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CONFORMED COPY 
CREDIT NUMBER 3023-ER
Development Credit Agreement
(Health Project)
between
THE STATE OF ERITREA
and
INTERNATIONAL DEVELOPMENT ASSOCIATION
Dated December 22, 1997
CREDIT NUMBER  3023-ER 
DEVELOPMENT CREDIT AGREEMENT 
AGREEMENT, dated December 2, 1997, between THE STATE OF ERITREA (the Borrower) 
and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association).
WHEREAS: (A) the Borrower, having satisfied itself as to the feasibility and 
priority of the Project described in Schedule 2 to this Agreement, has requested the 
Association to assist in the financing of the Project; 
(B)
the Association has received a letter, dated October 31, 1997, from the 
Borrower describing a program of actions, objectives and policies designed to improve 
the health and well-being of the Borrower’s population (the Program) and declaring the 
Borrower’s commitment to the execution of the Program; and 
WHEREAS (C) the Association has agreed on the basis, inter alia, of the 
foregoing to extend the Credit to the Borrower upon the terms and conditions set forth 
in this Agreement;
NOW THEREFORE the parties hereto hereby agree as follows:
ARTICLE I
General Conditions; Definitions
Section 1.01. The “General Conditions Applicable to Development Credit 
Agreements” of the Association, dated January 1, 1985, with the modifications set 
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forth below (the General Conditions) constitute an integral part of this Agreement:
(a)
The last sentence of Section 3.02 is deleted.
(b)
The second sentence of Section 5.01 is modified to read:
“Except as the Association and the Borrower shall otherwise agree, 
no withdrawals shall be made: (a) on account of expenditures in 
the 
territories of any country which is not a member of the Bank 
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.”
(c)
Section 6.03 is modified to read:
“Section 6.03.  Cancellation by the Association.  If (a) the right 
of the Borrower to make withdrawals from the Credit Account shall 
have 
been suspended with respect to any amount of the Credit for a 
continuous 
period of thirty days, or (b) at any time, the 
Association 
determines, after consultation with the Borrower, that 
an amount of the 
Credit will not be required to finance the 
Project’s costs to be financed 
out of the proceeds of the Credit, 
or (c) at any time, the Association 
determines, with respect to 
any contract to be financed out of the 
proceeds of the Credit, 
that corrupt or fraudulent practices were engaged in 
by 
representatives of the Borrower or of a beneficiary of the Credit 
during the procurement or the execution of such contract, without 
the 
Borrower having taken timely and appropriate action 
satisfactory to the 
Association to remedy the situation, and 
establishes the amount of 
expenditures in respect of such contract 
which would otherwise have been 
eligible for financing out of the 
proceeds of the Credit, or (d) at any 
time, the Association 
determines that the procurement of any contract to be 
financed out 
of the proceeds of the Credit is inconsistent with the procedures 
set forth or referred to in the Development Credit Agreement and 
establishes the amount of expenditures in respect of such contract 
which 
would otherwise have been eligible for financing out of the 
proceeds of 
the Credit, or (e) after the Closing Date, an amount 
of the Credit shall remain 
unwithdrawn from the Credit Account, 
the Association may, by notice to the 
Borrower, terminate the 
right of the Borrower to make withdrawals with 
respect to such 
amount.  Upon the giving of such notice, such amount of the 
Credit 
shall be cancelled.” 
Section 1.02. Unless the context otherwise requires, the several terms defined 
in the General Conditions have the respective meanings therein set forth and the 
following additional terms have the following meanings: 
(a)
“First Project Year” means the twelve-month period beginning from the 
Effective Date and ending twelve months thereafter, and “Project Year” means any 
twelve-month period beginning at the end of the First Project Year or the subsequent 
Project Years; 
(b)
“MOH” means the Borrower’s Ministry of Health; 
(c)
“MOF” means the Borrower’s Ministry of Finance; 
(d)
“PMU” means the Project Management Unit, established by the Borrower 
within MOH for the purpose of the coordination of the implementation of the Project; 
(e)
“Performance Monitoring Indicators” means the indicators referred to in 
Schedule 6 to this Agreement; 
(f)
“Project Implementation Plan” means the plan adopted by the Borrower, 
pursuant to Section 6.01(a) of this Agreement containing detailed arrangements 
regarding the implementation of the Project, as the same may be amended from time to 
time, in consultation with, and with the consent of the Association, and such term 
includes any schedules to the Project Implementation Plan;
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(g)
“Project Preparation Advance” means the project preparation advance 
granted by the Association to the Borrower pursuant to an exchange of letters, dated 
March 28, 1997 and May 5, 1997, between the Borrower and the Association; and  
(h)
“Special Account” means the account referred to in Section 2.02 (b) of 
this Agreement.
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 thirteen million four hundred thousand Special 
Drawing Rights (SDR 13,400,000). 
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 described in 
Schedule 2 to this Agreement 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 a separate special deposit account in its central bank on terms and 
conditions, satisfactory to the Association.  Deposits into, and payments out of, the 
Special Account shall be made in accordance with the provisions of Schedule 5 to this 
Agreement.
(c)
Promptly after the Effective Date, the Association shall, on behalf of 
the Borrower, withdraw from the Credit Account and pay to itself the amount required 
to repay the principal amount of the Project Preparation Advance withdrawn and 
outstanding as of such date and to pay all unpaid charges thereon. The unwithdrawn 
balance of the authorized amount of the Project Preparation Advance shall thereupon be 
canceled. 
Section 2.03. The Closing Date shall be June 30, 2003, or such later date as 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 
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. 
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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, 2008 and ending October 1, 2037. Each 
installment to, and including the installment payable on October 1, 2017, 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.
ARTICLE III
Execution of the Project 
Section 3.01. (a) The Borrower declares its commitment to the objectives of the 
Project as set forth in Schedule 2 to this Agreement and, to this end, shall carry out 
the Project with due diligence and efficiency and in conformity with appropriate 
technical, administrative, health and environmental practices, and shall provide, 
promptly as needed, the funds, facilities, services and other resources required for 
the Project. 
(b)
Without limitation upon the provisions of paragraph (a) of this Section 
and except as the Borrower and the Association shall otherwise agree, the Borrower 
shall carry out the Project in accordance with the Implementation Program set forth in 
Schedule 4 to this Agreement. 
Section 3.02. Except as the Association shall otherwise agree, procurement of 
the goods, works and consultants’ services required for the Project and to be financed 
out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to 
this Agreement.
Section 3.03. For the purposes of Section 9.07 of the General Conditions and 
without limitation thereto, the Borrower shall: 
(a)
prepare, on the basis of guidelines acceptable to the Association, and 
furnish to the Association not later than six (6) months after the Closing Date or 
such later date as may be agreed for this purpose between the Borrower and the 
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Association, a plan for the future operation of the Project; and 
(b)
afford the Association a reasonable opportunity to exchange views with 
the Borrower on said plan.
ARTICLE IV
Financial Covenants 
Section 4.01. (a) The Borrower shall maintain or cause to be maintained records 
and accounts adequate to reflect in accordance with sound accounting practices the 
operations, resources and expenditures in respect of the Project of the departments or 
agencies of the Borrower responsible for carrying out the Project or any part thereof.
(b)
The Borrower shall:
(i)
have the records and accounts referred to in paragraph (a) 
of this Section including those for the Special Account for 
each fiscal year audited, in accordance with appropriate 
auditing 
principles consistently applied, by independent 
auditors acceptable 
to the 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, the 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 said records and accounts and the audit thereof 
as the 
Association shall 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 statements of expenditure, the Borrower shall:
(i)
maintain or cause to be maintained, in accordance with 
paragraph (a) of this Section, records and accounts 
reflecting such expenditures;
(ii)
retain, until at least one year after the 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 statements of 
expenditure submitted 
during such fiscal year, together 
with the procedures and internal 
controls involved in their 
preparation, can be relied upon to 
support the related 
withdrawals.
ARTICLE V
Remedies of the Association 
Section 5.01. Pursuant to Section 6.02 of the General Conditions, the following 
additional event is specified, namely that a situation has arisen which shall make it 
improbable that the Program, or a significant part thereof, will be carried out.
ARTICLE VI
Effective Date; Termination
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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 adopted a Project implementation plan, in form and 
substance acceptable to the Association; and 
(b)
the Borrower has established a financial management system, acceptable to 
the Association. 
Section 6.02. The date ninety (90) days after the date of this Agreement is 
hereby specified for the purposes of Section 12.04 of the General Conditions.
ARTICLE VII
Representative of the Borrower; Addresses 
Section 7.01. The Minister of the Borrower in charge of finance 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 895
Asmara
State of Eritrea
For the Association:
International Development Association
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Cable address:
Telex:
INDEVAS
248423 (MCI) or
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.
THE STATE OF ERITREA
By /s/ Semere Russom 
Authorized Representative
INTERNATIONAL DEVELOPMENT ASSOCIATION
By /s/ Callisto Madavo 
Regional Vice President 
Africa
SCHEDULE 1
Withdrawal of the Proceeds of the Credit
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1.
The table below sets forth the Categories of items to be financed out of the 
proceeds of the Credit, the allocation of the amounts of the Credit to each Category 
and the percentage of expenditures for items so to be financed in each Category:
Amount of the
Credit Allocated
% of
(Expressed in
  Expenditures
Category
SDR Equivalent)
to be Financed
(1)
Civil works
4,240,000
100% of foreign
expenditures and
90% of local
expenditures
(2)
Goods, including 
4,750,000
100% of foreign
equipment, furniture
expenditures and
and supplies
90% of local 
(excluding
expenditures
pharmaceutical
supplies)
(3)
Pharmaceutical
  660,000
100% of foreign
supplies
expenditures and
90% of local
expenditures
(4)
Consultants’
  590,000
100%
services
(5)
Training
  950,000
100%
(6)
Studies,
  220,000
100%
surveys and 
research
(7)
Incremental
  370,000
60%
Operating Costs
(8)
Refunding of 
  590,000
Amount due 
Project
pursuant to
Preparation
Section 2.02 (c)
Advance
of this Agreement
(9)
Unallocated
1,030,000
_________
TOTAL
      13,400,000
      ==========
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;
(b)
the term “local expenditures” means expenditures in the currency of the 
Borrower or for goods or services supplied from the territory of the 
Borrower; provided, however, that if the currency of the Borrower is also that of 
another country from the territory of which goods or services are supplied, 
expenditures in such currency for such goods or services shall be deemed to be 
“foreign expenditures”; and
(c)
the term “Incremental Operating Costs” means the incremental expenses 
incurred on account of Project implementation, management, and monitoring, including 
office supplies, vehicle operation, travel and supervision costs but excluding 
salaries of officials of the Borrower’s civil service. 
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3.
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.
4.
The Association may require withdrawals from the Credit Account to be made on 
the basis of statements of expenditure for expenditures for: (i) goods under contracts 
costing less than $100,000 equivalent each; (ii) for works under contracts costing 
less than $250,000 equivalent each; (iii) for services of consulting firms under 
contracts costing less than $100,000 equivalent each; (iv) for services of individual 
consultants under contracts costing less than $50,000 equivalent each; and (v) all 
training and operating costs, under such terms and conditions as the Association shall 
specify by notice to the Borrower.
SCHEDULE 2
Description of the Project 
The objective of the Project is to contribute to the improvement of health care 
delivery services and health status in the territory of the Borrower.
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:
Strengthening of Health Care Services Delivery 
1.
Expanding access to secondary referral health care through the construction, 
equipping and staffing of two referral hospitals in the towns of Barentu and 
Mendefera. 
2.
Increasing national primary health care coverage and quality through the 
acquisition of equipment, drugs and vaccines and supplies, and carrying out of 
training programs. 
3.
Expanding the national blood bank service including the construction of a 
central blood bank in Asmara and strengthening the network of blood banks in the 
territory of the Borrower.
Part B:
Strengthening of Institutional Capacity 
1.
Provision of technical advisory services, organization of training programs, and 
carrying out of studies to strengthen managerial capacity at all levels in the 
Borrower’s administration, and to improve mechanisms to promote involvement and 
managerial autonomy within the hospitals and rural health facilities, to raise and 
manage additional revenue to sustain rural health facilities and primary health care 
program.
2.
Provision of technical advisory services and training to assist MOH in the 
implementation and overall coordination and management of the Project. 
* * * 
The Project is expected to be completed by December 31, 2002.
SCHEDULE 3
Procurement and Consultants’ Services 
Section I.
Procurement of Goods and Works
Part A:
General
Goods and works shall be procured in accordance with the provisions of Section I 
of the “Guidelines for Procurement under IBRD Loans and IDA Credits” published by the 
Bank in January 1995 and revised in January and August 1996 (the Guidelines) and the 
following provisions of this Section, as applicable.
Part B:
International Competitive Bidding 
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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
and domestic contractors
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 and works 
to be carried out by domestic contractors.
(c)
Notification and Advertising 
The invitation to prequalify or bid for each contract estimated to cost 
$10,000,000 equivalent or more shall be advertised in accordance with the procedures 
applicable to large contracts under paragraph 2.8 of the Guidelines.
Part C:
Other Procurement Procedures 
1.
National Competitive Bidding 
Goods estimated to cost less than $100,000 equivalent per contract, up to an 
aggregate amount not to exceed $2,250,000 equivalent and works estimated to cost less 
than $250,000 equivalent per contract, up to an aggregate amount not to exceed 
$250,000 equivalent, may be procured under contracts awarded in accordance with the 
provisions of paragraphs 3.3 and 3.4 of the Guidelines. 
2.
Shopping 
Goods estimated to cost less than $50,000 equivalent per contract, up to an 
aggregate amount not to exceed $250,000 equivalent, may be procured under contracts 
awarded on the basis of international and national shopping procedures in accordance 
with the provisions of paragraphs 3.5 and 3.6 of the Guidelines.
Part D:
Review by the Association of Procurement Decisions 
1.
Procurement Planning
Prior to the issuance of any invitations to prequalify for bidding or to bid for 
contracts, the proposed procurement plan for the Project shall be furnished to the 
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
With respect to each contract for goods, estimated to cost the equivalent of 
$100,000 or more and each contract for works estimated to cost the equivalent of 
$250,000 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
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Part A:
General
Consultants’ services shall be procured in accordance with the provisions of the 
Introduction and Section IV of the “Guidelines:  Selection and Employment of 
Consultants by World Bank Borrowers” published by the Bank in January 1997 (the 
Consultant Guidelines) and the following provisions of Section II of this Schedule.
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.
Part C:
Other Procedures for the Selection of Consultants  
1.
Selection Based on Consultants’ Qualifications
Services for training 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
Specialized services that meet the requirements set forth in paragraph 5.01 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 and (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 Management and Coordination 
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1.
The Borrower shall implement the Project in accordance with the PIP and, except 
as the Association shall otherwise agree, the Borrower shall not amend or waive any 
provision thereof if, in the opinion of the Association, such amendment or waiver may 
materially and adversely affect the implementation of the Project. 
2.
To ensure effective management and implementation of the Project, the Borrower 
shall establish and maintain a Project Management Unit (PMU), with terms of reference 
and composition acceptable to the Association and shall consist of suitably qualified 
and experienced staff  in adequate numbers. The PMU shall report to the Ministry of 
Health which shall be responsible for  the overall  coordination and policy guidance. 
3.
The Borrower shall maintain appropriate information systems necessary to enable 
the monitoring of Project implementation and evaluation of its development objectives, 
in accordance with the Performance Monitoring Indicators identified in Schedule 6 to 
this Agreement.
4.
The Borrower shall conduct a project launch workshop within two months of the 
Effective Date to facilitate the Project staff’s familiarization with the Project. 
Reports and Reviews 
5.
The Borrower shall prepare and, not later than February 28 and August 31 of each 
year, furnish to the Association semi-annual progress reports on Project 
implementation. The progress report to be prepared and furnished immediately prior to 
the  mid-term review referred to in paragraph 7 of this Schedule, shall in addition to 
the information contained in a semi-annual progress report, also integrate the 
progress achieved in the carrying out of the Project during the preceding years 
starting from the Effective Date, and a consideration of the continued validity of the 
Project objectives, strategies and design in relation to the Program. 
6.
(a)
The Borrower shall conduct four quarterly reviews of the progress of the 
Project each year, two of which shall be carried out jointly with the Association, in 
accordance with mutually acceptable terms of reference. 
(b)
Each quarterly review shall include the consideration of the progress 
made in the carrying out of the Project as well as issues affecting the success of the 
Project in the achievement of its development objectives.
(c)
Promptly after completing such reviews, the Borrower shall carry out 
recommendations arising out of said reviews. 
7.
(a)
The Borrower shall, not later than September 30, 2000, carry out, jointly 
with the Association, and in accordance with mutually acceptable terms of reference, a 
mid-term review of the Project. The mid-term review shall be in lieu of one of the 
quarterly reviews intended to be conducted in year 2000, pursuant to paragraph 6 (a) 
of this Schedule, and shall be based on the progress report prepared by the Borrower 
for that period pursuant to paragraph 5 of this Schedule. 
(b)
Promptly after the mid-term review, the Borrower shall carry out 
recommendations arising from it. 
8.
Program performance review shall be carried out at the mid-term review and 
Project completion using indicators referred to in Part 1 of Schedule 6 to this 
Agreement, made available by the Borrower to the Association at the baseline, at the 
mid-term review and at Project completion.
SCHEDULE 5
Special Account
1.
For the purposes of this Schedule:
(a)
the term “eligible Categories” means Categories (1) through (7) set forth 
in the table in paragraph 1 of Schedule 1 to this Agreement;
(b)
the term “eligible expenditures” means expenditures in respect of the 
reasonable cost of goods, works 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 
Page  12
Categories in accordance with the provisions of Schedule 1 to this Agreement; and
(c)
the term “Authorized Allocation” means an amount equivalent to $700,000 
in respect of the Special Account to be withdrawn from the Credit Account and 
deposited into the Special Account 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 $350,000 until 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 shall be equal to or exceed the equivalent of SDR 2,500,000. 
2.
Payments out of the Special Account shall be made exclusively for eligible 
expenditures in accordance with the provisions of this Schedule.
3.
After the Association has received evidence satisfactory to it that the Special 
Account has been duly opened, withdrawals of the Authorized Allocation and subsequent 
withdrawals to replenish the Special Account 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 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 Special Account 
such amount or amounts as the Borrower shall have requested.
(b)
(i)
For replenishment of the Special Account, the Borrower 
shall furnish to the Association requests for deposits into 
the 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 
Special Account such amount as the Borrower shall 
have 
requested and as shall have been shown by said documents 
and other evidence to have been paid out of the Special 
Account for eligible expenditures. All such deposits shall 
be withdrawn 
by the 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 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 the 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 Account;
(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
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(d)
once the total unwithdrawn amount of the Credit allocated to the eligible 
Categories for the 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, 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 for the Project shall follow such 
procedures as the Association shall specify by notice to the Borrower. Such further 
withdrawals shall be made only after and to the extent that the Association shall have 
been satisfied that all such amounts remaining on deposit in the Special Account as of 
the date of such notice will be utilized in making payments for eligible expenditures.
6.
(a)
If the Association shall have determined at any time that any payment out 
of the Special Account: (i) was made for an expenditure or in an amount not eligible 
pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence 
furnished to the Association, the Borrower shall, promptly upon notice from the 
Association, (A) provide such additional evidence as the Association may request, or 
(B) deposit into the Special Account (or, if the Association shall so request, refund 
to the Association) an amount equal to the amount of such payment or the portion 
thereof not so eligible or justified. Unless the Association shall otherwise agree, no 
further deposit by the Association into the Special Account shall be made until the 
Borrower has provided such evidence or made such deposit or refund, as the case may 
be.
(b)
If the Association shall have determined at any time that any amount 
outstanding in the Special Account will not be required to cover further payments for 
eligible expenditures, the Borrower shall, promptly upon notice from the Association, 
refund to the Association such outstanding amount.
(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 Account. 
(d)
Refunds to the Association made pursuant to paragraph 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 Monitoring Indicators 
1.
Achievement of Development Objectives
(to be reviewed every three years - at the national and zonal levels)
(a)
Infant mortality rate
(b)
Under five mortality rate
(c)
Maternal mortality ratio
(d)
Total fertility rate
(e)
Prevalence of malnutrition in children under five and in women
(f)
Prevalence of tuberculosis, malaria, acute respiratory infections, 
sexually transmitted diseases and acquired immune deficiency 
syndrome (AIDS)
(g)
% of publicly provided health services financed by local and 
community resources
2.
Implementation Progress (to be monitored every six months)
(a)
% of disbursement actual/planned
(b)
% of civil works completed/planned
(c)
% of equipment procured/planned
(d)
% of personnel recruited/planned
(e)
% of training completed/planned
(f)
% of rural health facilities fully equipped and furnished
(g)
Bed-occupancy ratios in hospitals and health centers by zone.
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