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CONFORMED COPY
CREDIT NUMBER 3438-ET
Development Credit Agreement
(Emergency Recovery Project)
between
FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA
and
INTERNATIONAL DEVELOPMENT ASSOCIATION
Dated  December 21, 2000
CREDIT NUMBER 3438-ET
DEVELOPMENT CREDIT AGREEMENT
AGREEMENT, dated  December 21, 2000, between FEDERAL DEMOCRATIC REPUBLIC OF 
ETHIOPIA (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association).
WHEREAS (A) the Association has received from the Borrower a letter dated 
November 1, 2000, describing a program of actions to address the Emergency (as 
hereinafter defined) (the Program) and declaring the Borrower’s commitment to the 
execution of the Program;  
(B)
the Borrower, having satisfied itself as to the feasibility and priority 
of the project described in Schedule 2 to this Agreement (the Project), which forms 
part of the Program has requested the Association to: (i)  assist in the financing of 
the Project; and (ii) for assistance in support of the Program during the execution 
thereof;
(C)
Part C of the Project will be carried out by the Ethiopian Roads 
Authority (ERA) with the Borrower’s assistance and as part of such assistance, the 
Borrower will make available to ERA part of the proceeds of the Credit as provided in 
this Agreement; and
WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, 
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to extend the Credit to the Borrower upon the terms and conditions set forth in this 
Agreement and the Project Agreement of even date herewith between the Association and 
ERA;
NOW THEREFORE the parties hereto hereby agree as follows:
ARTICLE I
General Conditions; Definitions
Section 1.01. The “General Conditions Applicable to Development Credit 
Agreements” of the Association, dated January 1, 1985 (as amended through October 6, 
1999) with the modifications set forth below (the General Conditions), constitute an 
integral part of this Agreement: 
(a)
A new paragraph (12) is added to Section 2.01 to read as set forth below, 
and the existing paragraphs (12) through (14) of said Section are accordingly 
renumbered as paragraphs (13) through (15):
“12.
‘Participating Country’ means any country that the Association determines 
meets the requirements set forth in 
Section 11 of Resolution No. 194 of the Board 
of Governors of the Association, adopted on April 8, 1999; and 
‘Participating Countries’ means, collectively, all such countries.” ; 
(b)
The second sentence of Section 5.01 is modified to read as below:
“Section 5.01. Except as the Borrower and the Association shall otherwise 
agree, no withdrawals shall be made: (a) 
on account of expenditures in the 
territories of any country which is not a Participating Country or for goods produced 
in, or services supplied from, such territories; or (b) for the purpose of any 
payment to persons or entities, or for any 
import of goods, if such payment or 
import, to the knowledge of the Association, is prohibited by a decision of the 
United Nations Security Council taken under Chapter VII of the Charter of 
the United Nations.”
Section 1.02. Unless the context otherwise requires, the several terms defined 
in the General Conditions and in the Preamble to this Agreement have the respective 
meanings therein set forth and the following additional terms have the following 
meaning:
(a)
“Birr” means the Borrower’s currency;
(b)
“Eligible Beneficiaries” means the internally displaced persons living 
within the fourteen Woredas (as hereinafter defined) affected by the Emergency (as 
hereinafter defined) in the Tigray and Afar Regions, deportees/returnees and families 
of deceased breadwinners, who require assistance to reconstruct their homes or to 
resume farming or other income generation activities;
(c)
“Emergency” means the extraordinary event of limited duration which for 
the purposes of this Agreement started in May 1998, and which was caused by the 
escalation of the conflict between the Borrower and the State of Eritrea and by the 
drought;
(d)
“ERA” means the Ethiopian Roads Authority, established and operating 
under the Borrower’s Proclamation No. 80/1997, dated June 5, 1997;
(e)
“ERP Fund Account” means the account in Birr, to be established pursuant 
to Section 6.01 (c) of this Agreement in the National Bank of Ethiopia for the purpose 
of holding the Birr equivalent of the proceeds of the Credit disbursed from Category 
(1) of the table in paragraph 1 of Schedule 1 to this Agreement;
(f)
“ERPMU” means the Borrower’s Program Management Unit, established within 
MEDaC (as hereinafter defined) for the purposes of overseeing the implementation of 
the Program;
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(g)
“ESRDF” means the Ethiopia Social Rehabilitation and Development Fund, 
established and operating pursuant to the Borrower’s Proclamation No. 19 dated 
February 13, 1996; 
(h)
“MEDaC” means the Borrower’s Ministry of Economic Development and 
Cooperation;
(i)
“Mines” means landmines and includes explosive items such as bombs, booby 
traps, munitions and explosive ordnance of any kind;  
(j)
“PIP” or “Project Implementation Plan” means the Project Implementation 
Plan, adopted by the Borrower, and giving details of procurement and disbursement 
arrangements, performance indicators and other administrative, financial and 
organizational arrangements, as shall have been agreed with the Association for 
purposes of the implementation of the Project, as same may be amended from time to 
time, and such term includes any schedules to the PIP;
(k)
“Project Agreement” means the agreement between the Association and ERA 
of even date herewith, as the same may be amended from time to time, and such term 
includes all schedules and agreements supplemental to the Project Agreement;
(l)
“Project Management Report” means each report prepared in accordance with 
Section 4.02 of this Agreement;
(m)
“Region” means administrative areas within the Borrower’s territory as 
defined in the Borrower’s Constitution;
(n)
“Special Accounts” means the accounts referred to in Section 2.02 (b) of 
this Agreement;
(o)
“Subsidiary Financing Agreement” means the agreement to be entered into 
between the Borrower and ERA pursuant to Section 3.01 (d) of this Agreement, as the 
same may be amended from time to time, and such term includes all schedules to the 
Subsidiary Financing Agreement; and
(p)
“Zones, Woredas, and Kebeles or Tabias” mean different local government 
levels within the Borrower’s territory established and operating pursuant to the 
relevant Regional Constitutions.
ARTICLE II
The Credit
Section 2.01. The Association agrees to lend to the Borrower, on the terms and 
conditions set forth or referred to in the Development Credit Agreement, an amount in 
various currencies equivalent to one hundred and eighty million two hundred thousand 
Special Drawing Rights (SDR 180,200,000).
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 reasonable cost of goods and services required for the Project and to be financed 
out of the proceeds of the Credit.
(b)
The Borrower may, for the purposes of the Project, open and maintain in 
dollars two special deposit accounts (the MEDaC Special Account for Parts B and D of 
the Project and the ERA Special Account for Part C of the Project) in the National 
Bank of Ethiopia on terms and conditions satisfactory to the Association, including 
appropriate protection against set-off, seizure or attachment. Deposits into, and 
payments out of, each respective Special Account shall be made in accordance with the 
provisions of Schedule 5 to this Agreement.
Section 2.03. The Closing Date shall be December 31, 2003, or such later date as 
the Borrower and the Association shall establish. The Association shall promptly 
notify the Borrower of such later date.
Section 2.04. (a) The Borrower shall pay to the Association a commitment charge 
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on the principal amount of the Credit not withdrawn from time to time at a rate to be 
set by the Association as of June 30 of each year, but not to exceed the rate of 
one-half of one percent (1/2 of 1%) per annum.
(b)
The commitment charge shall accrue: (i) from the date sixty days after 
the date of this Agreement (the accrual date) to the respective dates on which amounts 
shall be withdrawn by the Borrower from the Credit Account or canceled; and (ii) at 
the rate set as of the June 30 immediately preceding the accrual date and at such 
other rates as may be set from time to time thereafter pursuant to paragraph (a) 
above. The rate set as of June 30 in each year shall be applied from the next date in 
that year specified in Section 2.06 of this Agreement.
(c)
The commitment charge shall be paid: (i) at such places as the 
Association shall reasonably request; (ii) without restrictions of any kind imposed 
by, or in the territory of, the Borrower; and (iii) in the currency specified in this 
Agreement for the purposes of Section 4.02 of the General Conditions or in such other 
eligible currency or currencies as may from time to time be designated or selected 
pursuant to the provisions of that Section.
Section 2.05. The Borrower shall pay to the Association a service charge at the 
rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of 
the Credit withdrawn and outstanding from time to time.
Section 2.06. Commitment charges and service charges shall be payable 
semiannually on April 1 and October 1 in each year.
Section 2.07. (a) Subject to paragraphs (b), (c) and (d) below, the Borrower 
shall repay the principal amount of the Credit in semiannual installments payable on 
each April 1 and October 1 commencing April 1, 2011, and ending October 1, 2040. Each 
installment to and including the installment payable on October 1, 2020, shall be one 
percent (1%) of such principal amount, and each installment thereafter shall be two 
percent (2%) of such principal amount.
(b)
Whenever: (i) the Borrower’s per capita gross national product (GNP), as 
determined by the Association, shall have exceeded for three consecutive years  the 
level established annually by the Association for determining eligibility to access 
the Association's resources; and (ii) the Bank shall consider the Borrower 
creditworthy for Bank lending, the Association may, subsequent to the review and 
approval thereof by the Executive Directors of the Association and after due 
consideration by them of the development of the Borrower's economy, modify the 
repayment of installments under paragraph (a) above by: (A) requiring the Borrower to 
repay twice the amount of each such installment not yet due until the principal amount 
of the Credit shall have been repaid; and (B) requiring the Borrower to commence 
repayment of the principal amount of the Credit as of the first semiannual payment 
date referred to in paragraph (a) above falling six months or more after the date on 
which the Association notifies the Borrower that the events set out in this paragraph 
(b) have occurred, provided, however, that there shall be a grace period of a minimum 
of five years on such repayment of principal.
(c)
If so requested by the Borrower, the Association may revise the 
modification referred to in paragraph (b) above to include, in lieu of some or all of 
the increase in the amounts of such installments, the payment of interest at an annual 
rate agreed with the Association on the principal amount of the Credit withdrawn and 
outstanding from time to time, provided that, in the judgment of the Association, such 
revision shall not change the grant element obtained under the above-mentioned 
repayment modification.
(d)
If, at any time after a modification of terms pursuant to paragraph (b) 
above, the Association determines that the Borrower’s economic condition has 
deteriorated significantly, the Association may, if so requested by the Borrower, 
further modify the terms of repayment to conform to the schedule of installments as 
provided in paragraph (a) above.
Section 2.08. The currency of The United States of America is hereby specified 
for the purposes of Section 4.02 of the General Conditions.
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ARTICLE III
Execution of the Program and the Project
Section 3.01. (a) The Borrower declares its commitment to the objectives of the 
Program and the Project as set forth in the Preamble and Schedule 2 to this Agreement, 
and, to this end shall carry out Parts A, B, and D of the Project through MEDaC, with 
due diligence and efficiency and in conformity with appropriate financial, technical, 
engineering, mine-safety, administrative and environmental practices, and shall 
provide, promptly as needed, the funds, facilities, services and other resources 
required for the Project; 
(b)
Without any limitation or restriction upon any of its other obligations 
under this Agreement, the Borrower shall cause ERA, with respect to Part C of the 
Project, to perform in accordance with the provisions of the Project Agreement all the 
obligations of ERA therein set forth, shall take or cause to be taken all action, 
including the provision of funds, facilities, services and other resources, necessary 
or appropriate to enable ERA to perform such obligations, and shall not take or permit 
to be taken any action which would prevent or interfere with such performance; 
(c)
Without any limitation upon the provisions of paragraph (a) of this 
Section and except as the Borrower and the Association shall otherwise agree, the 
Borrower shall carry out Parts A, B, and D of the Project in accordance with the 
Implementation Program set forth in Schedule 4 to this Agreement.
(d)
The Borrower shall make the proceeds of the Credit from time to time 
allocated to Categories (2), (3) (b), and (4) (b) in the table in Schedule 1 to this 
Agreement available to ERA as a grant under a subsidiary financing agreement to be 
entered into between the Borrower and ERA, under terms and conditions which have been 
approved by the Association.
(e)
The Borrower shall exercise its rights under the Subsidiary Financing 
Agreement in such a manner as to protect the interests of the Borrower and the 
Association and to accomplish the purposes of the Credit, and except as the 
Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or 
waive the Subsidiary Financing Agreement or any provision thereof. 
Section 3.02. Except as the Association shall otherwise agree, procurement of 
the goods, works and consultants’ services required for Parts A, B and D of 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. The Borrower shall:
(a)
establish and maintain until completion of the Project the ERP Fund 
Account in the National Bank of Ethiopia; and 
(b)
shall ensure that all amounts deposited in the ERP Fund Account, shall be 
used exclusively to make payments for eligible activities under Part A of the Project.
ARTICLE IV
Financial Covenants
Section 4.01. (a) The Borrower shall maintain a financial management system, 
including records and accounts, and prepare financial statements in a format 
acceptable to the Association, adequate to reflect the operations, resources and 
expenditures related to Parts A, B, and D of the Project.
(b)
The Borrower shall:
(i)
have the records, accounts and financial statements referred to in 
paragraph (a) of this Section and the 
records and accounts for the 
Special Accounts as well as the ERP Fund Account, for each fiscal year 
audited, in accordance with auditing standards acceptable to the 
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Association, consistently applied, by 
independent auditors acceptable 
to the Association;
(ii)
furnish to the Association as soon as available, but in any case 
not later than six months after the end of 
each such year, (A) 
certified copies of the financial statements referred to in paragraph (a) of this 
Section for such year as so audited, and (B) an opinion on 
such statements, records and accounts and report 
of such audit, by 
said auditors, of such scope and in such detail as the Association shall have 
reasonably requested; 
and
(iii)
furnish to the Association such other information concerning such 
records and accounts, and the audit 
thereof, and concerning 
said auditors, as the Association may from time to time reasonably request.
(c)
For all expenditures with respect to which withdrawals from the Credit 
Account were made on the basis of Project Management Reports or statements of 
expenditure, the Borrower shall:
(i)
maintain or cause to be maintained, in accordance with paragraph 
(a) of this Section, records and separate 
accounts reflecting such 
expenditures;
(ii)
retain, until at least one year after the Association has received 
the audit report for the fiscal year in 
which the last withdrawal 
from the Credit Account was made, all records (contracts, orders, invoices, 
bills, receipts and other documents) evidencing such expenditures;
(iii)
enable the Association’s representatives to examine such records; 
and
(iv)
ensure that such records and accounts are included in the annual 
audit referred to in paragraph (b) of this 
Section and that the 
report of such audit contains a separate opinion by said auditors as to whether the 
Project Management Reports or statements of expenditure submitted 
during such fiscal year, together with 
the procedures and internal 
controls involved in their preparation, can be relied upon to support the 
related withdrawals.
Section 4.02. (a) Without limitation upon the provisions of Section 4.01 of this 
Agreement, the Borrower shall carry out a time-bound action plan acceptable to the 
Association for the strengthening of the financial management system for Parts B and D 
of the Project referred to in paragraph (a) of said Section 4.01 in order to enable 
the Borrower, not later than eighteen months after the Effective Date, or such later 
date as the Association shall agree, to prepare quarterly Project Management Reports, 
acceptable to the Association, each of which:
(i)
(A) sets forth actual sources and applications of funds for the 
Project, both cumulatively and for the 
period covered by said report, 
and projected sources and applications of funds for the Project for the 
six-month period following the period covered by said report, and (B) 
shows separately expenditures 
financed out of the proceeds of 
the Credit during the period covered by said report and expenditures 
proposed to be financed out of the proceeds of the Credit during 
the six-month period following the period 
covered by said report;
(ii)
(A) describes physical progress in Project implementation, both 
cumulatively and for the period covered by 
said report, and (B) 
explains variances between the actual and previously forecast implementation targets; 
and
(iii)
sets forth the status of procurement under the Project and 
expenditures under contracts financed out of the 
proceeds of the 
Credit, as at the end of the period covered by said report.
(b)
Upon the completion of the action plan referred to in paragraph (a) of 
this Section, the Borrower shall prepare, in accordance with guidelines acceptable to 
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the Association, and furnish to the Association not later than 45 days after the end 
of each calendar quarter a Project Management Report for such period.
ARTICLE V
Remedies of the Association
Section 5.01. Pursuant to Section 6.02 (l) of the General Conditions, the 
following additional events are specified:
(a)
an extraordinary situation shall have arisen which shall make it 
improbable that the Program or a significant part thereof will be carried out;
(b)
as a result of the Borrower laying down new Mines anywhere in its 
territory, the objectives of the Project have in the opinion of the Association, been 
undermined or jeopardized;
(c)
the ERP Fund Account has been used for purposes other than those stated 
in Section 3.03 (b) of this Agreement;
(d)
ERA shall have failed to perform any of its obligations under the Project 
Agreement;
(e)
as a result of events which have occurred after the date of the 
Development Credit Agreement, an extraordinary situation shall have arisen which shall 
make it improbable that ERA will be able to perform its obligations under the Project 
Agreement; or
(f)
Proclamation No. 80/1997, dated June 5, 1997, establishing ERA shall have 
been amended, suspended, abrogated, repealed or waived so as to affect materially and 
adversely the ability of ERA to perform any of its obligations.
Section 5.02. Pursuant to Section 7.01 (h) of the General Conditions, the 
following additional events are specified:
(a)
any events specified in paragraphs (b), (c), and (d) of Section 5.01 of 
this Agreement shall occur and shall continue for a period of 30 days after notice 
thereof shall have been given by the Association to the Borrower; and
(b)
the events specified in paragraphs (e) and (f) of Section 5.01 of this 
Agreement shall occur and shall continue for a period of 60 days after notice thereof 
shall have been given by the Association to the Borrower.
ARTICLE VI
Effective Date; Termination
Section 6.01. The following events are specified as additional conditions to the 
effectiveness of the Development Credit Agreement within the meaning of Section 12.01 
(b) of the General Conditions:
(a)
the Borrower has established a financial management and accounting system 
for Parts B and D of the Project, acceptable to the Association; 
(b)
the Borrower has adopted the PIP in form and substance satisfactory to 
the Association;
(c)
the Borrower has established the ERP Fund Account; and
(d)
the Borrower has established the ERPMU and the Tigray PMU, with the key 
staff as specified in paragraph 2 of Schedule 4 to this Agreement.
Section 6.02. The following is specified as an additional matter, within the 
meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion 
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or opinions to be furnished to the Association, namely, that the Project Agreement has 
been duly authorized or ratified by ERA, and is legally binding upon ERA in accordance 
with its terms.
Section 6.03. 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 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 Finance
P. O. Box 1905
Addis Ababa
Ethiopia
Cable address:
Telex:
Facsimile:
MINFIN
21147
251 1 551355
For the Association:
International Development Association
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Cable address:
Telex:
Facsimile:
INDEVAS
248423 (MCI) or
(202) 477-6391
Washington, D.C.
 64145 (MCI)
IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized 
representatives, have caused this Agreement to be signed in their respective names in 
the District of Columbia, United States of America, as of the day and year first above 
written.
FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA
By /s/ Berhane Gebre-Christos
Authorized Representative
INTERNATIONAL DEVELOPMENT ASSOCIATION
By /s/ Callisto Madavo
Regional Vice President
Africa
SCHEDULE 1
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Withdrawal of the Proceeds of the Credit
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)
Eligible Imports 
100% of foreign
required for Part A of
expenditures
the Project as specified
in the Annex to this
Schedule
         (a)
   31,400,000
         (b)
   35,300,000
         (c)
   19,600,000
(2)
Civil works for
   31,400,000
90% 
Part C of the Project
(3)
Goods, vehicles and
100% of foreign
equipment
expenditures, 100% of
local expenditures
(ex-factory costs) and
90% of local
expenditures
for other items 
procured locally
(a) for Part B of the Project
    1,900,000
(b) for Part C of the Project
   29,600,000
(c) for Part D of the Project
    1,900,000
(4)
Consultants’ services,
100%
de-mining services,
training, and audits
(a) for Part B of 
   21,700,000
the Project
(b) for Part C of 
    3,000,000
the Project
(c) for Part D of 
    1,300,000
the Project
(5)
Unallocated
    3,100,000
TOTAL
  180,200,000
2.
For the purposes of this Schedule:
(a)
the term “foreign expenditures” means expenditures in the currency of any 
country other than that of the Borrower for goods or services supplied from the 
territory of any country other than that of the Borrower; and
(b)
the term “local expenditures” means expenditures in the currency of the 
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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 under: (i) Category (1) (a) prior to the 
date of this Agreement, except that withdrawals, in an aggregate amount not exceeding 
the equivalent of SDR 31,400,000, may be made on account of payments made for 
expenditures before that date but after June 18, 2000; and (ii) Categories (2) and (3) 
(b) prior to the date of this Agreement, except that withdrawals in an aggregate 
amount not exceeding the equivalent of SDR 31,000,000 may be made on account of 
payments made for expenditures before that date, but after June 18, 2000;
(b)
expenditures under Category (1) for goods supplied under a contract which 
any international financing institution or agency other than the Association shall 
have financed or agreed to finance under another credit; 
(c)
except as the Association shall otherwise agree, expenditures under 
Category (1) in excess of an aggregate amount equivalent to 50% of the amount 
allocated to such Category for any class of eligible imports specified in the Annex to 
this Schedule;
(d)
expenditures under Category (1) for goods intended for military or 
paramilitary purposes, luxury consumption and used goods; 
(e)
expenditures under Categories (1) (b) and (1) (c) until the Borrower has 
furnished to the Association the information referred to in paragraph 7 of Schedule 4 
to this Agreement, in form and substance satisfactory to the Association; and
(f)
expenditures under Categories (2), (3) (b) and (4) (b) unless the 
Borrower and ERA have executed the Subsidiary Financing Agreement referred to in 
Section 3.01 (d) of this Agreement and the Association has received a legal opinion 
that it is binding on the Borrower and ERA in accordance with its terms.
4.
The Association may require withdrawals from the Credit Account to be made on 
the basis of statements of expenditure for expenditures for goods and works under 
contracts costing less than $200,000, services for consultant firms under contracts 
costing less than $100,000 equivalent, and services for individual consultants under 
contracts costing less than $50,000 equivalent, all under such terms and conditions as 
the Association shall specify by notice to the Borrower.
ANNEX TO SCHEDULE 1
Classes of Eligible Imports to be Financed Under the Project
1.
Agricultural equipment and inputs.
2.
Petroleum and fuel products.
3.
Construction materials.
4.
Transport vehicles and spare parts.
5.
Livestock, animal products and veterinary supplies.
6.
School supplies and equipment.
7.
Medical supplies and equipment.
8.
Construction equipment, industrial machinery and  spare parts.
9.
Electrical equipment, machinery, materials and parts.
10.
Industrial raw materials and chemicals.
SCHEDULE 2
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Description of the Project
The objectives of the Project are to: (i) assist the people affected by the 
Emergency rebuild their lives and resume economic activities; (ii) reconstruct and 
rehabilitate physical and social infrastructure; and (iii) support macroeconomic 
stability.
The Project consists of the following parts, subject to such modifications 
thereof as the Borrower and the Association may agree upon from time to time to 
achieve such objectives:
Part A:
Household Rehabilitation.
The importation of goods specified in the Annex to Schedule 1 to this Agreement 
to support income generation assistance, community infrastructure and housing 
rehabilitation and reconstruction for about 182,000 Eligible Beneficiaries. 
Part B: 
De-mining Activities
Carrying out of de-mining activities, including, acquisition of equipment and 
materials, training of personnel in mine clearing, clearing of landmines and their 
disposal, undertaking a surveying and a quality assurance program, and provision of 
technical advisory services.
Part C:
Road Rehabilitation
1.
Rehabilitation and improvement of the following primary and secondary roads: (a) 
about 668 kilometers of roads affected by the Emergency; (b) about 91 kilometers of 
roads which have deteriorated as a result of the increased traffic in the northern 
Regions of the Borrower’s territory; (c) about 200 kilometers of roads leading to 
persistent drought affected areas; and (d) about 340 kilometers of other road sections 
affected by the Emergency.
2.
Improvement of about 500 kilometers of regional rural roads in Regions impacted 
by increased movement as a result of the Emergency.
3.
Reconstruction/installation of selected bridges, including the Abay bridge, the 
bridge on the Dire Dawa/Dewelle and various roads.
4.
Acquisition of road maintenance equipment and spare parts to strengthen 
regravelling, resealing and routine maintenance units in the following Districts, 
Adigrat, Gondar, Debremarkos, Combolcha and Dire Dawa.
5.
Acquisition of about 1,970 meters of steel bridges (Bailey bridges) to replace 
bridges damaged by the Emergency.
6.
Carrying out pre-construction investigations and construction supervision, 
including road condition surveys to confirm the scope of the improvements required, 
through the provision of technical advisory services.
Part D:
Institutional Strengthening
Strengthening the capacity of the Borrower’s institutions at the federal, 
regional and local levels to carry out and support activities for Part A and B of the 
Project through the provision of training and technical advisory services, and the 
acquisition of vehicles and equipment, and the carrying out of audits.
* * *
The Project is expected to be completed by June 30, 2003.
SCHEDULE 3
Procurement and Consultants’ Services
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Section I:
Procurement of Good and Works
Part A:
General
1.
Goods and works shall be procured in accordance with (a) the provisions of 
Section I of the “Guidelines for Procurement under IBRD Loans and IDA Credits” 
published by the Bank in January 1995 and revised in January and August 1996, 
September 1997 and January 1999 (the Guidelines) and (b) the provisions of the 
following Parts of this Section I.
2.
In paragraphs 1.6 and 1.8 of the Guidelines, the references to “Bank member 
countries” and “member country” shall be deemed to be references, respectively, to 
“Participating Countries” and “Participating Country”.
Part B:
International Competitive Bidding
1.
Except as otherwise provided in Part C of this Section, goods and works shall be 
procured under contracts awarded in accordance with the provisions of Section II of 
the Guidelines and paragraph 5 of Appendix 1 thereto.
2.
The following provisions shall apply to goods and works to be procured under 
contracts awarded in accordance with the provisions of paragraph 1 of this Part B.
(a)
Grouping of contracts
To the extent practicable, contracts for goods shall be grouped in bid packages 
estimated to cost $100,000 equivalent or more each.
(b)
Preference for domestically manufactured goods
The provisions of paragraphs 2.54 and 2.55 of the Guidelines and Appendix 2 
thereto shall apply to goods manufactured in the territory of the Borrower. 
Part C:
Other Procurement Procedures
1.
National Competitive Bidding
Works and goods estimated to cost less than $500,000 and $200,000 equivalent 
respectively per contract, up to an aggregate amount not to exceed $20,000,000 and 
$5,000,000 equivalent respectively, may 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 $30,000 equivalent per contract, up to an 
aggregate amount not to exceed $500,000 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.
3.
Force Account
Works which meet the requirements of paragraph 3.8 of the Guidelines, and 
costing $4,000,000 equivalent or less in the aggregate, may, with the Association's 
prior agreement, be carried out by force account in accordance with the provisions of 
said paragraph of the Guidelines.
4.
Procurement from UN Agencies
Vehicles and office equipment may be procured from IAPSO in accordance with the 
provisions of paragraph 3.9 of the Guidelines.
5.
Commonly Traded Commodities
Commonly traded commodities under Category (1) in the table in Schedule 1 to 
this Agreement may be procured through organized international commodity markets or 
other channels of competitive procurement acceptable to the Association, in accordance 
Page  13
with the provisions of paragraph 2.65 of the Guidelines.
6.
Public Sector Imports
Goods imported by the public sector under Category (1) in the table in Schedule 
1 to this Agreement estimated to cost less than $750,000 equivalent per contract, may 
be procured under contracts awarded on the basis of international shopping procedures 
in accordance with paragraphs 3.5 and 3.6 of the Guidelines.
7.
Private Sector Imports
Goods imported by the private sector under Category (1) in the table in Schedule 
1 to this Agreement estimated to cost less than $3,000,000 equivalent per contract may 
be procured in accordance with established commercial practices satisfactory to the 
Borrower and the Association.
Part D:
Review by the Association of Procurement Decisions
1.
Procurement Planning
Prior to the issuance of any invitations to bid for contracts, the proposed 
procurement plan for the Project shall be furnished to the Association for its review 
and approval, in accordance with the provisions of paragraph 1 of Appendix 1 to the 
Guidelines. Procurement of all goods and works shall be undertaken in accordance with 
such procurement plan as shall have been approved by the Association, and with the 
provisions of said paragraph 1.
2.
Prior Review
(a)
With respect to each contract for goods and works estimated to cost the 
equivalent of $200,000 or more, the procedures set forth in paragraphs 2 and 3 of 
Appendix 1 to the Guidelines shall apply.
(b)
With respect to each contract for imports under Category (1) in the table 
in paragraph 1 of Schedule 1 to this Agreement: (i) procured by the public sector and 
estimated to cost $750,000 or more; and (ii) procured by the private sector and 
estimated to cost $3,000,000 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
1.
Consultants’ services shall be procured in accordance with, (a) the provisions 
of the Introduction and Section IV of the “Guidelines:  Selection and Employment of 
Consultants by World Bank Borrowers” published by the Association in January 1997 and 
revised in September 1997 and January 1999, subject to the modifications thereto set 
forth in paragraph 2 of this Part A (the Consultant Guidelines), and (b) the 
provisions of the following Parts of this Section II.
2.
In paragraph 1.10 of the Consultant Guidelines, the references to “Bank member 
countries” and “member country” shall be deemed to be references, respectively, to 
“Participating Countries” and “Participating Country”.
Part B:
Quality- and Cost-Based Selection
1.
Except as otherwise provided in Part C of this Section, consultants’ services 
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.
Page  14
2.
The following provisions shall apply to consultants’ services to be procured 
under contracts awarded in accordance with the provisions of the preceding paragraph.  
The short list of consultants estimated to cost less than $100,000 equivalent per 
contract, may comprise entirely national consultants in accordance with the provisions 
of paragraph 2.7 of the Consultant Guidelines.
Part C:
Other Procedures for the Selection of Consultants
1.
Selection Based on Consultants’ Qualifications
Services estimated to cost less than $100,000 equivalent per contract may be 
procured under contracts awarded in accordance with the provisions of paragraphs 3.1 
and 3.7 of the Consultant Guidelines.
2.
Individual Consultants
Services for tasks that meet the requirements set forth in paragraph 5.1 of the 
Consultant Guidelines shall be procured under contracts awarded to individual 
consultants in accordance with the provisions of paragraphs 5.1 through 5.3 of the 
Consultant Guidelines.
Part D:
Review by the Association 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 
Association for its review and approval, in accordance with the provisions of 
paragraph 1 of Appendix 1 to the Consultant Guidelines.  Selection of all consultants’ 
services shall be undertaken in accordance with such selection plan as shall have been 
approved by the Association, 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.
(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 Association for its prior review and approval.  The contract shall be 
awarded only after the 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 4
Implementation Program
Project Coordination
1.
The Program and Project shall be managed, coordinated and carried out by the 
ERPMU, established and maintained within MEDaC, which shall report to the Minister 
responsible for MEDaC.
2.
The Borrower shall establish and maintain until completion of the Program, PMUs 
in the Tigray and Afar Regions, with terms of reference and key staff (PMU manager, 
procurement specialist, financial manager and sector specialists) satisfactory to the 
Association. The PMU shall be responsible for overall management and monitoring of the 
Program in the Region concerned and shall report to the President of the Regional 
Page  15
Council concerned.
Part A of the Project
3.
In the Tigray Region each of the seven participating Woredas shall maintain 
until completion of the Project Rehabilitation Task Forces, comprising the Woreda 
Chairman, relevant Borrower officials and women and youth associations. Each 
Participating Woreda, shall establish an ERP Unit, with a Woreda Program coordinator, 
at least two field teams to provide training and support to the Tabia councils and an 
accountant to supervise disbursements and keep financial records.
4.
The Afar Regional Administration shall establish a coordination committee to 
guide and monitor the Program in the seven participating Woredas. The Regional ESRDF 
office shall serve as the PMU for the implementation of Part A of the Project.
5.
The Borrower shall establish PMUs in other Regions as required to implement Part 
A of the Project. Such PMUs shall report to the Borrower’s Disaster Prevention and 
Preparedness Commission.
6.
The Borrower shall carry out Parts A, B, and D of the Project in accordance with 
the PIP, and shall not amend or waive any provision thereof which in the opinion of 
the association shall materially or adversely impact the implementation of the 
project. The process of identification and reconfirmation of the Eligible 
Beneficiaries, verification of the benefit packages, flow of funds to the Eligible 
Beneficiaries and verification of the use of  the funds for the purposes intended 
shall be in accordance with the provisions of the PIP.
7.
(a)
The Borrower shall within six months of the Effectiveness Date and 
semiannually thereafter, furnish to the Association: (i) a list of Eligible 
Beneficiaries, identifying the amount of the funds for each and the agreed goods and 
services to be acquired by said Eligible Beneficiary; (ii) verification that a sample 
of the Eligible Beneficiaries as agreed between the Borrower and the Association, have 
received their payments in accordance with the certified list; and (iii) verification 
that a sample as agreed between the Borrower and the Association of the Eligible 
Beneficiaries have acquired the goods and services intended.
(b)
The Borrower shall: (i) not later than the first quarter of Project 
implementation, and quarterly thereafter, carry out a review of activities under Part 
A of the Project; (ii) furnish the information from such review to the Association; 
and (iii) following such review act promptly to take all measures identified by such 
review.
Part B of Project
8
The MEDaC shall supervise the implementation of the de-mining under Part B of 
the Project and shall be responsible for ensuring that the activities are carried out 
in accordance with international standards for such activities, based on independent 
monitoring and verification by a quality assurance unit within the ERPMU secretariat, 
which includes at least one international expert.
9.
The Borrower shall arrange for annual reviews by specialists, with experience 
and qualifications acceptable to the Association, to advise and guide the ERPMU in the 
implementation of de-mining activities under Part B of the Project. 
10.
(a)
For purposes of carrying out Part B of the Project, the Borrower shall:
(i)
maintain with qualified staff and adequate resources the ERPMU, 
which shall be responsible for (A) setting 
the standards for Mine 
clearing works; (B) reviewing the standard operating procedures and safety 
regulations of Mine clearing agencies; and (C) conducting quality 
assurance tests to ensure compliance of 
Mine clearing agencies 
with accepted international standards for humanitarian mine clearance and United 
Nations Guidelines; and
(ii)
ensure that all Mine clearing activities are carried out and all 
Mines cleared under the Project are 
promptly destroyed in 
Page  16
accordance with appropriate safety standards and guidelines.
Monitoring and Evaluation
11.
The Borrower shall: 
(a)
maintain policies and procedures adequate to enable it to monitor and 
evaluate on an ongoing basis, in accordance with indicators specified in Schedule 6 to 
this Agreement, the carrying out of the Project and the achievement of the objectives 
thereof;
(b)
prepare, under terms of reference satisfactory to the Association, and 
furnish to the Association, on or about February 1 in each year, a report integrating 
the results of the monitoring and evaluation activities performed pursuant to 
paragraph (a) of this Section, on the progress achieved in the carrying out of the 
Project during the period preceding the date of said report and setting out the 
measures recommended to ensure the efficient carrying out of the Project and the 
achievement of the objectives thereof during the period following such date; and
(c)
review with the Association, by March 31 in each year, or such later date 
as the Association shall request, the report referred to in paragraph (b) of this 
Section, and, thereafter, take all measures required to ensure the efficient 
completion of the Project and the achievement of the objectives thereof, based on the 
conclusions and recommendations of the said report and the Association’s views on the 
matter.
SCHEDULE 5
Special Accounts
1.
For the purposes of this Schedule:
(a)
the term “eligible Categories” means Categories, (3) (a), (3) (c), (4) 
(a) and (4) (c) set forth in the table in paragraph 1 of Schedule 1 to this Agreement 
in respect of Parts B and D of the Project and Categories (2), (3) (b) and (4) (b) set 
forth in said table in respect of Part C of the Project;
(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 equivalent to $1,000,000 
in respect of the Special Account for Parts B and D of the Project and an amount 
equivalent to $2,000,000 in respect of the Special Account for Part C thereof, to be 
withdrawn from the Credit Account and deposited into the Special Accounts pursuant to 
paragraph 3 (a) of this Schedule, provided, however, that unless the Association shall 
otherwise agree, the Authorized Allocation shall be limited to an amount equivalent to 
$500,000 in respect of the Special Account for Parts B and D of the Project and an 
amount equivalent to $1,000,000 in respect of the Special Account for Part C thereof, 
until: (i) in respect of the Special Account for Parts B and D of the Project, the 
aggregate amount of withdrawals from the Credit Account plus the total amount of all 
outstanding special commitments entered into by the Association pursuant to Section 
5.02 of the General Conditions for Parts B and D of Project shall be equal to or 
exceed the equivalent of SDR 2,500,000, and (ii) in respect of the Special Account for 
Part C of the Project, the aggregate amount of withdrawals from the Credit Account 
plus the total amount of all outstanding special commitments entered into by the 
Association pursuant to Section 5.02 of the General Conditions for Part C of the 
Project shall be equal to or exceed the equivalent of SDR 5,000,000.
2.
Payments out of the respective 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 
respective Special Account has been duly opened, withdrawals of the Authorized 
Allocation and subsequent withdrawals to replenish the respective Special Account 
Page  17
shall be made as follows:
(a)
For withdrawals of the Authorized Allocation, the Borrower shall furnish 
to the Association a request or requests for deposit into the respective 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 Association 
shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into 
the respective Special Account such amount or amounts as the Borrower shall have 
requested.
(b)
(i)
For replenishment of the respective Special Account, the Borrower 
shall furnish to the Association requests 
for deposits into the 
respective Special Account at such intervals as the Association shall specify.
(ii)
Prior to or at the time of each such request, the Borrower shall 
furnish to the Association the documents 
and other evidence 
required pursuant to 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 Association shall, on behalf of 
the Borrower, 
withdraw from the Credit Account and deposit into the respective 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 
respective Special Account for eligible expenditures. All such deposits shall be 
withdrawn by the Association from the Credit 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 respective Special Account, the 
Borrower shall, at such time as the Association shall reasonably request, furnish to 
the Association such documents and other evidence showing that such payment was made 
exclusively for eligible expenditures.
5.
Notwithstanding the provisions of paragraph 3 of this Schedule, the Association 
shall not be required to make further deposits into any Special Account:
(a)
if, at any time, 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;
(b)
if the Borrower shall have failed to furnish to the Association, within 
the period of time specified in Section 4.01 (b) (ii) of this Agreement, any of the 
audit reports required to be furnished to the Association pursuant to said Section in 
respect of the audit of the records and accounts for the Special Accounts;
(c)
if, at any time, the Association shall have notified the Borrower of its 
intention to suspend in whole or in part the right of the Borrower to make withdrawals 
from the Credit Account pursuant to the provisions of Section 6.02 of the General 
Conditions; or
(d)
once the total unwithdrawn amount of the Credit allocated to the eligible 
Categories for the respective Special Account minus the total amount of all 
outstanding special commitments entered into by the Association 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 Credit Account of the remaining unwithdrawn amount of 
the Credit allocated to the eligible Categories 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 respective Special Account as of the date 
of such notice will be utilized in making payments for eligible expenditures.
6.
(a)
If the Association shall have determined at any time that any payment out 
of any 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 Association, the Borrower shall, promptly upon notice from the 
Page  18
Association: (A) provide such additional evidence as the Association may request; or 
(B) deposit into the respective 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. Unless the Association shall 
otherwise agree, no further deposit by the Association into any Special Account shall 
be made until the Borrower has provided such evidence or made such deposit or refund, 
as the case may be.
(b)
If the Association shall have determined at any time that any amount 
outstanding in any 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.
(c)
The Borrower may, upon notice to the Association, refund to the 
Association all or any portion of the funds on deposit in the Special Accounts.
(d)
Refunds to the Association made pursuant to paragraphs 6 (a), (b) and (c) 
of this Schedule shall be credited to the Credit Account for subsequent withdrawal or 
for cancellation in accordance with the relevant provisions of this Agreement, 
including the General Conditions.
SCHEDULE 6
Performance Indicators
Rehabilitation
1.
At least 60% of the finances needed by the estimated 360,000 Eligible 
Beneficiaries within the war affected area to return to their homes and to restart 
farming and other income generating activities transferred to individual households. 
2.
At least 60% of the finances needed by the estimated 110,000 deportees/returnees 
and 36,000 families of deceased civilians to restart/initiate income generating 
activities transferred to individual households.
De-mining
De-mining carried out in the war affected area to allow at least 85% of the 
Eligible Beneficiaries to return to their homes, farms and pastures.
Reconstruction
1.
Rehabilitation/improvement of at least 500 km of primary and secondary roads.
2.
Improvement of at least 500 km of regional rural roads in the war-affected 
areas. 
3.
Procurement of at least 1,500 meters of Bailey bridges to replace bridges 
damaged during the conflict and to replenish ERA’s emergency stocks.