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CONFORMED COPY 
LOAN NUMBER 3983 EE
Loan Agreement
(Agriculture Project)
between
REPUBLIC OF ESTONIA
and
INTERNATIONAL BANK FOR RECONSTRUCTION
AND DEVELOPMENT
Dated August 7, 1996
LOAN NUMBER 3983 EE
LOAN AGREEMENT
AGREEMENT, dated August 7, 1996, between REPUBLIC OF ESTONIA (the Borrower) and 
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank).
WHEREAS 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
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
Section 1.01. The “General Conditions Applicable to Loan and Guarantee 
Agreements for Single Currency Loans” of the Bank, dated May 30, 1995 (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 have the respective meanings therein set forth and the 
following additional terms have the following meanings:
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(a)
“PIU” means the Project Implementation Unit within the Borrower’s 
Ministry of Agriculture, to be established in accordance with Section 5.01 (b) of this 
Agreement and maintained in accordance with paragraph 1 (b) of Schedule 5 to this 
Agreement;
(b)
“PSC” means the Inter-Ministerial Project Steering Committee to be 
established in accordance with Section 5.01 (b) of this Agreement and maintained in 
accordance with paragraph 1 (a) of Schedule 5 to this Agreement;
(c)
“Land and Water Association” or “LWA” means an association of farmers in 
a drainage area established and operating pursuant to the Land Amelioration Law of the 
Borrower dated April 20, 1994;
(d)
“Private Advisory Services Development Fund” or “PASDF” means a fund to 
be established and administered by the Ministry of Agriculture of the Borrower in 
accordance with paragraph 2 (b) of Schedule 5 to this Agreement;
(e)
“National Agricultural Extension Task Force” or “NAETF” means a task 
force to be established and administered by the Ministry of Agriculture of the 
Borrower in accordance with Section 5.01 (c) of this Agreement, to develop the 
national agricultural extension strategy and monitor its implementation;
(f)
“Est-Survey” means the state-owned enterprise of the Borrower, consisting 
of fifteen regional land survey offices, responsible for carrying out land surveys and 
cadastre map storing activities;
(g)
“National Land Board” means the agency under the Borrower’s Ministry of 
Environment responsible for land cadastre keeping, geodesy and mapping;
(h)
“National Geodetic Network” means the geographical base coordination 
system of the Borrower’s territory;
(i)
“Technical Services” means all land surveying, mapping and cadastre 
registration services to be provided under Parts A(2) and A(3) of the Project;
(j)
“Deutsche Mark” and “DEM” each means the lawful currency of the Federal 
Republic of Germany; and 
(k)
“Special Account” means the account referred to in Section 2.02 (b) of 
this Agreement.
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 
twenty-two million Deutsche Marks (DEM 22,000,000).
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 
Deutsche Marks a special deposit account in a commercial bank acceptable to the Bank 
on terms and conditions satisfactory to the Bank, including appropriate protection 
against set-off, seizure or attachment. 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, 2001 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 commitment charge at the rate 
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of three\1efourths of one per cent (3/4 of 1%) per annum on the principal amount of the 
Loan not withdrawn from time to time.
Section 2.05. (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 2.06 
of this 
Agreement.
(iii)
“LIBOR Base Rate” means, for each Interest Period, the London 
interbank 
offered rate for six-month deposits in Deutsche Marks 
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) one half 
of one 
percent (1/2 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 2.05, 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 amounts of the Loan not yet withdrawn 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 2.06. Interest and other charges shall be payable on June 15 and 
December 15 in each year.
Section 2.07. 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 of the 
Project as set forth in Schedule 2 to this Agreement, and, to this end, shall carry 
out the Project with due diligence and efficiency and in conformity with appropriate 
administrative, financial, agricultural, engineering and environmental 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 
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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. (a) Except as the Bank shall otherwise agree, procurement of the 
goods, works and consultants’ services (other than the services of the consultants 
referred to in paragraph (b) below) 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.
(b)
The Borrower shall, with respect to consultants’ services required to be 
employed for the Project and to be financed out of proceeds other than the Loan, 
consult with the Bank on the terms of reference for said consultants.
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;
(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 four 
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 or 
payment out of the Special 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 
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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
Effective Date; Termination
Section 5.01. The following events are specified as additional conditions to the 
effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the 
General Conditions: 
(a)
the Borrower has promulgated as official regulations the environmental 
screening criteria and procedures applicable to all drainage rehabilitation works in 
the Borrower’s territory and has published these regulations and procedures;
(b)
the Borrower has established the PSC and the PIU and has appointed: (i) 
the Chairman and members of the PSC; and (ii) the PIU’s Project Manager, procurement 
specialist, accountant and monitoring and evaluation specialist with qualifications, 
experience and terms of reference satisfactory to the Bank;
(c)
the Borrower has established NAETF under terms and conditions and with 
composition and budget satisfactory to the Bank, and has appointed NAETF’s manager and 
an extension officer with qualifications, experience and terms of reference 
satisfactory to the Bank; and 
(d)
the Borrower has made adequate allocations for the Project in the budget 
for the year 1996.
Section 5.02. The date one hundred twenty (120) days after the date of this 
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
1 Suur-Ameerika
EE0100 Tallinn
Republic of Estonia
Telex:
173106 PLAAN
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:
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INTBAFRAD
248423 (MCI)
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.
REPUBLIC OF ESTONIA
By /s/ Toomas H. Ilves
Authorized Representative
INTERNATIONAL BANK FOR
   RECONSTRUCTION AND DEVELOPMENT
By /s/ Basil Kavalsky
Acting Regional Vice President
Europe and Central Asia
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
(Expressed in
   to be
Category
Deutsche Marks)
  Financed
(1)
Goods
   2,400,000
100% of foreign 
 
expenditures, 
100% of local 
expenditures 
(ex-factory 
cost) and 80% 
of local 
expenditures for 
other items 
procured locally
(2)
Works 
   6,400,000
60% 
(3)
Consultants’           
Services and
Training
(a)
Studies
     700,000
100%
(b)
Design and
   1,200,000
80%
supervision of
drainage works
(c)
Agricultural
   3,400,000
80%  
Advisory Services
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under Part D (1)
of the Project
(d) 
Training
     300,000
100%
(4)
Technical Services
   5,600,000
60%
under Parts A(2)
and A(3) of
the Project
(5)
Unallocated
   2,000,000
   _________
TOTAL
  22,000,000
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: (a) payments made for expenditures prior to the date of this 
Agreement; (b)
Category 3(c) before the Borrower has presented to the Bank: (i) a 
form of a standard contract for the provision of agricultural advisory services 
satisfactory to the Bank; and (ii) the selection criteria satisfactory to the Bank for 
the agricultural advisors to be engaged for the purposes of Part D of the Project; and 
(c) Category (4) before the Borrower has: (i) published the tender for privatization 
of at least five of Est-Survey’s regional land survey offices or terminated 
Est-Survey’s commercial land survey activities; and (ii) contracted all publicly 
funded land and property surveys to private surveyors under competitive bidding 
procedures satisfactory to the Bank.
4.
The Bank may require withdrawals from the Loan Account to be made on the basis 
of statements of expenditure for expenditures for: (a) goods under contracts not 
exceeding $300,000 equivalent; (b) works under contracts not exceeding $300,000 
equivalent; (c) Technical Services under contracts not exceeding $300,000 equivalent; 
and (d) services under contracts not exceeding $50,000 equivalent for individual 
consultants and $100,000 equivalent for consulting firms.
SCHEDULE 2
Description of the Project
The objectives of the Project are to increase rural incomes and stimulate the 
rural economy through rural entrepreneurship by providing assistance for: (a) 
privatization of rural lands; (b) privatization and rehabilitation of select rural 
infrastructure; (c) improvement of human resources skills for entrepreneurship in 
rural areas; (d) introduction of new farming technologies consistent with transformed 
private agriculture; and (e) improved food quality. 
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:
Land Reform
Carrying out: (1) a study on the disposal of state-owned rural land to 
accelerate the transfer of such land to the private sector through sale or lease; (2) 
surveys and measuring work through private companies to complete the National Geodetic 
Network; and (3) land surveys through private surveying companies and cadastre 
registration of: (a) lands to benefit from drainage rehabilitation under Part B of the 
Project; and (b) other rural lands.
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Part B:
Farm Drainage Rehabilitation
Improving the capacity of existing farmland drainage, excluding polders and wet 
forests, with extensive farmers’ participation by: (1) rehabilitating existing 
drainage systems of about 60,000 ha with works covering: (a) main channel 
rehabilitation; (b) rehabilitation of collector drains; (c) flushing of subsurface 
pipe outlets entering collector drains; and (d) selective tillage of compacted soils; 
(2) organizing farmers in about sixty Land and Water Associations with the 
responsibility for future operation and maintenance of the drainage systems; and (3) 
developing an adaptive research program for (a) reduction of maintenance costs; and 
(b) environmental protection.
Part C:
Land Use Management
(1)
Formulation of a national strategy for wetlands management on the basis of a 
wetlands management strategy study; 
(2)
carrying out environmental screening of sites for, and monitoring of, the 
drainage rehabilitation works; and 
(3)
carrying out of an environmental study on future drainage investments analyzing 
options for drained lands and measures needed to convert drained land to other uses. 
Part D:
Agricultural Advisory Services
(1)
Establishment of the Private Advisory Services Development Fund and the 
provision through PASDF to eligible farmers of temporary and partial funding to 
contract private sector advisory services in farming and rural business; 
(2)
strengthening of the publicly funded extension service through training and 
technical assistance to develop educational programs on improved agricultural 
practices; and 
(3)
supporting selected rural information centers with equipment and technical 
assistance to assist the rural population in finding alternative rural employment.
Part E:
Food Quality Control and Veterinary Laboratories
Strengthening the state-owned veterinary and food control laboratories through: 
(1) laboratory equipment for the quality control of Estonian food and livestock 
products; and (2) training of personnel for the operations of food quality and 
veterinary control facilities.
Part F:
Project Management
Provision of expert services and facilities for project management activities, 
primarily for accounting, procurement, monitoring and evaluation, and project 
management.
* * *
The Project is expected to be completed by June 30, 2001.
SCHEDULE 3
Amortization Schedule
           Payment of Principal 
Date Payment Due
(Expressed in Deutsche Marks) * 
June 15, 2001
 915,000.00 
December 15, 2001
 915,000.00 
June 15, 2002
 915,000.00 
December 15, 2002
 915,000.00 
June 15, 2003
 915,000.00 
December 15, 2003
 915,000.00 
June 15, 2004
 915,000.00 
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December 15, 2004
 915,000.00 
June 15, 2005
 915,000.00 
December 15, 2005
 915,000.00 
June 15, 2006
 915,000.00 
December 15, 2006
 915,000.00 
June 15, 2007
 915,000.00 
December 15, 2007
 915,000.00 
June 15, 2008
 915,000.00 
December 15, 2008
 915,000.00 
June 15, 2009
 915,000.00 
December 15, 2009
 915,000.00 
June 15, 2010
 915,000.00 
December 15, 2010
 915,000.00 
June 15, 2011
 915,000.00 
December 15, 2011
 915,000.00 
June 15, 2012
 915,000.00 
December 15, 2012
 955,000.00
     _____________
TOTALS
     22,000,000.00
     ============= 
___________________
*
The figures in this column represent the amount in Deutsche Marks to be repaid, 
except as 
provided in Section 4.04(d) of the General Conditions.
SCHEDULE 4
Procurement and Consultants’ Services
Section I.
Procurement of Goods 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 (the Guidelines) and the following provisions of this Section, as 
applicable.
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.
To the extent practicable, contracts for goods to be awarded in accordance with 
the provisions of paragraph 1 of this Part B shall be grouped into bid packages 
estimated to cost the equivalent of $300,000 or more each.
Part C:
Other Procurement Procedures
1.
National Competitive Bidding
Works and Technical Services may be procured under contracts awarded in 
accordance with the provisions of paragraphs 3.3 and 3.4 of the Guidelines.
2.
International Shopping
Goods estimated to cost $100,000 equivalent or less per contract and $150,000 
equivalent or less in the aggregate, may be procured under contracts awarded on the 
basis of international shopping procedures in accordance with the provisions of 
paragraphs 3.5 and 3.6 of the Guidelines.
3.
National Shopping
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Goods estimated to cost $50,000 equivalent or less per contract and $150,000 
equivalent or less in the aggregate, 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.
Part D:
Review by the Bank of Procurement Decisions
1.
Procurement Planning
Prior to the issuance of any invitations to prequalify for bidding or to bid for 
contracts, the proposed procurement plan for the Project shall be furnished to the 
Bank 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 Bank, and 
with the provisions of said paragraph 1.
2.
Prior Review
With respect to each contract for: (a) goods under Part B of this Section, (b) 
works estimated to cost the equivalent of $300,000 or more, and (c) the first two 
contracts for works and Technical Services awarded every year, 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 covered 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
1.
Consultants’ services shall be procured under contracts awarded in accordance 
with the provisions of the “Guidelines for the Use of Consultants by World Bank 
Borrowers and by The World Bank as Executing Agency” published by the Bank in August 
1981 (the Consultant Guidelines). For complex, time-based assignments, such contracts 
shall be based on the standard form of contract for consultants’ services issued by 
the Bank, with such modifications as shall have been agreed by the Bank. Where no 
relevant standard contract documents have been issued by the Bank, other standard 
forms acceptable to the Bank shall be used.
2.
Notwithstanding the provisions of paragraph 1 of this Section, the provisions of 
the Consultant Guidelines requiring prior Bank review or approval of budgets, short 
lists, selection procedures, letters of invitation, proposals, evaluation reports and 
contracts shall not apply to (a) contracts for the employment of consulting firms 
estimated to cost less than $100,000 equivalent each or (b) contracts for the 
employment of individuals estimated to cost less than $50,000 equivalent each. 
However, said exceptions to prior Bank review shall not apply to (a) the terms of 
reference for such contracts, (b) single-source selection of consulting firms, (c) 
assignments of a critical nature, as reasonably determined by the Bank, (d) amendments 
to contracts for the employment of consulting firms raising the contract value to 
$100,000 equivalent or above, or (e) amendments to contracts for the employment of 
individual consultants raising the contract value to $50,000 equivalent or above.
SCHEDULE 5
Implementation Program
1.
The Borrower shall maintain until completion of the Project:
(a)
the PSC with overall responsibility for all aspects of Project 
implementation consisting of key members from the Ministries of Agriculture and 
Environment, and associate members from at least the Ministries of Justice and 
Finance, the Farmers’ Union and the Producers’ Union, the Estonian Food Board, a 
representative of the municipalities concerned, and two Joint Project Directors from 
the Ministry of Agriculture and Environment respectively; and
(b)
the PIU in the Ministry of Agriculture to carry out the following 
activities: (i) coordination of and support to the implementing agencies; (ii) 
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administration, accounting and financial management; (iii) procurement coordination 
and supervision; (iv) loan withdrawals; (v) monitoring and evaluation; and (vi) 
reporting. 
2.
The Borrower shall:
(a)
except as otherwise agreed with the Bank, by March 31, 1996 initiate 
studies acceptable to the Bank to formulate and develop a plan for a national policy 
for the transfer of state-owned rural and farming lands to private owners and publish 
and present to the Bank by March 31, 1997 the findings of said studies and the 
proposed plan, including a timetable for said plan’s implementation, and, thereafter, 
implement the same taking into consideration the Bank’s views on the matter;
(b)
by May 31, 1996: (i) establish the PASDF to provide grants to farmers to 
finance private agricultural advisory services; and (ii) appoint a manager of the 
PASDF, with qualifications, experience and terms of reference satisfactory to the 
Bank;
(c)
by June 30, 1996, transfer the cadastre registration activities of 
Est-Survey to the National Land Board;
(d)
by June 30, 1996, establish a contract administration unit with a manager 
and four staff in the National Land Board to manage and supervise the Technical 
Services under Parts A(2) and A(3) of the Project; and
(e)
prepare progress reports every quarter on the procurement of goods and 
services under the Project and furnish said reports to the Bank.
3.
 Before commencement of the drainage rehabilitation works under Part B (1) of 
the Project on any specific drainage site the Borrower shall: (a) register in the 
cadastre all land at that specific drainage site to benefit from drainage 
rehabilitation; and (b) make available all such state-owned agricultural land for 
purchase or lease in accordance with procedures acceptable to the Bank.
4.
The Borrower shall select the drainage sites under Part B (1) of the Project in 
accordance with criteria satisfactory to the Bank.
5.
The Borrower shall take all necessary measures to ensure that the members of the 
LWA benefiting from the drainage rehabilitation shall contribute 20% of the costs of 
the drainage rehabilitation works either in cash or by providing labor.
6.
The Borrower shall:
(a)
maintain policies and procedures adequate to enable it to monitor and 
evaluate on an ongoing basis, in accordance with indicators satisfactory to the Bank, 
the carrying out of the Project and the achievement of the objectives thereof;
(b)
except as otherwise agreed with the Bank, prepare, under terms of 
reference satisfactory to the Bank, and furnish to the Bank, by April 1, 1998, a 
report covering the period through December 31, 1997, 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, 1998, or such later date as the Bank 
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 said report and the Bank’s views on the matter.
SCHEDULE 6
Special Account
1.
For the purposes of this Schedule:
Page  12
(a)
the term “eligible Categories” means Categories (1), (2), (3) and (4) 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 equal to DEM 1,400,000 
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 equal to DEM 
700,000 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 DEM 4,300,000.
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 a deposit or deposits 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 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;
Page  13
(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 for the Special Account, minus the total amount of all outstanding special 
commitments entered into by the Bank pursuant to Section 5.02 of the General 
Conditions on account of the respective Parts of 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.
(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.