OFFICIAL LOAN NUMBER 2360 PH

DCUNIE NTS

Loan Agreement(Central Visayas Regional Project)

between

REPUBLIC OF THE PHILIPPINES

and

INTERNATIONAL BANK FOR RECONSTRUCTIONAND DEVELOPMENT

Dated , 1984

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LOAN NUMBER 2360 PH

LOAN AGREEMENT

AGREEMENT, dated ,1984, between

REPUBLIC OF PHILIPPINES (herein er called the Borrower) andINTERNATIONAL BANK FOR RECONSTR TION AND DEVELOPMENT (herein-

after called the Bank).

ARTICLE I

General Conditions; Definitions

Section 1.01. The parties to this Agreement accept all theprovisions of the General Conditions Applicable to Loan andGuarantee Agreements of the Bank, dated October 27, 1980, withthe same force and effect as if they were fully set forth herein(said General Conditions Applicable to Loan and Guarantee

Agreements of the Bank being hereinafter called the General

Conditions).

Section 1.02. Wherever used in this Agreement, unless thecontext otherwise requires, the several terms defined in theGeneral Conditions have the respective meanings therein set forth

and the following additional terms have the following meanings:

(a) "Central Visayas" means Region VII of the Republic ofthe Philippines consisting of the Provinces of Bohol, Cebu,Negros Oriental and Siquijor, and other islands as establishedand existing under Presidential Decree No. 1;

(b) "Regional Projects Office" means the Central VisayasRegional Projects Office as established and existing under

Executive Order No. 907 dated September 10, 1983;

(c) "Project Preparation Advances" means:

(i) the project preparation advance granted by theBank to the Borrower pursuant to an exchange ofletters dated March 24, 1981 and April 24, 1981between the Borrower and the Bank, as amended; and

(ii) the project preparation advance granted by theBank to the Borrower pursuant to an exchange ofletters dated August 5, 1982 and December 30, 1982between the Borrower and the Bank, as amended: and

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(d) "Special Account" means the account to be opened andthereafter maintained pursuant to Section 2.02 (b) of this

Agreement.

ARTICLE II

The Loan

Section 2.01. The Bank agrees to lend to the Borrower, onthe terms and conditions set forth or referred to in this Agree-ment, an amount in various currencies equivalent to twenty-five

million six hundred thousand dollars ($25,600,000).

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 (a) The amount of the Loan may be withdrawn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, as such Schedule may be amended

from time to time by agreement between the Porrower and the Bank,

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 shall, for the purposes of the Project,

open and thereafter maintain in dollars a special account in the

Central Bank of the Philippines on terms and conditions satisfac-

tory to the Bank. Deposits into, and payments out of, the Special

Account shall be made in accordance with the provisions of Sched-

ule 6 to this Agreement.

(c) Promptly after the Effective DaL, , the Bank shall, on

behalf of the Borrower, withdraw from the Loan Account and pay to

itself the amounts required to repay the principal amounts of the

Project Preparation Advances withdrawn and outstanding as of such

date and to pay all unpaid charges thereon. The unwithdrawn

balance of the authorized amounts of the Project Preparation

Advances shall thereupon be cancelled.

Section 2.03. Except as the Bank shall otherwise agree,

procurement of the goods and civil works required for the Project

and to be financed out of the proceeds of the Loan shall be

governed by the provisions of Schedule 4 to this Agreement.

Section 2.04. The Closing Date shall be June 30, 1990 or

such later date as the Bank shall establish. The Bank shall

promptly notify the Borrower of such later date.

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Section 2.05. (a) The Borrower shall pay to the Bank a feeequivalent to sixty-three thousand eight hundred forty dollars($63,840).

(b) On or promptly after the Effective Date, the Bankshall, on behalf of the Borrower, withdraw from the Loan Accountand pay to itself the amount of the said fee in such currency orcurrencies as the Bank shall determine.

Section 2.06. The Borrower shall pay to the Bank a commit-ment charge at the rate of three-fourths of one per cent (3/4 of1%) per annum on the principal amount of the Loan not withdrawnfrom time to time.

Section 2.07. (a) The Borrower shall pay interest on theprincipal amount of the Loan withdrawn and outstanding from timeto time at a rate per annum for each Interest Period equal to onehalf percent per annum above the Cost of Qualified Borrowings forthe last Semester ending prior to the commencement of suchInterest Period.

(b) As soon as practicable after the end of each Semester,the Bank shall notify the Borrower of the Cost of QualifiedBorrowings for such Semester.

(c) For purposes of thi6 Section:

(i) "Interest Period" means the six-month periodcommencing on each date specified in Section 2.08of this Agreement, including the Interest Periodin which this Agreement is signed.

(ii) "Cost" of Qualified Borrowings means the cost,expressed as a percentage per annum, as reasonablydetermined by the Bank, provided that the amountof $8,520.5 million referred to in (iii) (B)hereunder shall be reckoned at a cost of 10.93%per annum.

(iii) "Qualified Borrowings" means: (A) outstandingborrowings of the Bank drawn down after June 30,1982; and (B) until July 1, 1985, the amount of$8,520.5 million (representing borrowings of the

Bank between July 1, 1981 and June 30, 1982) less

any part thereof repaid earlier than July 1, 1985.

(iv) "Semester" means the first six months or the

second six months of a calendar year.

Section 2.08. Interest and other charges shall be payable

semiannually on February 1 and August 1 in each year.

Section 2.09. 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. The Borrower shall carry out Part B (4) of the

Project through its National Economic and Development Authority,

and the remainder of the Project through the Regional Projects

Office with due diligence and efficiency and in conformity with

appropriate administrative, financial and agricultural practices,

and shall provide, promptly as needed, the funds, facilities,

services and other resources required for the purpose.

Section 3.02. In order to assist the Borrower in carrying

out the Project, the Borrower shall employ or cause to be

employed consultants whose qualifications, experience and terms

and conditions of employment shall be satisfactory to the Bank,

such consultants to be selected in accordance with principles and

procedures satisfactory to the Bank on the basis of the "Guide-

lines for the Use of Consultants by World Bank Borrowers and by

the World Bank as Executing Agency" published by the Bank in

August 1981.

Section 3.03. (a) The Borrower undertakes to insure, or make

adequate provision for the insurance of, the imported goods to be

financed out of the proceeds of the Loan against hazards incident

to the acquisition, transportation and delivery thereof to the

place of use or installation, and for such insurance any indem-

nity shall be payable in a currency freely usable by the Borrower

to replace or repair such goods.

(b) The Borrower shall cause all goods and services

financed out of the proceeds of the Loan to be used exclusively

for the purposes of the Project.

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Section 3.04. (a) The Borrower shall furnish to the Bank,promptly upon their preparation, the plans, specifications,reports, training programs, contract documents and constructionand procurement schedules for the Project, and any materialmodifications thereof or additions thereto, in such detail as theBank shall reasonably request.

(b) The Borrower shall: (i) maintain records and proceduresadequate to record and monitor the progress of the Project (in-cluding its cost and the benefits to be derived from it), toidentify the goods and services financed out of the proceeds ofthe Loan, and to disclose their use in the Project; (ii) enablethe Bank's representatives to visit the facilities and construc-tion sites included in the Project and to examine the goodsfinanced out of the proceeds of the Loan and any relevant recordsand documents; and (iii) furnish to the Bank at regular intervalsall such information as the Bank shall reasonably request con-cerning the Project, its cost and, where appropriate, the bene-fits to be derived from it, the expenditure of the proceeds ofthe Loan and the goods and services financed out of such pro-ceeds.

(c) Upon the award by the Borrower of any contract forgoods, works or services to be financed out of the proceeds ofthe Loan, the Bank may publish a description thereof, the nameand nationality of the party to whom the contract was awarded andthe contract price.

(d) Promptly after completion of the Project, but in anyevent not later than six months after the Closing Date or suchlater date as may be agreed for this purpose between the Borrowerand the Bank, the Borrower shall prepare and furnish to the Banka report, of such scope and in such detail as the Bank shallreasonably request, on the execution and initial operation of theProject, its cost and the benefits derived and to be derived fromit, the performance by the Borrower and the Bank of their respec-tive obligations under the Loan Agreement and the accomplishmentof the purposes of the Loan.

Section 3.05. The Borrower shall take or cause to be takenall such action as shall be necessary to acquire as and whenneeded all such land and rights in respect of land as shall berequired for carrying out the Project.

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Section 3.06. The Borrower shall cause the action program

outlined in Schedule 5 to this Agreement to be completed by the

dates set forth therein.

Section 3.07. The Borrower shall cause the Regional Projects

Office to be maintained, with powers, resources and staff satis-

factory to the Bank.

ARTICLE IV

Other Covenants

Section 4.01. (a) It is the policy of the Bank, in making

loans to, or with the guarantee of, its members not to seek, in

normal circumstances, special security from the member concerned

but to ensure that no other external debt shall have priority

over its loans in the allocation, realization or distribution of

foreign exchange held under the control or for the benefit of

such member. To that end, if any lien shall be created on any

public assets (as hereinafter defined), as security for any

external debt, which will or might result in a priority for the

benefit of the creditor of such external debt in the allocation,

realization or distribution of foreign exchange, such lien shall,

unless the Bank shall otherwise agree, ipso facto and at no cost

to the Bank, equally and ratably secure the principal of, and

interest and other charges on, the Loan, and the Borrower, in

creating or permitting the creation of such lien, shall make

express provision to that effect; provided, however, that, if for

any constitutional or other legal reason such provision cannot be

made with respect to any lien created on assets of any of its

political or administrative subdivisions, the Borrower shall

promptly and at no cost to the Bank secure the principal of, and

interest and other charges on, the Loan by an equivalent lien on

other public assets satisfactory to the Bank.

(b) The for-going undertaking shall not apply to: (i) any

lien created on property, at the time of purchase thereof, solely

as security for payment of the purchase price of such property or

as security for the payment of debt incurred for the purpose of

financing the purchase of such property; and (ii) any lien aris-

ing in the ordinary course of banking transactions and securing a

debt maturing not more than one year after its date.

(c) As used in this Section, the term "public assets" means

assets of the Borrower, of any political or administrative sub-

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division thereof and of any entity owned or controlled by, oroperating for the account or benefit of, the Borrower or any suchsubdivision, including gold and foreign exchange assets held byany institution performing the functions of a central bank orexchange stabilization fund, or similar functions, for the Bor-rower.

Section 4.02. The Borrower shall, with respect to the Proj-ect, cause the Regional Projects Office to:

(a) maintain records adequate to reflect in accordancewith consistently maintained appropriate accounting practices theoperations, financial condition, resources and expenditures ofthe Regional Projects Jifice, the Ministries or Agencies of theBorrower responsible for carrying out the Project or any partthereof, and the Central Visayas Regional Office of suchMinistries or Agencies, including, without limitation to theforegoing, separate accounts reflecting all expenditures onaccount of which withdrawals are requested from the Loan Accounton the basis of statements of expenditure;

(b) retain, until one year after the Closing Date, allrecords (contracts, orders, invoices, bills, receipts and otherdocuments) evidencing the expenditures on account of which with-drawals are requested from the Loan Account on the basis ofstatements of expenditure, and to enable the Bank's representa-tives to examine such records;

(c) have its accounts and financial statements (state-ments of income and expenses and related statements) for eachfiscal year audited, in accordance with appropriate auditingprinciples consistently applied, by independent auditors accept-able to the Bank;

(d) furnish to the Bank as soon as available, but in anycase not later than six months after the end of each such year,(i) certified copies of its financial statements for such year asso audited, and (ii) the report of such audit by said auditors,of such scope and in such detail as the Bank shall have reason-ably requested, including, without limitation to the foregoing, aseparate opinion by said auditors: (A) on the separate accountsreferred to in paragraph (a) of this Section; and (B) in respectof the expendit-ures and records referred to in paragraph (b) ofthis Section, as to whether the proceeds of the Loan made avail-able to it and withdrawn from the Loan Account on the basis of

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statements of expenditure have been used for the purpose forwhich they were provided; and

(e) furnish to the Bank such other information concern-

ing said accounts, financial statements, records and expendi-tures, as well as the audit thereof, as the Bank shall from timeto time reasonably request.

Section 4.03. The Borrower shall cause the facilities con-structed, and the goods provided under the Project to be operated

and maintained in accordance with appropriate administrative,fianancial and agricultural practices and shall provide, promptly

as needed, the funds, facilities, services and other resources

required for the purpose.

ARTICLE V

Effective Date; Termination

Section 5.01. The following events are specified as addi-tional conditions to the effectiveness of the Loan Agreement

within the meaning of Section 12.01 (c) of the General Condi-tions:

(a) a Project Manager with qualifications and experiencesatisfactory to the Bank, shall be in place; and

(b) the Special Account has seen opened in accordance with

the provisions of Section 2.02 (b) of this Agreement.

Section 5.02. The date !F, /fey, is hereby speci-

fied for the purposes of Section 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.

Se tion 6.02. The following addresses are specified for thepurposes of Section 11.01 of the General Conditions:

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For the Borrower:

Minister of FinanceMinistry of FinanceManilaPhilippines

Cable address: Telex:

MINFIN 7550 CBP-PHManila 40268 CB-CONF

For the Bank:

International Bank forReconstruction and Development

1818 H Street, N.W.Washington, D.C. 20433United States of America

Cable address: Telex:

INTBAFRAD 440098 (ITT)Washington, D.C. 248423 (RCA) or

64145 (WUI)

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IN WITNESS WHEREOF, the parties hereto, acting through their

representatives thereunto duly authorized, 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 THE PHILIPPINES

ByAuthorized Representative

INTERNATIONAL BANK FORRECONSTRUCTION AND DEVELOPMENT

ByRegional Vice President

East Asia and Pacific

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SCEDULE 1

Withdrawal of the Proceeds of the Loan

1. The table below sets forth the Categories of items to befinanced out of the proceeds of the Loan, the allocation of theamounts of the Loan to each Category and the percentage ofexpenditures for items so to be financed in each Category:

Amount of theLoan Allocated % of(Expressed in Expenditures

Category Dollar Equivalent) to be Financed

(1) Civil works 7,500,000 80%

(2) Equipment, 6s500,000 100% of foreignvehicles, inputs, expenditures,materials and 100% of locallivestock expenditures

(ex-factory cost)and 70% of local

expenditures forother items pro-cured locally

(3) Consultants' ser- 6,900,000 100% of foreignvices and overseas expenditures andtraining 80% of local

expenditures

(4) Initial deposit 2,000,000 Amount due underin Special Account Section 2.02 (b)to prefinance items of this Agreementunder Categories(1), (2) and (3)

(5) Refunding of 1,100,000 Amount due underProject Prepara- Section 2.02 (c)tion Advances of this Agreement

(6) Fee 63,840 Amount due underSection 2.05 ofthis Agreement

(7) Unallocated 1,536,160

TOTAL 25,600,000

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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. The disbursement percentages have been calculated in com-

pliance with the policy of the Bank that the proceeds of the Loan

shall not be disbursed on account of payments for taxes levied

by, or in the territory of, the Borrower on goods or services, or

on the importation, manufacture, procurement or supply thereof;

on this basis, if the amount of any such taxes levied on or in

respect of items in any Category decreases or increases, the Bank

may, by notice to the Borrower, increase or decrease the dis-

bursement percentage then applicable to such Category as required

to be consistent with the aforementioned policy of the Bank.

4. Notwithstanding the provisions of paragraph 1 above, no

withdrawals shall be made in respect of payments made for

expenditures prior to the date of this Agreement.

5. Notwithstanding the allocation of an amount of the Loan

or the disbursement percentages set forth in the table in para-

graph 1 above, if the Bank has reasonably estimated that the

amount of the Loan then allocated to any Category will be

insufficient to finance the agreed percentage of all expenditures

in that Category, the Bank may, by notice to the Borrower: (i)

reallocate to such Category, to the extent required to meet the

estimated shortfall, proceeds of the Loan which are then

allocated to another Category and which in the opinion of the

Bank are not needed to meet other expenditures; and (ii) if such

reallocation cannot fully meet the estimated shortfall, reduce

the disbursement percentage then applicable to such expenditures

in order that further withdrawals under such Category may

continue until all expenditures thereunder shall have been made.

6. If the Bank shall have reasonably determined that the pro-

curement of any item in any Category is inconsistent with the

procedures set forth or referred to in this Agreement, no

expenditure for such item shall be financed out of the proceeds

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of the Loan, and the Bank may, without in any way restricting orlimiting any other right, power or remedy of the Bank under theLoan Agreement, by notice to the Borrower, cancel such amount ofthe Loan as, in the Bank's reasonable opinion, represents theamount of such expenditures which would otherwise have beeneligible for financing out of the proceeds of the Loan.

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SCHEDULE 2

Description of the Project

The Project is part of the Borrower's program to develop the

Central Visayas, and consists of the following Parts:

Part A: Watershed Management

(1) Upland Agriculture

(a) introduction of farm systems to control soil erosion,

increase soil water retention, improve soil fertility, intensify

land use, and increase crop and livestock production; and

(b) establishment of nurseries.

(2) Social Forestry

(a) forest stand improvement; and

(b) reforestation.

(3) Nearshore Fisheries

(a) establishment of artificial reefs;

(b) replanting of mangroves; and

(c) establishment of coral reef sanctuaries.

(4) Infrastructure

(a) construction of barangay roads;

(b) improvement of existing roads; and

(c) grading of trails.

Part B: Support Services

(1) Institutional Strengthening

(a) strengthening of the Central Visayas Regional Office of

the Ministry of Agriculture, the Central Visayas Regional Office

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of the Bureau of Forest Development, the Central Visayas RegionalOffice of the Bureau of Fisheries and Aquatic Resources, theRegional Projects Office, and the Provincial Eagineering Offices;and

(b) establishment of management units.

(2) Training and Technical Assistance

(a) improvement capabilities of staff, farmers and fisher-men; and

(b) strengthening of training facilities.

(3) Research

Research in support of activities related to Part A herein-above.

(4) Project Preparation

Preparation of Regional projects.

The Project is expected to be completed by June 30, 1989.

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SCHEDULE 3

Amortization Schedule

Payment of Principal

Date Payment Due (expressed in dollars)*

On each February 1 and August 1

beginning August 1, 1989through August 1, 2003 855,000

On February 1, 2004 805,000

* The figures in this column represent dollar equivalents

determined as of the respective dates of withdrawal; seeGeneral Conditions, Section 3.04.

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Premiums on Prepayment

The following percentages are specified as the premiumspayable on repayment in advance of maturity of any portion of theprincipal amount of the Loan pursuant to Section 3.04 (b) of theGeneral Conditions:

Time of Prepayment Premium

The interest rate (ex-pressed as a percentageper annum) applicable tothe balance outstandingon the Loan on the dayof prepayment ultipliedby:

Not more than three years 0.15before maturity

More than three years but 0.30not more than six yearsbefore maturity

More than six years but 0.55not more than eleven yearsbefore maturity

More than eleven years but not 0.80more than sixteen yearsbefore maturity

More than sixteen years but not 0.90more than eighteen yearsbefore maturity

More than eighteen years 1.00before maturity

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SCHEDULE 4

Procurement

A. International Competitive Bidding

1. Construction equipment and vehicles shall be procured undercontracts awarded in accordance with procedures consistent withthose set forth in the current edition of the "Guidelines forProcurement under World Bank Loans and IDA Credits" published bythe Bank in March 1977 (hereinafter called the Guidelines), onthe basis of international competitive bidding as described inPart A of the Guidelines.

2. For construction equipment and vehicles to be procured onthe basis of international competitive bidding, in addition tothe requirements of paragraph 1.2 of the Guidelines, the Borrowershall prepare and forward to the Bank as soon as possible, and inany event not later than 60 days prior to the date of avail-ability to the public of the first tender or prequalificationdocuments relating thereto, as the case may be, a general pro-curement notice, in such form and detail and containing suchinformation as the Bank shall reasonably request; the Bank willarrange for the publication of such notice in order to providetimely notification to prospective bidders of the opportunity tobid for the goods in question. The Borrower shall provide thenecessary information to update such notice annually so long asany construction equipment and vehicles remain to be procured onthe basis of international comdpetitive bidding.

3. For the purpose of evaluation and comparison of bids for thesupply of construction equipment and vehicles to be procured onthe basis of international competitive bidding: (i) bidders shallbe required to state in their bid the c.i.f. (port of eatry)price for the imported construction equipment and vehicles, orthe ex-factory price or off-the-shelf price of other constructionequipment and vehicles, offered in such bid; (ii) customs dutiesand other import taxes levied in connection with the importation,or the sales and similar taxes levied in connection with the saleor delivery, pursuant to the bid, of the construction equipmentand vehicles shall not be taken into account in the evaluation ofthe bids; and (iii) the cost of inland freight and other expendi-tures incidental to the delivery of the construction equipmentand vehicles to the place of their use or installation shall beincluded.

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B. Preference for Domestic Manufacturers

In the procurement of construction equipment and vehicles inaccordance with the procedures described in Part A of thisSchedule, construction equipment and vehicles manufactured in thePhilippines may be granted a margin of preference in accordancewith, and subject to, the following provisions:

1. All bidding documents for the procurement of construc-tion equipment and vehicles shall clearly indicate any preferencewhich will be granted, the information required to establish theeligibility of a bid for such preference and the following

methods and stages that will be followed in the evaluation andcomparison of bids.

2. After evaluation, responsive bids will be classified in

one of the following three groups:

(1) Group A: bids offering construction equipment andvehicles manufactured in the Philippines if thebidder shall have established to the satisfactionof the Borrower and the Bank that the manufactur-ing cost of such construction equipment and

vehicles includes a value added in the Philippinesequal to at least 20% of the ex-factory bid priceof such goods.

(2) Group B: all other domestic bids.

(3) Group C: bids offering any other constructionequipment and vehicles.

3. In order to determine the lowest evaluated bid of eachgroup, all evaluated bids in each group shall first be comparedamong themselves, without taking into account customs duties andother import taxes levied in connection with the importation, andsales and similar taxes levied in connection with the sale or

delivery, pursuant to the bids, of the construction equipment and

vehicles. Such lowest evaluated bids shall then be compared witheach other, and if, as a result of this comparison, a bid fromgroup A or group B is the lowest, it shall be selected for theaward.

4. If, as a result of the comparison under paragraph 3

above, the lowest bid is a bid from group C, all group C bids

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shall be further compared with the lowest evaluated bid fromgroup A after adding to the evaluated bid price of the importedconstruction equipment and vehicles offered in each group C bid,for the purpose of this further comparison only, an amount equalto: (i) the amount of customs duties and other import taxes whicha non-exempt importer would have to pay for the importation ofthe construction equipment and vehicles offered in such group Cbid; or (ii) 15% of the c.i.f. bid price of such constructionequipment and vehicles if said customs duties and taxes exceed15% of such price. If the group A bid in such further comparisonis the lowest, it shall be selected for the award; if not, thebid from Group C which as a result of the comparison under para-graph 3 is the lowest evaluated bid shall be selected.

C. Other Procurement Procedures

1. (a) Except as the Bank may otherwise agree, contracts forcivil works, including those for the construction of buildingsand barangay roads, and grading of trails, shall be awarded inaccordance with the Borrower's competitive bidding proceduressatisfactory to the Bank.

(b) Works on improvement of roads, watershed rehabilita-tion, reforestation, construction of artificial reefs, and near-shore fisheries may be carried out under force account, providedthat works so carried out shall not exceed in the aggregate theequivalent of $500,000.

2. (a) Goods (except for construction equipment and vehicles)may be procured in accordance with the Borrower's procurementprocedures satisfactory to the Bank.

(b) Contracts for goods (except construction equipment andvehicles) costing less than the equivalent of $10,000 each, maybe procured after solicitation of quotations from at least threeindependent suppliers in accordance with procedures satisfactoryto the Bank, provided that such goods so procured shall notexceed in the aggregate the equivalent of $150,000.

(c) Livestock shall be procured through local ranchers inaccordance with procedures satisfactory to the Bank.

D. Review of Procurement Decisions by the Bank

1. Review of invitations to bid and of proposed awards andfinal contracts:

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With respect to all contracts estimated to cost theequivalent of $100,000 or more:

(a) Before bids are invited, the Borrower shall furnish tothe Bank, for its comments, the text of the invitations to bidand the specifications and other bidding documents, together witha description of the advertising procedures to be followed forthe bidding, and shall make such modifications in the said docu-ments or procedures as the Bank shall reasonably request. Anyfurther modification to the bidding documents shall require theBank's concurrence before it is issued to the prospectivebidders.

(b) After bids have been received and evaluated, theBorrower shall, before a final decision on the award is made,inform the Bank of the name of the bidder to which it intends toaward the contract and shall furnish to the Bank, in sufficienttime for its review, a detailed report on the evaluation and

comparison of the bids received, and such other information asthe Bank shall reasonably request. The Bank shall, if itdetermines that the intended award would be inconsistent with the

Guidelines or this Schedule, promptly inform the Borrower andstate the reasons for such determination.

(c) The terms and conditions of the contract shall not,without the Bank's concurrence, materially differ from those on

which bids were asked or prequalification was invited.

(d) Two conformed copies of the contract shall be furnishedto the Bank promptly after its execution and prior to the submis-sion to the Bank of the first application for withdrawal of funds

from the Loan Account in respect of such contract.

2. With respect to each contract not governed by the precedingparagraph, the Borrower shall furnish to the Bank, promptly after

its execution and prior to the submission to the Bank of the

first application for withdrawal of funds from the Loan Accountin respect of such contract, two conformed copies of such

contract, together with the analysis of the respective bids,recommendations for award and such other information as the Bankshall reasonably request. The Bank shall, if it determines thatthe award of the contract was not consistent with the Guidelinesor this Schedule, promptly inform the Borrower and state thereasons for such determination.

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3. Before agreeing to any material modification or waiver ofthe terms and conditions of a contract, or granting an extensionof the stipulated time for performance of such contract, orissuing any change order under such contract (except in cases ofextreme urgency) which would increase the cost of the contract bymore than 15% of the original price, the Borrower shall informthe Bank of the proposed modification, waiver, extension orchange order and the reasons therefor. The Bank, if it determinesthat the proposal would be inconsistent with the provisions ofthis Agreement, shall promptly inform the Borrower and state thereasons for its determination.

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SCHEDULE 5

Action Program

1. Appointment not later than May 31, 1984, of a full-timefinancial controller in the Regional Projects Office with quali-

fications and experience satisfactory to the Bank.

2. (a) Establishment not later than June 30, 1984, of site

management units in each of the sites under Part A (1) of theProject, with powers, resources and staff satisfactory to the

Bank.

(b) Appointment not later than June 30, 1984, of a

full-time manager with qualifications and experience satisfactory

to the Bank, for each of the site management units under Part A(1) of the Project.

3. (a) Establishment not later than June 30, 1984, of sub-site

management units in each of the sites under Part A (3) of the

Project, with powers, resources and staff satisfactory to theBank.

(b) Appointment not later than June 30, 1984, of a

full-time deputy manager with qualifications and experience

satisfactory to the Bank, for each of the sub-site management

units under Part A (3) of the Project.

4. (a) Designate not later than June 30, 1984, the Ayungon -Bindoy site for Part A (2) of the Project.

(b) Establishment not later than June 30, 1984, of a sitemanagement unit under Part A (2) of the Project, with powers,resources and staff satisfactory to the Bank.

(c) Appointment not later than June 30, 1984, of a full-time manager with qualifications and experience satisfactory to

the Bank, for the site management unit under Part A (2) of theProject.

(d) Designate not later than June 30, 1984, the Central

Visayas Regional Office of the Bureau of Forest Development toprovide support services under Part A (2) of the Project inaccordance with terms of reference satisfactory to the Bank.

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(e) Designate or appoint not later than June 30, 1984,staff with qualifications and in numbers satisfactory to the

Bank, for the provision of support services under Part A (2) ofthe Project.

5. (a) Designate not later than June 30, 1984, the CentralVisayas Regional Office of the Ministry of Agriculture to provide

support services under Part A (1) of the Project in accordance

with terms of reference satisfactory to the Bank.

(b) Designate or appoint not later than June 30, 1984,staff with qualifications and in numbers satisfactory to theBank, for the provision of support services under Part A (1) ofthe Project.

6. (a) Designate not later than June 30, 1984, the Central

Visayas Regional Office of the Bureau of Fisheries and Aquatic

Resources to provide support services under Part A (3) of the

Project in accordance with terms of reference satisfactory to the

Bank.

(b) Designate or appoint not later than June 30, 1984,staff with qualifications and in numbers satisfactory to the

Bank, for the provision of support services under Part A (3) ofthe Project.

7. (a) Designate not later than June 30, 1984, the ProvincialEngineers Office in Bohol, Cebu, Negros Oriental and Siquijor to

implement Part A (4) of the Project, under terms of reference

satisfactory to the Bank.

(b) Designate or appoint not later than June 30, 1984,staff with qualifications and in numbers satisfactory to the

Bank, for the implementation of Part A (4) of the Project.

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SCHEDULE 6

Special Account

1. For the purposes of this Schedule:

(a) the term "Category" means a category of items to befinanced out of the proceeds of the Loan as set forth in thetable in paragraph 1 of Schedule 1 to this Agreement;

(b) the term "eligible expenditures" means expenditures inrespect of the reasonable cost of goods and services required forthe Project and to be financed out of the proceeds of the Loanallocated from time to time to Categories (1), (2) and (3) inaccordance with the provisions of Schedule 1 to this Agreement;and

(c) the term "initial deposit" means an amount in dollarsequivalent to the amount allocated to Category (4) and to bewithdrawn from the Loan Account and deposited in the SpecialAccount pursuant to the first sentence of paragraph 3 to thisSchedule.

2. Payments out of the Special Account shall be made exclu-sively for eligible expenditures in accordance with the provi-sions of this Schedule.

3. The Bank shall, at the request of the Borrower, withdraw onbehalf of the Borrower from the Loan Account and deposit into theSpecial Account the initial deposit. Thereafter and on the basisof requests by the Borrower furnished to the Bank at such inter-vals as the Bank shall specify, the Bank shall further so with-draw from the Loan Account and deposit into the Special Accountsuch amounts as shall be required to replenish the SpecialAccount with amounts equal to payments made out of the SpecialAccount for eligible expenditures, but only to the extent thatthe amount of any such deposit, together with any amount remain-ing on deposit in the Special Account as of the date of suchrequest, shall not exceed in the aggregate the equivalent of theinitial deposit. Except as the Bank may otherwise agree, eachsuch deposit after the initial deposit shall be withdrawn by theBank from the Loan Account under the respective Categories (1),(2) and (3), and in the respective equivalent amounts, as shallhave been justified by the evidence supporting the request forsuch deposit furnished pursuant to paragraph 4 of this Schedule.

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4. Prior to or at the time of each request by the Borrower fora deposit by the Bank into the Special Account after the initialdeposit, the Borrower shall furnish to the Bank in respect ofeach payment made by the Borrower out of the Special Account suchdocuments and other evidence as the Bank shall reasonably re-quest, showing that such payment was made for eligible expendi-tures.

5. Notwithstanding the provisions of paragraph 3 of this Sched-ule, no further deposit into the Special Account shall be made bythe Bank (a) when the Bank shall have determined at any time thatall further withdrawals can be made directly by the Borrower fromthe Loan Account in accordance with the provisions of paragraph(a) of Section 2.02 of this Agreement, or (b) unless otherwiseagreed by the Bank, when the total unwithdrawn amount of the Loanallocated to Categories (1), (2) and (3) for the Project, minusthe amount of any qualified agreement to reimburse made by theBank and of any special commitment entered into by the Bank pur-suant to Section 5.02 of the General Conditions with respect tothe Project, shall be equal to the equivalent of twice the amountof the initial deposit, whichever shall be sooner. Withdrawalfrom the Loan Account of the remaining unwithdrawn amount of theLoan allocated to Categories (1), (2) and (3) of the Projectshall follow such procedures as the Bank shall specify by noticeto the Borrower and shall, except as the Bank shall otherwiseagree, be made only after and to the extent the Bank shall havebeen satisfied that all such amounts remaining on deposit in theSpecial Account as of the date of such notice have been or willbe utilized in making payments for eligible expenditures.

6. If the Bank shall have determined at any time that:

(a) any payment out of the Special Account (i) was made forany expenditure or in any amount not eligible pursuant to para-graph 2 of this Schedule, or (ii) was not justified by the evi-dence furnished pursuant to paragraph 4 of this Schedule, theBorrower shall, promptly upon notice from the Bank and, unlessotherwise agreed by the Bank, prior to any further deposit intothe Special Account by the Bank, deposit into the Special Accountor, if the Bank shall so request, refund to the Bank an amountequal to the amount of such payment or the portion thereof not soeligible or justified; or

(b) any amount outstanding in the Special Account will notbe required to cover further payments for eligible expenditures,

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the Borrower shall, promptly upon notice from the Bank, andunless otherwise agreed by the Bank, refund to the Bank suchamount then outstanding in the Special 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 Interna-

tional Bank for Reconstruction and Develop-

ment.

In witness whereof I have signed this Certifi-

cate and aTxed the Seal of the Bank thereunto

this day of 6 198 -.

FOR SECRETARY