CREDIT NUMBER 1745 TO Development Credit Agreement (Third Coffee and Cocoa Development Project) between REPUBLIC OF TOGO and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1987 CREDIT NUMBER 1745 TO DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated ^ 2S , 1987, between the Republic of Togo (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 Borrower intends to contract from Caisse Centrale de Cooperation Economique (hereinafter called CCCE) a loan (the CCCE Loan) in the amount of forty one million French Francs (F 41,000,000) to assist in financing the Project on the terms and conditions set forth in an agreement (the CCCE Loan Agreement) to be entered into between the Borrower and CCCE; (C) the Borrower intends to contract from the Republic of France acting through Fonds d'Aide et de Cooperation (hereinafter called FAC), a grant (the FAC Grant) in the amount of twenty million French Francs (F 20,000,000) to assist in financing the Project on the terms and conditions set forth in an agreement (the FAC Grant Agreement) to be entered into between the Borrower and FAC; and 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 Develop- ment Credit Agreements" of the Association, dated January 1, 1985, with the last sentence of Section 3.02 deleted (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 Pre- amble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: - 2 - (a) "CNCA" means Caisse Nationale de Credit Agricole, an agency of the Borrower; (b) "Project Area" means the plains of Litime and Kloto and the plateaus of Akposso, Akebou and Dayes; (c) "IRAT" means Institut de Recherches Agronomiques Tropicales of the Borrower; (d) "IRCC" means Institut de Recherche du Cafe et du Cacao of the Borrower; (e) "OPAT" means Office des Produits Agricoles du Togo, an agency of the Borrower; (f) "DRA" means Direction de la Recherche Agronomique of the Borrower; (g) "SRCC" means Societe Nationale pour la Renovation et le D6veloppement de la Cacaoyere et de la Cafeiere Togolaises, an agency of the Borrower; (h) "PCU" means Project Credit Unit of CNCA; (i) "FA" means Farmers' Association; (j) "CFA Francs" means the currency of the Borrower; (k) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (1) "Project Preparation Advance" means the project pre- paration advance granted by the Association to the Borrower pur- suant to an exchange of letters dated October 30, 1986 and December 18, 1986 between the Borrower and the Association; and (m) "Third Grant Agreement" means the agreement to be entered into between the Borrower and SRCC pursuant to Section 3.01 (b) of this Development Credit Agreement, as the same may be amended from time to time, and includes all schedules and agree- ments supplemental to the Third Grant Agreement. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Bor- rower, on the terms and conditions set forth or referred to in - 3 - the Development Credit Agreement, an amount in various currencies equivalent to fourteen million nine hundred thousand Special Drawing Rights (SDR 14,900,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement for expenditures made (or, if the Association shall so agree, to be made) in respect of the reason- able cost of goods and services required for the Project des- cribed in Schedule 2 to this Agreement and to be financed out of the proceeds of the Credit. (b) The Borrower shall, for the purposes of the Project, open and maintain a special account in CFA Francs in a commercial bank on terms and conditions satisfactory to the Association. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 4 to this Agreement. (c) Promptly after the Effective Date, the Association shall, on behalf 3f the Borrower, withdraw from the Credit Account and pay to itself the amount required to repay the prin- cipal amount of the Project Preparation Advance withdrawn and outstanding as of such date and to pay all unpaid charges there- on. The unwithdrawn balance of the authorized amount of the Project Preparation Advance shall thereupon be cancelled. Section 2.03. The Closing Date shall be December 31, 1992, or such later date as the Association shall establish. The Asso- ciation shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to the Association a commitment charge at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of the Credit not with- drawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agree- ment to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) 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 - 4 -- 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 per cent (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 June 1 and December 1 in each year. Section 2.07. The Borrower shall repay the principal amount of thte Credit in semiannual installments payable on each June 1 and December 1 commencing June 1, 1997, and ending December 1, 2036. Each installment to and including the installment payable on December 1, 2006 shall be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter shall be one and one-half per cent (1-1/2%) of such principal amount. 'action 2.08. The currency of the Republic of France 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 Part A.5 of the Project through the Ministry of Rural Development; and shall cause: (i) SRCC to carry out Parts A.1, A.2, A.4, B.1, B.2 and D of the Project, (ii) IRCC to carry out Part A.3 of the Project, (iii) DRA to carry out directly or under contract with IRAT, Parts B.3 and B.4 of the Project; and (iv) PCU to carry out Part C of the Project; all with due diligence and efficiency and in conformity with appropriate agricultural, administrative, financial and management practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) The Borrower shall make available the proceeds of the Credit to SRCC, on a non-reimbursable basis, under an agreement to be entered into between the Borrower and SRCC hereinafter called the Third Grant Agreement. - 5 - (c) Without limitation or restriction upon its obligations under paragraph (a) of this Section, the Borrower shall, exclu- sively for the purposes of the Project, cause SRCC and PCU to maintain each an account in a commercial bank (SRCC Project Account and PCU Project Account) in CFA Francs. To this end, the Borrower shall: (i) make an initial deposit in the SRCC Project Account, in an amount of one hundred and fifty million CFA Francs (CFAF 150,000,000); and (ii) thereafter replenish said Project Account as and when required, to ensure that on the first day of each calendar quarter of each year the Project is executed, an amount equal to at least three months of SRCC's expenditures, estimated on the basis of its annual current budget, is available therein. Section 3.02. 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 3.03. For purposes of Part A.5 (a) of the Project, the Borrower shall: (i) not later than December 31, 1987, com- plete and furnish to the Association the recommendations of the land tenure and sharecropping practices study; and (ii) not later than June 30, 1988, implement those of said recommendations which are satisfactory to the Association. Section 3.04. For purposes of carrying out Part A.2 (c) (i) of the Project, the Borrower shall cause SRCC to employ in accor- dance with the provisions set forth in Section II of Schedule 3 to this Agreement, an independent and qualified expert, to make an annual assessment of the mirid control program. Section 3.05. In order to carry out Part A.3 of the Project, the Bor7ower shall cause SRCC to: (a) employ, on terms and condi- tions satisfactory to the Association, an independent expert to undertake annual reviews of IRCC's research program and budget; and (b) submit to the Association, for its review and comments, the recommendations resulting therefrom. Section 3.06. The Borrower shall cause SRCC and PCU to sub- mit to the Association for its review and comments, not later than October 31 and July 31 in each year, respectively, their draft annual budgets. -6- Section 3.07. For purposes of assisting in coordinating the e,,-Acution of the Project by SRCC, the Borrower shall cause SRCC to employ and thereafter maintain in SRCC, the following staff: (a) a Project Manager; (b) an internationally-recruited Technical Advisor; and (c) Heads of the following Departments: (i) Agricul- tural Operations, (ii) Training, (iii) Civil Works, and (iv) Administration and Finance. The qualifications and experience of said staff shall be acceptable to the Association. Section 3.08. In order to carry out Parts A and B of the Project, the Borrower shall cause SRCC to coordinate and super- vise the use and management of pesticides and fungicides in accordance with environmental guidelines satisfactory to the Association. Section 3.09. For purposes of Part C of the Project, the Borrower shall cause SRCC and PCU to grant credit only to appli- cants who are current in servicing credit already made to them. Section 3.10. For purposes of carrying out Part A of the Project, the Borrower shall, not later than June 30 in each year, revi-w with the Association, coffee and cocoa producer prices, and adjust them thereafter. Section 3.11. The Borrower shall cause: (a) PCU to charge an interest rate of 8.5% per annum on credits to farmers; and (b) OPAT: (i) to deposit In PCU Project Account an amount equiva- lent to 2.5% per annum on all outstanding farmers' credit; and (ii) to reschedule all short-term credit assigned to and not repaid by PCU. Section 3.12. For purposes of carrying out Part A.2 of the Project, the Borrower shall, not later than November 30, 1989, cause SRCC to: (a) complete a joint review with the Association of the cocoa program; and (b) promptly thereafter, implement the recommendations of said review on terms satisfactory to the Asso- ciation. Section 3.13. For purposes of Part A.5 (b) of the Project, the Borrower shall, not later than December 31, 1990, complete and furnish to the Association, for its review and comments, the recommendations of the study to design a long-term sectoral strategy for coffee and cocoa. - 7 - Section 3.14. The Borrower shall cause all staff having received training abroad financed under the Project to remain in their assignments for a period of at least five years after the completion of such training. ARTICLE IV Fina-icial Covenants Section 4.01. (a) The Borrower shall cause SRCC and PCU to maintain separate records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project and finan- cial condition of the Project Accounts. (b) The Borrower shall cause SRCC and PCU to: (i) have the records and accounts referred to in para- graph (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 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 copy of the renort of such audit by said auditorq, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning said records, accounts, financial statements of SRCC and PCU and the audit thereof as the Association shall from time to time reason- ably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of statements of expenditure, the Borrower shall cause SRCC and PCU to: (i) maintain, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; - 8 - (ii) retain, until at least one year after the comple- tion of the audit for the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts qnd 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 statements of expenditure submitted during such fiscal year, together with the proce- dures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. ARTICLE V Other Covenants Section 5.01. The Borrower shall cause SRCC: (a) to take out and maintain with responsible insurers, or to make other provision satisfactory to the Association for, insurance against such risks and in such amounts as shall be con- istent with appropriate practice; (b) to carry on its operations and conduct its affairs in accordance with sound administrative, financial, agricultural and management practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers; and (c) at all times to operate and to maintain machinery, equipment, vehicles and other property, and from time to time, promptly as needed, to make all necessary repairs and renewals thereof, all in accordance with sound engineering, financial and technical practices. ARTICLE VI Remedies of the Association Section 6.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional events are specified, namely, that: (a) Decree No. 86-209 of November 21, 1986 of the Borrower regulating coffee and cocoa marketing shall have been amended, suspended, abrogated, repealed or waived without prior approval of the Association; and (b) (i) subject to subparagraph (ii) of this paragraph: (A) the right of the Borrower to withdraw the proceeds of the CCCE Loan or the FAC Grant made to the Borrower for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the CCCE Loan Agreement and the FAC Grant Agreement providing therefor, or (B) the CCCE Loan shall have become due and pay- able prior to the agreed maturity thereof. (ii) subparagraph (i) of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Association that: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obliga- tions under such agreement; and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obliga- tions of the Borrower under this Agreement. Section 6.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) the events specified in paragraph (a) of Section 6.01 of this Agreement shall occur; and - 10 - (b) any event specified in paragraph (b) (i) of Section 6.01 of this Agreement shall occur, subject to the proviso of paragraph (b) (ii) of that Section. ARTICLE VII Effective Date; Termination Section 7.01. The following events are specified as addi- tional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) SRCC has employed: (i) the Technical Advisor referred to in Sec- tion 3.07 (b) of this Agreement; and (ii) consultants to assist. in carrying out Part D.1 of the Project; (b) the Borrower has appropriated the necessary budgetary allocations to finance its contribution to the Project for Fiscal Year 1987; (c) The Borrower has deposited the initial amount referred to in Section 3.01 (c) (i) of this Agreement; (d) the Association has been notified by CCCE and FAC that all conditions precedent to the effectiveness of the CCCE Loan Agreement and the FAC Grant Agreement have been fulfilled except for the effectiveness of this Agreement; and (e) the Grant Agreement referred to in Section 3.01 (b) of this Agreement has been executed. Section 7.02. 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. Section 7.03. The obligations of the Borrower under Section 5.01 and the provisions of Section 6.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on the date 20 years after the date of this Agreement, whichever shall be the earlier. - 11 - ARTICLE VIII Representative of the Borrower; Addresses Section 8.01. Thie 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 8.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministry of Economy and Finance B.P. 387 Lome Republic of Togo Cable address: Telex: MINFIE 5286 Lome, Togo For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (wUI) - 12 - 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. REPUBLIC OF TOGO By Is iOA (oj SCAAeAArr Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By 0JyA Vzt Regional Vice President Western Africa - 13 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit 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) Civil works 180,000 100% under Parts A.4(a) and D.1(b) of the Project (2) Vehicles and 2,080,000 100% equipment under Parts A.4(c) and D.1 (a) of the Project (3) Consultants' 670,000 100% services under Parts A.2(c), A.3(a), A.5(b), and Part D of the Project (4) Operating 3,900,000 100% costs of SRCC, DRA, IRAT and IRCC in relation to the execu- tion of the Project (5) Salaries for local 3,490,000 93% for 1987 staff 90% for 1988 75% for 1989 50% for 1990 25% for 1991 - 14 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (6) Agricultural 2,660,000 100% inputs under Part A.2(d) of the Project (7) Refunding of 1,250,000 Amount due Project Pre- pursuant to paration Section 2.02 (b) Advance of this Agreement (8) Unallocated 670,000 TOTAL 14,900,000 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; provided, however, that if the currency of the Borrower is also that of another country from the territory of which goods or services are supplied, expenditures in such currency for such goods or services shall be deemed to be "foreign expenditures". 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expen- ditures prior to the date of this Agreement. - 15 - SCHEDULE 2 Description of the Project The Project is the fourth stage of the Borrower's program for the rehabilitation and improvement of coffee and cocoa pro- duction. The purposes of the Project are to: (i) increase coffee and cocoa production by maintain- ing the existing plantations, planting new areas and implementing plant protection programs; (ii) improve foodcrop productivity in the Project Area; (iii) provide agricultural credit to coffee and cocoa producers in the Project Area; and (iv) strengthen the Borrower's institutions for the development of the coffee and cocoa sector. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Association may agree from time to time to achieve such objectives: Part A: Increasing Coffee and Cocoa Production 1. Coffee (a) Planting of about 7,500 ha; (b) production and distribution of planting materials for village and individual farmers' nurseries; and (c) maintenance of about 16,600 ha, including pruning of about 7,700 ha. 2. Cocoa (a) Replanting of about 2,000 ha; (b) production and distribution of planting materials; (c) carrying out annual plant protection programs to con- trol: (i) mirid pests; and (ii) blackpod diseases; and - 16 - (d) acquisition of pesticides, fungicides and agricultural inputs. 3. Applied Research (a) Carrying out applied research programs for coffee and cocoa; (b) acquisition of equipment, laboratory and experiment materials, greenhouses and vehicles; and (c) training IRCC staff in coffee and cocoa applied re- search techniques. 4. Roads (a) Construction, rehabilitation and maintenance of about 250 km of feeder roads within the Project Area; (b) maintenance of about 500 km of feeder roads con- structed in the Project Area; and (c) acquisition of equipment and vehicles. 5. Studies (a) Carrying out a national study of land tenure and share- cropping practices including those in the Project Area; and (b) carrying out a study to design a long-term sectoral strategy for coffee and cocoa. Part B: Improving foodcrop productivity 1. Planting of about 22,000 ha of foodcrops, such as maize, rice, groundnuts and cowpeas; 2. production of improved seeds; 3. carrying out an applied research program for foodcrops; and 4. acquisition of equipment and vehicles. Part C: Agricultural Credit Provision of credit in kind at an interest rate of 8.5% per annum to farmers participating in the Project as follows: - 17 - 1. Plantation credit: planting materials, equipment and fertil- izer, to be repaid in a maximum period of 9 years and with a maximum grace period of 4 years; and 2. Seasonal credit: fertilizer, to be repaid in 1 year. Part D: Institutional Development 1. Strengthening of SRCC (a) Acquisition of equipment and vehicles; (b) construction of about 6 central and 12 sectoral offices, 2 central stores, a training facility, and housing for staff assigned to applied research programs in the Litime area; (c) training of: (i) SRCC staff, in administration, manage- ment and agricultural techniques; (ii) SRCC staff and representa- tives of FAs, in group formation and management; and (iii) exten- sion agents and staff; (d) construction of about 200 village stores, and acquisi- tion of materials therefor; and (e) establishment of about 250 FAs. The Project is expected to be completed by December 31, 1991. - 18 - SCHEDULE 3 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A. International Competitive Bidding 1. Except as provided in Part D, hereof goods and works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in May 1985 (the Guidelines). 2. To the extent practicable, contracts for goods, works and services shall be grouped in bid packages estimated to cost the equivalent of $100,000 or more each. Part B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the proce- dures described in Part A.1 hereof, goods manufactured in Togo may be granted a margin of preference in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraphs 1 through 4 of Appendix 2 thereto. Part C. Preference for Domestic Contractors In the procurement of works in accordance with the proce- dures described in Part A.1 hereof, the Borrower may grant a margin of preference to domestic contractors in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraph 5 of Appendix 2 thereto. Part D. Other Procurement Procedures 1. Local Competitive Bidding Works referred to in Schedule 2, Part D.1 (b) may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association. - 19 - 2. Force Account Works referred to in Schedule 2, Part A.4, may also be carried out by force account by SRCC's Civil Works Department. Part E. Review by the Association of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract estimated to cost the equivalent of $100,000 or more, the procedures set forth in para- graphs 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Association pursuant to said paragraph 2 (d) shall be furnished to the Association prior to the making of the first payment out of the Special Account in respect of such contract. (b) With respect to each contract not governed by the pre- ceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract, together with the other information required to be furnished to the Association pursuant to said paragraph 3, shall be furnished to the Association as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 4 to this Agreement. (c) The provisions of the preceding subparagraphs (a) and (b) shall not apply to contracts for Category 4 of Schedule 1 excluding expenditures for fuel, lubricants and spare parts under Part A.4 of the Project, on account of which the Association has authorized withdrawals from the Credit Account on the basis of statements of expenditure. Such contracts shall be retained in accordance with Section 4.01 (c) (ii) of this Agreement. 2. The figure of 15% is hereby specified for purposes of para- graph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants In order to assist the Borrower in carrying out the Project, the Borrower shall employ and shall cause SRCC, IRCC, DRA and - 20 - IRAT, to employ the consultants referred to in Sections 3.04, 3.05 and 3.07 of this Agreement all with qualifications, ex- perience and terms and conditions of employment satisfactory to the Association. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Association on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" pub- lished by the Bank in August 1981. - 21 - SCHEDULE 4 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories 1 to 6 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 Credit 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 of CFAF 70,000,000 to be withdrawn from the Credit Account and deposited in the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Except as the Association shall otherwise agree, payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Association 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 may bE made as follows: (a) On the basis of a request or requests by the Borrower for a deposit or deposits which add up to the aggregate amount of the Authorized Allocation, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) The Borrower shall furnish to the Association requests for replenishment of the Special Account at such intervals as the Association shall specify. On the basis of such requests, the Association shall withdraw from the Credit Account and deposit into the Special Account such amounts as shall be required to replenish the Special Account with amounts not exceeding the amount of payments made out of the Special Account for eligible - 22 - expenditures. All such deposits shall be withdrawn by the Asso- ciation from the Credit Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. 4. For each payment made by the Borrower out of the Special Account for which the Borrower requests replenishment pursuant to paragraph 3 (b) of this Schedule, the Borrower shall furnish to the Association, prior to or at the time of such request, such documents and other evidence as the Association shall reasonably request, showing that such payment was made for eligible expen- ditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into the Special Account shall be made by the Association when either of the following situations first arises: (i) the Association shall have determined that all further withdrawals should be made by the Borrower directly from the Credit Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (ii) the total unwithdrawn amount of the Credit allo- cated to the eligible Categories of the Project, minus the amount of any outstanding special com- mitment entered into by the Association pursuant to Section 5.02 of the General Conditions with respect to the Project, shall be equal to the equivalent of twice the amount of the Authorized Allocation. (b) Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to the eligible Categories of the Project 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 the Special Account as of the date of such notice will be utilized in making payments for eli- gible expenditures. - 23 - 6. (a) If the Association shall have determined at any time that any payment out of the Special Account: (i) was made for any expenditure or in any amount not eligible pursuant to paragraph 2 of this Schedule, or (ii) was not justified by the evidence fur- nished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Association, deposit into the Special Account (or, if the Association shall so request, refund to the Association) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. No further deposit by the Association into the Special Account shall be made until the Borrower has made such deposit or refund. (b) If the Association 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 Association, refund to the Association such outstanding amount for crediting to the Credit Account. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Bank for Reconstruction and Development. FOR SECRETARY