OFFICIAL
DOCUMENTS
CREDIT NUMBER 6197-ET (Scale-up Facility Credit)
Financing Agreement
(Urban Institutional and Infrastructure Development Program)
between
FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA
and
INTERNATIONAL DEVELOPMENT ASSOCIATION


CREDIT NUMBER 6197-ET (Scale-up Facility Credit)
FINANCING AGREEMENT
AGREEMENT dated as of the Signature Date between FEDERAL
DEMOCRATIC REPUBLIC OF ETHIOPIA ("Recipient") and INTERNATIONAL
DEVELOPMENT ASSOCIATION ("Association").
WHEREAS:
(A)    by an agreement of the same date as the Signature Date between the Recipient and
the Association ("IDA Grant Financing Agreement"), the Association is agreeing to
provide an amount equivalent to SDR $191,700,000 ("Grant") under Grant No. D277-ET
to further assist in the financing of the Operation on the terms and conditions of said
agreement; and
(B)    by an agreement of the same date as the Signature Date between the Recipient and
the Association ("Regular Credit Financing Agreement"), the Association is agreeing to
provide an amount equivalent to SDR 89,200,000 ("Regular Credit") under Credit No.
6196-ET to further assist in the financing of the Operation on the terms and conditions of
said agreement.
The Recipient and the Association hereby agree as follows:
ARTICLE I - GENERAL CONDITIONS; DEFINITIONS
1.01.  The General Conditions (as defined in the Appendix to this Agreement) apply to
and form part of this Agreement.
1.02.  Unless the context requires otherwise, the capitalized terms used in this Agreement
have the meanings ascribed to them in the General Conditions or in the Appendix
to this Agreement.
ARTICLE II - CREDIT
2.01.   The Association agrees to extend to the Recipient a credit, deemed by the
Association to be on non-concessional terms, as set forth or referred to in this
Agreement, in the amount of two hundred million Dollars ($200,000,000), as such
amount may be converted from time to time through a Currency Conversion
("Credit"), to assist in financing:
(a)    the program as described in Part I ("Program") of Schedule I to this
Agreement; and


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(b)    the project as described in Part 2 ("Project") of Schedule 1 to this
Agreement,
(the Program and the Project hereinafter jointly referred to as the "Operation").
2.02.  The Recipient may withdraw the proceeds of the Credit in accordance with
Section IV of Schedule 2 to this Agreement. All withdrawals from the Credit
Account to which the amount of the Credit allocated to the Program is credited
shall be deposited by the Association into an account specified by the Recipient
and acceptable to the Association.
2.03.  The Front-end Fee is one quarter of one percent (/4 of 1%) of the Credit amount.
2.04.  The Commitment Charge is one-quarter of one percent (/ of 1%) per annum on
the Unwithdrawn Credit Balance.
2.05.  The Interest Charge is the Reference Rate plus the Fixed Spread or such rate as
may apply following a Conversion; subject to Section 3.09(e) of the General
Conditions.
2.06.  The Payment Dates are April 1 and October 1 in each year.
2.07.  The principal amount of the Credit shall be repaid in accordance with Schedule 3
to this Agreement.
ARTICLE III - OPERATION
3.01.  The Recipient declares its commitment to the objective of the Operation. To this
end, the Recipient shall carry out, through MUDHo, the Operation in accordance
with the provisions of Article V of the Program General Conditions, Article V of
the Project General Conditions, and Schedule 2 to this Agreement.
ARTICLE IV - EFFECTIVENESS; TERMINATION
4.01.  The Effectiveness Deadline is the date ninety (90) days after the Signature Date.
4.02.  For purposes of Section 10.05 (b) of the General Conditions, the date on which the
obligations of the Recipient under this Agreement (other than those providing for
payment obligations) shall terminate is twenty (20) years after the Signature Date.
ARTICLE V - REPRESENTATIVE; ADDRESSES
5.01.  The Recipient's Representative is its Minister of Finance and Economic
Cooperation.


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5.02.  For purposes of Section 11.01 of the General Conditions,
(a)    the Recipient's address is:
Ministry of Finance and Economic Cooperation
P. 0. Box 1905
Addis Ababa
Federal Democratic Republic of Ethiopia; and
(b)    the Recipient's Electronic Address is:
Telex:              Facsimile:
21147               (251-11) 1551355
5.03.  For purposes of Section 11.01 of the General Conditions:
(a)    the Association's Address is:
International Development Association
1818 H Street, N.W.
Washington, D.C. 20433
United States of America; and
(b)    the Association's Electronic Address is:
Telex:              Facsimile:
248423 (MCI)        1-202-477-6391


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AGREED as of the Signature Date.
FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA
By
Authorized Representative
Name:_______
ofMace    ate:   j", rRJ  &ID , ao I
INTERNATIONAL DEVELOPMENT ASSOCIATION      t1 ,,
By W LDB3ANK
By0
Authorized Representa r
Date: - M   r0 ccj,<ln


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SCHEDULE 1
Operation Description
The objective of the Operation is to enhance the institutional performance of
participating urban local governments to develop and sustain urban infrastructure, services,
and local economic development.
The Operation consists of the Program and the Project as follows:
Part 1: The Program
The Program consists of the following, namely provision of performance-based
grants to Eligible ULGs for Eligible Investments and provision of support to
achieve Program results at the regional level on capacity building, financial audit,
procurement audit and environmental and social safeguards audits.
Part 2: The Project
The Project, which aims to enable MUDHo to support and guide the Regions and
ULGs and also to administer and coordinate the Operation, consists of:
(a)    developing capacity, systems and organization of federal entities;
(b)    developing capacity, systems, and organization of regional and ULG
entities;
(c)    conducting project preparation studies, pre-feasibilities and feasibility
studies for ULGs with specific needs for further investments;
(d)    managing and monitoring and evaluating the Operation and to prepare
future follow-on projects; and
(e)    procuring and managing Annual Performance Assessment and Value for
Money Audits.


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SCHEDULE 2
Operation Execution
Section I.    Institutional and Implementation Arrangements
A.     Operation Institutions
1. The Recipient shall maintain the following with composition and resources
appropriate to fulfill their respective functions, during the period of
implementation of the Operation:
(a)    The Steering Committee, established  with representatives from
stakeholder ministries and agencies, responsible for providing Operation
oversight, endorsing Program performance and allocations, arbitrating
conflicts and strengthening inter-ministerial coordination.
(b)    The Technical Committee, established with key technical staff from
stakeholder ministries and agencies, responsible for supporting said
Steering Committee, providing advice, conflict resolution at the technical
level, and verifying Program performance and compliance.
2.     The Recipient shall maintain, and caused to be maintained, during the period of
implementation of the Operation, the following with staffing and resources
appropriate to carry out the respective functions under the Program and/or the
Project described below:
(a)    Federal level
(i)    MUDHo to be responsible for the overall coordination,
management, oversight, monitoring and evaluation of the
Operation and implementation of the Project.
(ii)   MoFEC to be responsible for fund flow, disbursement, financial
reporting and Program auditing for the Operation.
(b)    Regional level
(i)    Each bureau for urban development at the regional level to be
responsible for, but not limited to, the following with respect to
the Eligible ULGs within its jurisdiction: (A) oversight and
coordinating implementation of the Operation; (B) providing
technical assistance and capacity building in areas related to
strengthening urban development and management; and
(C) providing consolidated Operation progress reports to
MUDHo.


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(ii)   Each BoFED to be responsible for, but not limited to, the
following with respect to the Eligible ULGs within its jurisdiction:
(A) providing approved financing (funds from MoFEC and
matching funds from the Regions to Eligible ULGs); and
(B) preparing and submitting consolidated regional semi-annual
financial reports to MoFEC, which shall in turn submit them to
the Association.
(iii)  Regional entities, including: (A) ORAGs to be responsible for
conducting external audits of ULG financial reports; (B) REFAs
to be responsible for overseeing the Program's environmental and
social safeguards obligations; (C) RRBs to be responsible for
providing support to ULGs in the area of own source revenue
generation; (D) RPPPAA to be responsible for conducting annual
procurement audits of ULGs; and (E) REACCs to be responsible
for fraud and corruption monitoring and reporting.
(c)    ULG level
(i)    The Mayor and the Mayor's office in each Eligible ULG to be
responsible for overall performance of the Eligible ULG,
including ensuring compliance with financial management,
procurement, and Operation environmental and social safeguards
and regulations.
(ii)   A Program Coordination Team in each Eligible ULG, to be
responsible for day-to-day coordination of the Operation,
reporting to the city manager and working closely with relevant
offices within the Eligible ULG.
(d)    General
Other and additional Operation implementation arrangements at the
federal, regional and ULG levels, satisfactory to the Association and as
shall be further detailed in the Operation Manual.
B.     Program Implementation Arrangements
1.     Program Action Plan
The Recipient shall carry out the Program Action Plan, or cause the Program
Action Plan to be carried out, in accordance with the schedule set out in the said
Program Action Plan in a manner satisfactory to the Association.


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2.     Participation Agreements ("PAs")
(a)    The Recipient shall ensure that no ULG is eligible to participate in the
Operation until the following agreements (collectively referred to as
"Participation Agreements" or "PAs"), acceptable to the Association,
detailing the respective responsibilities of the parties to the agreements for
the implementation of activities under the Operation, have been signed:
(i)    Agreements between the Recipient, through MUDHo, and each of
the Regions; and
(ii)   Agreements between each of the Regions and the Eligible ULGs
located within the Region's jurisdiction.
(b)    The Recipient shall ensure that the PAs specify the financial contributions
made, or to be made, by the Eligible ULG and its respective Region to the
Program, and the terms and conditions that the Eligible ULG shall follow
in implementing the Operation, and as more specifically set out in the
Operation Manual.
3.     Budgetary Allocation
Throughout the Operation implementation period, the Recipient shall ensure that
sufficient budget is provided to MUDHo in a timely manner to enable MUDHo to
implement Operation activities related to Annual Performance Assessments,
capacity building, Value for Money Audits and procurement audits and that
funding is allocated to ULGs and Regional entities as per the formula and timing
defined in the Program.
4.     Annual Performance Assessment ("APA")
The Recipient shall, for each Eligible ULG and for each EFY throughout the period
of implementation of the Program:
(a)    Carry out, or cause to be carried out, in accordance with the Operation
Manual:
(i)    an APA covering an EFY to determine: (A) whether the Eligible
ULG has met the DLRs for said EFY; (B) the disbursement
amount for the Eligible ULG for said EFY based on the
calculation formula/performance score system as stipulated in the
Disbursement and Financial Information Letter and the Operation
Manual; and


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(ii)   furnish the final draft of the first APA by April 29, 2019, and
thereafter, furnish the final draft APA by January 21 in each
following year, to the Association for its review.
(b)    For purposes of carrying out each such APA:
(i)    Appoint independent verification agents, under terms of reference
acceptable to the Association ("Verification Agents"), to verify
the data and other evidence supporting the achievement of one or
more DLIs as set forth in the table in Section IV.A.1 of this
Schedule 2 and recommend corresponding payments to be made,
as applicable.
(ii)   (A) Ensure that the Verification Agents carry out verification and
process(es) in accordance with the Verification Protocol; and
(B) submit to the Association the corresponding verification
reports in a timely manner and in form and substance satisfactory
to the Association.
(c)    In the event that there is a need for verification services prior to the
appointment of the Verification Agents in accordance with sub-paragraph
(b)(i) above, put in place adequate interim arrangement satisfactory to the
Association and approved in writing by the Association for verification of
the DLls.
5.     Value for Money Audits
The Recipient shall for each EFY throughout the period of implementation of the
Program:
(a)     beginning EFY 2011, carry out, under terms of reference satisfactory to
the Association, a value for money audit of the Program activities
implemented by the Eligible ULGs in the preceding EFY and furnish said
audit to the Association not later than six (6) months after the end of the
EFY to which the audit relates. For EFY 2011, the audit shall cover only
ULGDP II Urban Local Governments and thereafter, audits shall cover
all Eligible ULGs; and
(b)     ensure that the findings of the audit are taken into account in the APA for
the EFY to which the audit relates.
C.     Operation Manual
1 .    The Recipient shall implement the Program and Project in accordance with
Operation Manual, which sets out detailed institutional, administrative, financial,
technical and operational guidelines and procedures, including, inter alia:


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(a)    the procedure and criteria for selection of Eligible Investments from a
menu of options for inclusion in the Program and implementation thereof,
including investment in: (i) roads, (ii) integrated infrastructure and land
services, (iii) sanitation (liquid waste), (iv) solid waste management,
(v) urban drainage, (vi) urban disaster risk management and urban
resilience, (vii) built facilities, and (viii) urban green infrastructure and
excluding investments that would be categorized by the Association as an
environmental assessment category "A" project;
(b)    the procedure and criteria for selection of capacity building activities for
inclusion in the Operation and implementation thereof;
(c)    description of Minimum   Conditions, performance measures and
associated performance indicators;
(d)    performance assessment guidelines containing detailed protocols,
guidelines, procedures and other arrangements for the carrying out of
annual performance assessments, including, inter alia, a methodology for
determining, in each EFY whether Eligible ULGs and regional entities
have met all DLRs, and formula/performance score systems for
calculating the amounts authorized for Financing disbursement for the
EFY; and
(e)    an environmental and social management manual containing guidelines
for, inter alia: assessing potential environmental and social impacts of the
Program; and appropriate mitigation, management, and monitoring
measures in respect of said impacts.
2.     The Recipient shall not amend, abrogate or suspend, or permit to be amended,
abrogated or suspended any provision of the Operation Manual without the prior
written agreement of the Association. Notwithstanding the foregoing, if any
provision of the Operation Manual is inconsistent with the provisions of this
Agreement, the provisions of this Agreement shall prevail.
D.     Safeguard Requirements for the Project
In carrying out activities under the Project, the Recipient shall ensure that all
technical assistance under the Project, application of whose results would have
environmental or social implications, shall only be undertaken pursuant to terms
of reference reviewed and found satisfactory by the Association, such terms of
reference to ensure that the technical assistance takes into account, and calls for
application of the Association's environmental and social safeguards policies and
the Recipient's own laws relating to the environment and social aspects..


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E.     Annual Work Plans and Budget ("AWPB") for the Project
1. For purposes of implementation of the Project, the Recipient shall:
(a)    prepare a draft AWPB for each EFY, setting forth, inter alia: (i) a detailed
description of the planned activities under the Project for the following
EFY; (ii) the sources and proposed use of funds therefor; (iii) procurement
arrangements therefor; and (iv) responsibility for the execution of said
Project activities, budgets, start and completion dates, outputs and
monitoring indicators to track progress of each activity;
(b)    by May 31 in each year, furnish the draft AWPB to the Association for its
review, and promptly thereafter finalize the AWPB, taking into account
the Association's comments thereon; and
(c)    by July 31 in each year, adopt and implement the final AWPB after
obtaining the Association's approval thereon.
Section II.   Excluded Activities
1 .    The Recipient shall ensure that the Program excludes any activities which:
(a)    in the opinion of the Association, are likely to have significant adverse
impacts that are sensitive, diverse, or unprecedented on the environment
and/or affected people; or
(b)    involve the procurement of: (i) works, estimated to cost $75,000,000
equivalent or more per contract; (ii) goods, estimated to cost $50,000,000
equivalent or more per contract; (iii) non-consulting services, estimated to
cost $50,000,000 equivalent or more per contract; or (iv) consultants'
services, estimated to cost $20,000,000 equivalent or more per contract.
Section III.  Operation Monitoring, Reporting and Evaluation
The Recipient shall furnish to the Association each Program Report and Project
Report by August 31 in each year, covering the preceding EFY.
Section IV.   Withdrawal of Credit Proceeds
A.     General
1. Without limitation upon the provisions of Article II of the Program General
Conditions, and Article II of the Project General Conditions, and in accordance
with the Disbursement and Financial Information Letter, the Recipient may
withdraw the proceeds of the Credit to:


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(a)    pay: (i) the Front-end Fee; and (ii) each Interest Rate Cap or Interest Rate
Collar premium;
(b)    with respect to the Program, finance the results ("Disbursement Linked
Results" or "DLRs") achieved by the Recipient, as measured against
specific indicators ("Disbursement Linked Indicators" or "DLIs") in the
amount allocated against Categories (1) through (10) of the table below
and with actual amounts authorized for disbursement (and/or formula for
their determination) upon achievement of an individual DLR for any given
DLI financed under such Category set forth in the Operation Manual; and
(c)    with respect to the Project, finance Eligible Expenditures in the amount
allocated and, if applicable, up to the percentage set forth against Category
(11) of the table below.


Category (including       Disbursement Linked Results  Amount of Grant  Amount of Financing   Amount of      Percentage of
Disbursement Linked Indicator,                              (expressed in   (expressed in SDR)       Credit         Eligible
as applicable)                                          SDR)           Regular Credit     (expressed in   Expenditures to
USD)          be financed
Scale-up Facility  (inclusive of
Credit          taxes)
(1) DLI#1: Eligible ULGs have  DLR#1: Eligible ULGs have    75,241,000      0                    0                Not applicable
achieved Program Minimum       achieved Program Minimum
Conditions                     Conditions based on the APA
(Up to 117 ULGs annually
from baseline of 0 ULG)
(2) DLI#2: Eligible ULGs have  DLR#2: Eligible ULGs have    0               50,900,000           113,841,015      Not applicable
strengthened their institutional  strengthened institutional
performance                    performance based on their
Score calculated in the APA
(Up to 100% Score annually
from baseline of 0)
(3) DLI#3: Eligible ULGs have  DLR#3: Eligible ULGs have    0               24,120,000           53,952,180       Not applicable
implemented quality           implemented quality
infrastructure and maintenance  infrastructure and maintenance
activities and ensured value for  activities and ensured value for
money                          money based on their Score
calculated in the APA
(Up to 100% Score annually
from baseline of 0)


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Category (including       Disbursement Linked Results  Amount of Grant   Amount of Financing    Amount of       Percentage of
Disbursement Linked Indicator,                                (expressed in   (expressed in SDR)       Credit          Eligible
as applicable)                                            SDR)           Regular Credit     (expressed in   Expenditures to
USD)          be financed
Scale-up Facility  (inclusive of
Credit          taxes)
(4) DLI#4: Eligible ULGs have  DLR#4: Eligible ULGs have     0                 14,180,000          31,706,805        Not applicable
strengthened performance on    strengthened performance on
LED, urban resilience and gender  LED, urban resilience and
mainstreaming                  gender mainstreaming based on
their Score calculated in the
APA
(Up to 100% Score annually
from baseline of 0)
(5) DLI#5: Regional support    DLR#5.1: CB Plan prepared in  19,577,000       0                    0                 Not Applicable
teams have delivered effective  accordance with Operation
capacity building ("CB") services  Manual requirements and
to Eligible ULGs in urban      mobile CB mentoring teams in
institutional and infrastructure  place and operating for
development                    EFY2011
SDR 4,894,250 from Grant
(Up to 10 teams annually from
baseline of 0)
DLR#5.2: CB needs                                                                    Not Applicable
assessment completed, CB Plan
prepared in accordance with
Operation Manual
requirements, and mobile CB


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Category (including       Disbursement Linked Results  Amount of Grant   Amount of Financing    Amount of       Percentage of
Disbursement Linked Indicator,                                (expressed in   (expressed in SDR)       Credit          Eligible
as applicable)                                            SDR)           Regular Credit     (expressed in   Expenditures to
USD)          be financed
Scale-up Facility  (inclusive of
Credit          taxes)
mentoring teams in place and
operating for EFY2012
SDR 4,894,250 from Grant
(Up to 10 teams annually from
baseline of 0)
DLR#5.3: CB needs                                                                    Not applicable
assessment completed, CB Plan
prepared in accordance with
Operation Manual
requirements, mobile CB
mentoring teams in place and
operating, and CB plan
implemented for EFY2013 and
EFY2014
SDR 4,894,250 from Grant for
each year
(Up to 10 teams annually from
baseline of 0)


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Category (including       Disbursement Linked Results  Amount of Grant  Amount of Financing   Amount of      Percentage of
Disbursement Linked Indicator,                              (expressed in   (expressed in SDR)       Credit         Eligible
as applicable)                                          SDR)           Regular Credit     (expressed in   Expenditures to
USD)          be financed
Scale-up Facility  (inclusive of
Credit          taxes)
(6) DLI#6: ORAGs have carried  DLR#6: ORAGs have carried    10,505,000      0                    0                Not applicable
out timely audits of Eligible ULG  out timely audits of Eligible
financial reports              ULG financial reports (by
January 7 of each financial
year)
(Up to 117 ULGs annually
from baseline of 0 ULGs)
(7) DLl#7: REFAs have          DLR#7: REFAs have            9,214,000       0                    0                Not applicable
completed timely review of     completed timely review of
Eligible ULG environmental and  Eligible ULG environmental
social safeguards compliance.  and social safeguards
compliance (by October 31 of
each year).
(Up to 117 ULGs annually
from baseline of 0 ULGs)
(8) DLI#8: RRBs have supported  DLR#8: RRB or BoFED, as the  4,944,000      0                    0                Not applicable
Eligible ULG revenue           case may be, has in place a CB
mobilization                   focal point and has provided
inputs in accordance with the
Operation Manual, to_support


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Category (including        Disbursement Linked Results  Amount of Grant  Amount of Financing    Amount of       Percentage of
Disbursement Linked Indicator,                                (expressed in   (expressed in SDR)       Credit          Eligible
as applicable)                                            SDR)           Regular Credit     (expressed in   Expenditures to
USD)          be financed
Scale-up Facility  (inclusive of
Credit          taxes)
Eligible ULG revenue
mobilization
(Up to 117 ULGs annually
from baseline of 0 ULG)
(9) DLI#9: RPPPAA conduct      DLR#9.1 - In EFY201 1,        4,944,000        0                    0                Not applicable
timely and quality procurement  RPPPAA prepared
audit of Eligible ULG accounts  procurement audit plan with
and performance                terms of reference for the audit.
SDR 1,236,000 from Grant
DLR#9.2 - RPPPAA conduct                                                             Not applicable
timely and quality procurement
audit of Eligible ULG's
accounts and performance for
subsequent three years.
SDR 1,236,000 from Grant for
each year
(Up to 117 ULGs annually
from baseline of 0 ULG)
(10) DLI#10: Strengthening     DLR#10: Strengthening         44,755,000       0                    0                Not applicable
institutional performance,     institutional performance,
infrastructure and service     infrastructure and service
delivery, maintenance, and job  delivery, maintenance, and job
creation for


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Category (including      Disbursement Linked Results  Amount of Grant  Amount of Financing  Amount of     Percentage of
Disbursement Linked Indicator,                             (expressed in  (expressed in SDR)      Credit         Eligible
as applicable)                                         SDR)          Regular Credit     (expressed in  Expenditures to
USD)          be financed
Scale-up Facility  (inclusive of
Credit          taxes)
ULGDP II Urban Local          creation for ULGDP II Urban
Governments                   Local Governments
(Prior results)
(Up to 92% from baseline of 0)
(11) Goods, non-consulting           Not applicable       22,520,000       0                   0                   100%
services, consulting services,
training and workshops,
Operating Costs under the Project
but excluding Part 2(c) of the
Project
(12) Front-end Fee to be paid        Not applicable       Not applicable  Not applicable       500,000          Not applicable
pursuant to Section 2.03 of Scale-
up Facility Financing Agreement
in accordance with Section 3.08
(b) of the General Conditions
(13) Interest Rate Cap or Interest   Not applicable       Not applicable  Not applicable       0               Not applicable
Rate Collar premium due
pursuant to be paid pursuant to
Section 4.06 (c) of the General
Conditions
TOTAL AMOUNT                              --              191,700,000      89,200,000         200,000,000            --


B.     Withdrawal Conditions for the Program
1. Notwithstanding the provisions of Part A of this Section, with respect to Categories
(1) through (10), no withdrawal shall be made:
(a)    for purposes of Section 2.03 of the Program General Conditions, for DLRs
achieved prior to the Signature Date, except that withdrawals up to an
aggregate amount not to exceed SDR 44,755,000 may be made for
DLR#10 achieved prior to this date but on or after February 21, 2017;
or/and
(b)    for any DLR until and unless the Recipient has furnished evidence
satisfactory to the Association that said DLR has been achieved, including
verification reports from the Verification Agent, based on reports prepared
by the Recipient certifying the achievement of the DLRs in accordance
with the Verification Protocol.
2.     Notwithstanding the provisions of Part B. 1(b) of this Section, with respect to the
Program, if any of the DLR has not been achieved by the date by which the said
DLR is set to be achieved, the Association may, by notice to the Recipient:
(a)    authorize the withdrawal of such lesser amount of the unwithdrawn
proceeds of the Financing then allocated to said Category which, in the
opinion of the Association, corresponds to the extent of achievement of
said DLR, said lesser amount to be calculated in accordance with the
formula set out in Operation Manual;
(b)    reallocate all or a portion of the proceeds of the Financing then allocated
to said DLR to any other DLR; and/or
(c)    cancel all or a portion of the proceeds of the Financing then allocated to
said DLR.
C.     Withdrawal Conditions for the Project
Notwithstanding the provisions of Section V.A of this Schedule, with respect to
Category (11), no withdrawal shall be made for payments made in respect of the
Project prior to the Signature Date.
D.     Operation Withdrawal Period
The Closing Date is July 7, 2023.


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SCHEDULE 3
Repayment Schedule
The following table sets forth the Principal Payment Dates of the Credit and the percentage
of the total principal amount of the Credit payable on each Principal Payment Date
("Installment Share").
Principal Payment Date                Installment Share
On each April 1, and October 1                    2.38%
Beginning April 1, 2027
through April 1, 2047
On October 1, 2047                                2.42%


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APPENDIX
Definitions
1.     "Annual Performance Assessment" or "APA" means the assessment, referred to in
Section I.B.4 of Schedule 2 to this Agreement, to be carried out in each EFY by
Verification Agents in accordance with the provisions thereof, and the term
"Annual Performance Assessments" or "APAs" means the plural thereof.
2.     "Anti-Corruption Guidelines" means for purposes of paragraph 5 of the Appendix
to the Program General Conditions, the Association's "Guidelines on Preventing
and Combating Fraud and Corruption in Program-for-Results Financing," dated
February 1, 2012, and revised July 10, 2015.
3.     "Anti-Corruption Guidelines" means, for purposes of paragraph 5 of the Appendix
to the Project General Conditions, the "Guidelines on Preventing and Combating
Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and
Grants", dated October 15, 2006 and revised in January 2011 and as of July 1,
2016.
4.     "AWPB" means the annual work plan and budget to be prepared and adopted in
accordance with Section I.E of Schedule 2 to this Agreement.
5.     "BoFED" means the Bureau of Finance and Economic Development at the
regional level, and any successor thereto.
6.     "Category" means a category set forth in the table in Section IV.A. I of Schedule 2
to this Agreement.
7.     "CB" means capacity building.
8.     "Disbursement Linked Indicator" or "DLI" means in respect of a given Category,
the indicator related to said Category as set forth in the table in Section IV.A. I of
Schedule 2 to this Agreement.
9.     "Disbursement Linked Result" or "DLR" means in respect of a given Category,
the result under said Category as set forth in the table in Section IV.A. I of
Schedule 2 to this Agreement, on the basis of the achievement of which, the
amount of the Credit allocated to said result may be withdrawn in accordance with
the provisions of said Section IV.
10.    "EFY" means the Ethiopian Fiscal Year, the fiscal year of the Recipient which
commences on July 8 and ends on July 7.


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11.   "Eligible ULG" means a ULG (as defined below) selected in accordance with
procedures and criteria set out in the Operation Manual, including: (a) having
autonomous urban administrative status (with a responsibility of municipal and
state functions), defined as having a city council and a mayor; and (b) having a
population equal to, or above, 20,000 people (according to the 2013 published
population figures from the Central Statistics Agency); and "Eligible ULGs"
means the plural thereof.
12.   "Eligible Investment" means an infrastructure and capacity building investment
selected in accordance with procedures and criteria set out in the Operation
Manual, which includes a menu of eligible and ineligible investments; and
"Eligible Investments" means the plural thereof.
13.   "General Conditions" means the Program General Conditions and/or the Project
General Conditions, as applicable.
14.   "Grant" means the proceeds of the financing provided under Grant No. D277-ET
pursuant to the IDA Grant Financing Agreement.
15.   "IDA Grant Financing Agreement" means the agreement described paragraph (A)
of the Preamble to this Agreement.
16.   "LED" means local economic development.
17.   "MoFEC" means the Recipient's Ministry of Finance and Economic Cooperation,
and any successor thereto.
18.   "MUDHo" means the Recipient's Ministry of Urban Development and Housing,
and any successor thereto.
19.   "Operating Costs" means the reasonable incremental expenses incurred, based on
AWBP approved by the Association, incurred by the Recipient on account of
Project implementation, management, and monitoring, including expenditures for
vehicle operation and maintenance, office supplies and consumables, utilities,
communication, translation and interpretation, bank charges, Operation-related
national and international travel, as well as per diem and accommodations (but
excluding salaries of the Recipient's civil servants), and other miscellaneous costs
directly associated with Operation implementation.
20.    "Operation" means, collectively, all activities described under the Program and the
Project in Schedule I to this Agreement.
21.    "Operation Manual" means the manual adopted by the Recipient, dated March 12,
2018, and referred to in Section I.C of Schedule 2 to this Agreement.


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22.    "ORAGs" means Office of Regional Auditor Generals, which are government
audit agencies at the regional level or their delegated agencies.
23.    "Procurement Regulations" means, for purposes of paragraph 87 of the Appendix
to the Project General Conditions, the "World Bank Procurement Regulations for
IPF Borrowers", dated July 2016 and revised in November 2017.
24.    "Program" means the activities described in Part I of the Operation.
25.    "Program Action Plan" means the Recipient's Program Action Plan referred to in
Section I.B. I of Schedule 2 to this Agreement, as such plan may be amended from
time to time with the agreement of the Association.
26.    "Program General Conditions" means the "International Development Association
General Conditions for IDA Financing, Program-for-Results Financing", dated
July 14, 2017.
27.    "Program Minimum Conditions" means the minimum institutional, financial,
planning and budgeting, procurement, functional, audit, reporting and
accountability, implementation and environmental and social safeguards standards
that must be attained by Eligible ULGs in each EFY to be eligible to receive funds
under the Program, as said standards and the methodology for determining are set
out in the Operation Manual.
28.    "Participation Agreements" or "PAs" means, collectively, the agreements to be
entered between the Recipient and each Region, as well as the agreements to be
entered between each Region and the Eligible ULGs within its jurisdiction, as set
forth in Section I.B.2 of Schedule 2 to this Agreement.
29.    "Project" means the activities described in Part 2 of the Operation.
30.    "Project General Conditions" means the "International Development Association
General Conditions for IDA Financing, Investment Project Financing", dated July
14, 2017.
31.    "REACC" means the Regional Ethics and Anti-Corruption Commission.
32.    "REFA" means the Regional Environment Protection, Forest and Climate Change
Authority.
33.    "Region" means the second tier of government in the administrative system of
Recipient established under the Recipient's Federal Constitution of 1995; and the
term "Regions" means the plural thereof.
34.    "Regular Credit" means the proceeds of the Financing provided under Credit
Number 6196-ET pursuant to the Regular Credit Financing Agreement.


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35.    "Regular Credit Financing Agreement" means the agreement described in
paragraph (B) of the preamble to this Agreement.
36.    "RPPPAA" means the Regional Public Procurement and Property Administration
Agency or its delegated agency.
37.    "RRB" means the Regional Revenue Bureau.
38.    "Scale-up Facility Credit" means the proceeds of the financing provided under
Credit No. 6197-ET pursuant to this Agreement.
39.    "Scale-up Facility Credit Agreement" means this Agreement.
40.    "Score" means for a given EFY, the performance score of each Eligible ULG
measured against the performance indicators as set out in the Operation Manual
and calculated in accordance with the methodology described in the Operation
Manual.
41.    "Signature Date" means the later of the two dates on which the Recipient and the
Association signed this Agreement and such definition applies to all references to
"the date of the Financing Agreement" in the General Conditions.
42.    "ULGs" means, collectively, (a) Dire Dawa City Administration, as defined in the
Dire Dawa Administration Charter Proclamation No. 416/2004, and any successor
thereto, and (b) the urban administrative areas within the Recipient's territory,
established and operating pursuant to the respective Regional proclamations; and
"ULG" means any said ULGs.
43.    "ULGDP II Urban Local Governments" means the forty-four urban local
governments participating in the Second Urban Local Government Development
Program being financed under Credit Number 5435-ET.
44.    "Value for Money Audits" means the audits to be carried out in accordance with
Section I.B.5 of Schedule 2 to this Agreement.
45.    "Verification Agents" means independent entities to be engaged by the Recipient
for the purposes of certifying the achievement of the DLRs as referred to in Section
I.B.4(b) of Schedule II to this Agreement.
46.    "Verification Protocol" means the Recipient's protocol, acceptable to the
Association, setting forth the means by which the achievement of DLRs will be
verified under the Program, as such Verification Protocol may be amended from
time to time with the prior written agreement of the Association.