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CONFORMED COPY
LOAN NUMBER 4658-EGT
Loan Agreement
(Higher Education Enhancement Project)
between
ARAB REPUBLIC OF EGYPT
and
INTERNATIONAL BANK FOR RECONSTRUCTION
AND DEVELOPMENT
Dated: April 23, 2002
LOAN NUMBER 4658-EGT
LOAN AGREEMENT
AGREEMENT, dated April 23, 2002, between the ARAB REPUBLIC OF EGYPT (the 
Borrower) and the INTERNATIONAL BANK FOR RECONSTRUCTION AND 
DEVELOPMENT (the Bank).
WHEREAS (A) the Bank has received a letter dated February 11, 2002, from the 
Borrower describing the objectives, policies and actions and financing plan designed to develop 
and promote the efficiency, relevance and quality of higher education and the Bank has 
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responded thereto by a letter dated February 17, 2002;
(B)
the Borrower, having satisfied itself as to the feasibility and priority of the 
Project described in Schedule 2 to this Agreement (the Project), has requested the Bank to assist 
in the financing of the Project; and
(C)
the Bank has agreed, on the basis, 
inter alia
,
of
the foregoing, to extend the Loan 
to the Borrower in support of the Project upon the terms and conditions set forth in this 
Agreement;
NOW THEREFORE the parties hereto hereby agree as follows:
ARTICLE I
General Conditions; Definitions
Section 1.01. The “General Conditions Applicable to Loan and Guarantee Agreements 
for Single Currency Loans” of the Bank, dated May 30, 1995 (as amended through October 6, 
1999) (the General Conditions) constitute an integral part of this Agreement.
Section 1.02. Unless the context otherwise requires, the several terms defined in the 
General Conditions and in the Preamble to this Agreement have the respective meanings therein 
set forth, and the following additional terms have the following meanings:
(a)
“Financial Monitoring Report” means each report prepared in accordance with 
Section 4.02 of this Agreement;
(b)
“Fiscal Year” and “FY” mean the twelve (12) months period corresponding to 
any of the Borrower’s fiscal years, which period commences on July 1 and ends on June 30 of 
each calendar year;
(c)
“HEEPF” means the Higher Education Enhancement Project Fund to be 
established under Part A.1 of the Project, and thereafter maintained by the Borrower’s MOHE in 
accordance with the provisions of paragraph A.3 of Schedule 5 to this Agreement;
(d)
“HEEPF Grants” means grants made or to be by the Borrower, through MOHE, 
under Part A.2 of the Project to finance Sub-projects (as this term is hereinafter defined), in 
accordance with eligibility criteria set forth in the HEEPF Manual (as this term is hereinafter 
defined);
(e)
“HEEPF Manual” means the procedures manual, satisfactory to the Bank, dated 
March 10, 2002, which shall govern the carrying out of Part A.2 of the Project;
(f)
“MOHE” means the Ministry of Higher Education of the Borrower or any 
successor thereto;
(g)
“NQAC” means the National Quality Assurance Council to be established under 
Part A.1 of the Project, and thereafter maintained by the Borrower to ensure quality of higher 
education programs;
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(h)
“PMU” means the Project Management Unit to be maintained by the Borrower 
in accordance with the provisions of paragraph A.1 of Schedule 5 to this Agreement;
(i)
“Special Account” means the account referred to in Section 2.02 (b) of this 
Agreement; and
(j)
“Sub-project” means a specific activity under Part A.2 of the Project whose 
objective is to: (i) improve quality of teaching and learning; (ii) support collaboration between 
private sector and post-secondary institutions; or (iii) enhance efficiency of management and 
administration of post-secondary institutions.
ARTICLE II
The Loan
Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set 
forth or referred to in the Loan Agreement, an amount equal to fifty million Dollars 
(US$50,000,000).
Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in 
accordance with the provisions of Schedule 1 to this Agreement for: (i) amounts paid (or if the 
Bank shall so agree, to be paid) by MOHE on account of expenditures under a HEEPF Grant to 
meet the reasonable costs of goods, works and services required for Sub-projects under Part A.2 
of the Project; and (ii) expenditures made (or, if the Bank shall so agree, to be made) in respect 
of the reasonable cost of works, goods and services required for the other parts of the Project and 
to be financed out of the proceeds of the Loan.
(b)
The Borrower shall, through MOHE, for the purposes of the Project, open and 
maintain in dollars a special deposit account (the Special Account) in its Central Bank, on terms 
and conditions satisfactory to the Bank. Deposits into, and payments out of, the Special Account 
shall be made in accordance with the provisions of Schedule 6 to this Agreement.
Section 2.03. The Closing Date shall be December 31, 2007, or such later date as the 
Bank shall establish. The Bank shall promptly notify the Borrower of such later date.
Section 2.04. The Borrower shall pay to the Bank a front-end fee in an amount equal to 
one percent (1%) of the amount of the Loan. On or promptly after the Effective Date, the Bank 
shall, on behalf of the Borrower, withdraw from the Loan Account and pay to itself the amount 
of said fee.
Section 2.05. The Borrower shall pay to the Bank a commitment charge at the rate of 
three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Loan not 
withdrawn from time to time.
Section 2.06. (a) The Borrower shall pay interest on the principal amount of the Loan 
withdrawn and outstanding from time to time, at a rate for each Interest Period equal to LIBOR 
Base Rate plus LIBOR Total Spread.
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(b)
For the purposes of this Section:
(i)
“Interest Period” means the initial period from and including the date of 
this Agreement to, but excluding, the first Interest Payment Date 
occurring thereafter, and after the initial period, each period from and 
including an Interest Payment Date to, but excluding the next following 
Interest Payment Date.
(ii)
“Interest Payment Date” means any date specified in Section 2.07 of this 
Agreement.
(iii)
“LIBOR Base Rate” means, for each Interest Period, the London 
interbank offered rate for six-month deposits in dollars for value the first 
day of such Interest Period (or, in the case of the initial Interest Period, 
for value the Interest Payment Date occurring on or next preceding the 
first day of such Interest Period), as reasonably determined by the Bank 
and expressed as a percentage per annum.
(iv)
“LIBOR Total Spread” means, for each Interest Period: (A) three-fourths 
of one percent (3/4 of 1%); (B) minus (or plus) the weighted average 
margin, for such Interest Period, below (or above) the London interbank 
offered rates, or other reference rates, for six-month deposits, in respect 
of the Bank’s outstanding borrowings or portions thereof allocated by 
the Bank to fund single currency loans or portions thereof made by it 
that include the Loan; as reasonably determined by the Bank and 
expressed as a percentage per annum.
(c)
The Bank shall notify the Borrower of LIBOR Base Rate and LIBOR Total 
Spread for each Interest Period, promptly upon the determination thereof.
(d)
Whenever, in light of changes in market practice affecting the determination of 
the interest rates referred to in this Section 2.06, the Bank determines that it is in the interest of 
its borrowers as a whole and of the Bank to apply a basis for determining the interest rates 
applicable to the Loan other than as provided in said Section, the Bank may modify the basis for 
determining the interest rates applicable to the Loan upon not less than six (6) months’ notice to 
the Borrower of the new basis. The new basis shall become effective on the expiry of the notice 
period unless the Borrower notifies the Bank during said period of its objection thereto, in which 
case said modification shall not apply to the Loan.
Section 2.07. Interest and other charges shall be payable semiannually on February 15 
and August 15 in each year.
Section 2.08. The Borrower shall repay the principal amount of the Loan in accordance 
with the amortization schedule set forth in Schedule 3 to this Agreement.
Section 2.09 The Borrower represents that it has designated its Ministry of Finance for 
the purpose of handling, on behalf of the Borrower, debt service payments with respect of the 
Loan.
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ARTICLE III
Execution of the Project
Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project, 
and, to this end, shall carry out the Project, through MOHE, with due diligence and efficiency 
and in conformity with appropriate education, communication, coordination, management and 
governance 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 Bank shall otherwise agree, the Borrower shall, through MOHE, 
carry out the Project in accordance with the Implementation Program set forth in Schedule 5 to 
this Agreement.
Section 3.02. Except as the Bank 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 
Loan shall be governed by the provisions of Schedule 4 to this Agreement.
Section 3.03. For the purposes of Section 9.08 of the General Conditions and without 
limitation thereto, the Borrower shall, through MOHE:
(a)
prepare, on the basis of guidelines acceptable to the Bank, and furnish to the 
Bank not later than six (6) months after the Closing Date or such later date as may be agreed for 
this purpose between the Borrower and the Bank, a plan for the continued achievement of the 
objectives of the Project; and
(b)
afford the Bank a reasonable opportunity to exchange views with the Borrower 
on said plan.
ARTICLE IV
Financial Covenants
Section 4.01. (a) The Borrower shall, through MOHE, maintain a financial management 
system, including records and accounts, and prepare financial statements, in a format acceptable 
to the Bank, adequate to reflect its operations and financial condition and to register separately 
the operations related to the Project.
(b)
The Borrower shall, through MOHE:
(i)
have the records, accounts and financial statements referred to in 
Paragraph (a) of this Section and the records and accounts for the 
Special Account for each Fiscal Year audited, in accordance with 
auditing standards acceptable to the Bank, consistently applied, by 
independent auditors acceptable to the Bank;
(ii)
furnish to the Bank as soon as available, but in any case not later than six 
(6) months after the end of each such year: (A) certified copies of its 
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financial statements referred to in paragraph (a) above for such year as 
so audited, and (B) an opinion on such statements, records and accounts 
and a report of such audit, by said auditors, of such scope and in such 
detail as the Bank shall have reasonably requested; and
(iii)
furnish to the Bank such other information concerning such records, 
accounts and financial statements, and the audit thereof, and concerning 
said auditors, as the Bank shall from time to time reasonably request.
Section 4.02. The Borrower shall, through MOHE, prepare and furnish to the Bank not 
later than 45 days after the end of the first calendar quarter, after the Effective Date and 
thereafter not later than 45 days after each calendar quarter, a Financial Monitoring Report for 
such period in a format and content acceptable to the Bank, each of which:
(a)
(i) sets forth actual and budgeted sources and applications of funds for the 
Project, both cumulatively and for the period covered by said report; (ii) shows 
separately expenditures financed out of the proceeds of the Loan during the 
period covered by said report; and (iii) explains the variances between actual and 
budgeted expenditures;
(b)
(i) describes physical progress in Project implementation, both cumulatively and 
for the period covered by said report, and (ii) explains variances between the 
actual and previously forecast implementation targets; and
(c)
sets forth the status of procurement under the Project, as at the end of the period 
covered by said report.
ARTICLE V
Termination
Section 5.01. The date one hundred and twenty (120) days after the date of this 
Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions.
ARTICLE VI
Representatives of the Borrower
Section 6.01. The Minister of State for Foreign Affairs of the Borrower is designated as 
representative of the Borrower for the purposes of Section 11.03 of the General Conditions.
Section 6.02. The following addresses are specified for the purposes of Section 11.01 of 
the General Conditions:
For the Borrower:
Ministry of Foreign Affairs
(International Cooperation Sector)
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8 Adly Street,
Cairo, Egypt
Cable address:
Facsimile:
Ministry of Foreign Affairs,
(202) 578 9711
(International Cooperation Sector)
(202) 391 5167
Cairo, Arab Republic of Egypt
For the Bank:
International Bank for
  Reconstruction and Development
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Cable address:
Telex:
Facsimile:
INTBAFRAD
248423 (MCI) or
(202) 477-6391
Washington, D.C.
  64145 (MCI)
IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized 
representatives, have caused this Agreement to be signed in their respective names in 
Washington D. C., as of the day and year first above written.
ARAB REPUBLIC OF EGYPT
By /s/ H.E. Nabil Fahmy
Authorized Representative
INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT
By /s/ Jean-Louis Sarbib
Regional Vice President
Middle East and North Africa
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SCHEDULE 1
Withdrawal of the Proceeds of the Loan
1.
The table below sets forth the Categories of items to be financed out of the proceeds of 
the Loan, the allocation of the amounts of the Loan to each Category and the percentage of 
expenditures for items so to be financed in each Category:
Amount of the
Loan Allocated
% of
(Expressed in
Expenditures
Category
United States dollars
)
to be Financed
(1)
Civil works
  4,500,000
75%
(2)
Goods
11,000,000
100% of foreign 
expenditures;
100% of local 
expenditures (ex-factory cost); 
and 75% of other items 
procured locally
(3)
Consultants' services
16,000,000
100%
and training
(4)
HEEPF Grants
12,000,000
100% of
amounts disbursed
by MOHE
(5)
Incremental 
Operating Costs
  1,500,000
80%
(6)
Front-end fee
    500,000
Amount due under
Section 2.04 of this Agreement
(7)
Unallocated
 4,500,000
TOTAL
50,000,000
2.
For the purposes of this Schedule:
(a)
the term “foreign expenditures” means expenditures in the currency of any 
country other than that of the Borrower for goods or services supplied from the territory of any 
country other than that of the Borrower;
(b)
the term “local expenditures” means expenditures in the currency of the 
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Borrower or for goods or services supplied from the territory of the Borrower; and
(c)
the term “Incremental Operating Costs” means expenditures incurred by the 
PMU on account of office furniture and supplies, local transportation, audit and PMU staff costs, 
excluding salaries of officials of the Borrower.
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 Bank may require withdrawals from the Loan Account to be made on the basis of 
statements of expenditure for expenditures for: (i) goods under contracts costing less than 
$250,000 equivalent each; (ii) works under contracts costing less than $600,000 equivalent each; 
(iii) services of consulting firms under contracts costing less than $100,000 equivalent each; (iv) 
services of individual consultants under contracts costing less than $50,000 equivalent each; and 
(v) HEEPF Grants, under such terms and conditions as the Bank shall specify by notice to the 
Borrower’s MOHE.
SCHEDULE 2
Description of the Project
The objective of the Project is to create conditions conducive to improving the quality 
and efficiency of the Borrower’s higher education system through legislative reform, institutional 
restructuring and the establishment of independent quality assurance mechanisms and monitoring 
systems.
The Project consists of the following parts, subject to such modifications thereof as the 
Borrower and the Bank may agree upon from time to time to achieve such objectives:
Part A
:
Reform of the overall governance and management efficiency of the higher 
education system
1.
Provision of goods and consultants’ services to: (i) reform the legislation governing the 
Borrower’s higher education system; (ii) rationalize funding allocation mechanisms according to 
a
transparent, equitable, and formula-driven approach; (iii) establish the NQAC and provide it 
with capacity building tools; (iv) provide training to members of higher education governing 
bodies and higher education administrators in management and financing practices, and in the 
use of technology to rationalize administrative procedures; and (v) establish and support the 
operation of the HEEPF.
2.
Provision of HEEPF Grants to post-secondary institutions for carrying out Sub-projects.
Part B
:
Improvement of quality and relevance of university education
Provision of works, goods and consultants’ services for: (i) the establishment of an 
integrated computer and network infrastructure for the deployment of a high-speed network 
infrastructure; (ii) in-service training for university faculty and instructors to develop their 
competencies in the use and application of instructional technology in their teaching; and (iii) the 
installation and operationalization of an inter-university library system.
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Part C
:
Improvement of the quality and relevance of mid-level technical education
Provision of works, goods and consultants’ services for: (i) the refurbishment of old 
facilities to acceptable international standards and construction of new facilities; (ii) curriculum 
redesign and instructor training; (iii) equipment upgrading, including information technology 
equipment; and (iv) training for strengthened administration and management.
* * *
The Project is expected to be completed by June 30, 2007
SCHEDULE 3
Amortization Schedule
Payment of Principal
Date Payment Due
(Expressed in
United States dollars)
On each February 15 and August 15
Beginning August 15, 2007 up to August 15, 2018
2,085,000
And on February 15, 2019
2,045,000
__________________
*
The figures in this column represent the amount in United States dollars to be repaid, 
except 
as provided in Section 4.04 (d) of the General Conditions.
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SCHEDULE 4
Procurement
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, September 1997 and January 1999 (the 
Guidelines) and the following provisions of Section I of this Schedule.
Part B
: International Competitive Bidding
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.
Part C:
Other Procurement Procedures
1.
National Competitive Bidding
Works estimated to cost less than $600,000 equivalent per contract, up to an aggregate 
amount not to exceed $4,500,000 equivalent, and goods estimated to cost less than $250,000 
equivalent per contract, up to an aggregate amount not to exceed $1,500,000 equivalent may be 
procured under contracts awarded in accordance with the provisions of paragraphs 3.3 and 3.4 of 
the Guidelines.
2.
International Shopping
Goods estimated to cost less than $100,000 equivalent per contract, up to an aggregate 
amount not to exceed $1,600,000 equivalent, may be procured under contracts awarded on the 
basis of international shopping procedures in accordance with the provisions of paragraphs 3.5 
and 3.6 of the Guidelines.
3.
National Shopping
Goods estimated to cost less than $50,000 equivalent per contract, up to an aggregate 
amount not to exceed $1,100,000 equivalent, may be procured under contracts awarded on the 
basis of national shopping procedures in accordance with the provisions of paragraphs 3.5 and 
3.6 of the Guidelines.
Part D:
Review by the Bank of Procurement Decisions
1.
Procurement Planning
Prior to the issuance of any invitations to bid for contracts, the proposed procurement 
plan for the Project shall be furnished to the Bank for its review and approval, in accordance with 
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the provisions of paragraph 1 of Appendix 1 to the Guidelines. Procurement of all goods and 
works shall be undertaken in accordance with such procurement plan as shall have been 
approved by the Bank, and with the provisions of said paragraph 1.
2.
Prior Review
(a)
With respect to each contract for: (i) goods estimated to cost the equivalent of 
US$250,000 or more; (ii) the first three contracts for goods estimated to cost the equivalent of 
US$100,000 or more but less than the equivalent of US$250,000; and (iii) the first three 
contracts for works, the procedures set forth in paragraphs 2 and 3 of Appendix 1 to the 
Guidelines shall apply.
(b)
With respect to the first three contracts for goods, procured under shopping 
procedures, estimated to cost the equivalent of $50,000 or more, but less than the equivalent of 
$100,000, the following procedures shall apply:
(i)
prior to the selection of any supplier under shopping procedures, the 
Borrower shall, through MOHE, provide to the Bank a report on the 
comparison and evaluation of quotations received;
(ii)
prior to the execution of any contract procured under shopping 
procedures, the Borrower shall, through MOHE, provide to the Bank a 
copy of the specifications and the draft contract; and
(iii)
the procedures set forth in paragraphs 2(f), 2(g) and 3 of Appendix 1 to 
the Guidelines shall apply.
3.
Post Review
With respect to each contract not governed by paragraph 2 of this Part, the procedures set 
forth in paragraph 4 of Appendix 1 to the Guidelines shall apply.
Section II.
Employment of Consultants
Part A:
General
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 and revised in September 1997 
and January 1999 (the Consultant Guidelines) and the following provisions of Section II of this 
Schedule.
Part B:
Quality- and Cost-based Selection
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.
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Part C:
Other Procedures for the Selection of Consultants
1.
Selection Based on Consultants’ Qualifications
Services estimated to cost less than $50,000 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.
Quality-based Selection
Services estimated to cost less than $100,000 equivalent per contract, shall be procured 
under contracts awarded in accordance with the provisions of paragraphs 3.1 through 3.4 of the 
Consultant Guidelines.
3.
Individual Consultants
Services for tasks that meet the requirements set forth in paragraph 5.1 of the Consultant 
Guidelines shall be procured under contracts awarded to individual consultants in accordance 
with the provisions of paragraphs 5.1 through 5.3 of the Consultant Guidelines.
Part D:
Review by the Bank 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 Bank 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 Bank, and with the provisions of said 
paragraph 1.
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2.
Prior Review
(a)
With respect to each contract for the employment of consulting firms estimated 
to cost the equivalent of $100,000 or more, the procedures set forth in paragraphs 1, 2 (other than 
the third subparagraph of paragraph 2(a)) and 5 of Appendix 1 to the Consultant Guidelines shall 
apply.
(b)
With respect to each contract for the employment of consulting firms estimated 
to cost the equivalent of $50,000 or more, but less than the equivalent of $100,000, the 
procedures set forth in paragraphs 1, 2 (other than the second subparagraph of paragraph 2(a)) 
and 5 of Appendix 1 to the Consultant  Guidelines shall apply.
(c)
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 Bank 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 5
Implementation Program
A.
Project Implementation
1.
Overall responsibility for Project management and implementation shall be vested in 
MOHE, which shall be assisted by the PMU. The Borrower shall, through MOHE, maintain the 
PMU within MOHE, with professional staff in adequate numbers whose qualifications, 
experience and terms of reference shall be acceptable to the Bank.
2.
The functions of the PMU shall include, 
inter alia
,
responsibility for: (i) the procurement 
process and the preparation of withdrawal applications under the Project; (ii) monitoring, in 
accordance with indicators agreed upon with the Bank, progress in the implementation of the 
Project; (iii) preparation, for submission to the Bank, of annual work programs and updated 
procurement plans relating to the Project; (iv) budgeting, financial management and accounting; 
and (v) preparation, for submission to the Bank, of the reports referred to under paragraph B of 
this Schedule.
3.
The Borrower shall, through MOHE: (i) establish HEEPF by July 1, 2004, and NQAC by 
July 1, 2005, with adequate resources satisfactory to the Bank and personnel in adequate 
numbers, whose qualifications, experience and terms of reference shall be acceptable to the 
Bank; (ii) ensure that HEEPF Grants under Part A.2 of the Project shall be made in accordance 
with eligibility criteria, requirements and other details set out in the HEEPF Manual; and (iii) 
review with the Bank at such intervals as the Bank may request, the HEEPF Manual, and, based 
on such reviews, update the same as may be agreed between the Borrower and the Bank.
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B.
Mid-Term Review
The Borrower shall, through MOHE:
(a)
maintain policies and procedures adequate to enable it to monitor and evaluate 
on an ongoing basis, in accordance with indicators acceptable to the Bank, the carrying out of the 
Project and the achievement of the objectives thereof;
(b)
prepare, under terms of reference satisfactory to the Bank, and furnish to the 
Bank on or about April 1, 2005, a report integrating the results of the monitoring and evaluation 
activities performed pursuant to paragraph (a) of this Section, on the progress achieved in the 
carrying out of the Project during the period preceding the date of said report and setting out the 
measures recommended to ensure the efficient carrying out of the Project and the achievement of 
the objectives thereof during the period following such date; and
(c)
review with the Bank, by June 30, 2005, or such later date as the Bank shall 
request, the report referred to in paragraph (b) of this Section, and, thereafter, take all measures 
required to ensure the efficient completion of the Project and the achievement of the objectives 
thereof, based on the conclusions and recommendations of the said report and the Bank’s views 
on the matter. 
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SCHEDULE 6
Special Account
1.
For the purposes of this Schedule:
(a)
the term “eligible Categories” means Categories (1), (2), (3), (4) and (5) 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 works, goods and services required for the Project and to be financed out of the proceeds 
of the Loan allocated from time to time to the eligible Categories in accordance with the 
provisions of Schedule 1 to this Agreement; and
(c)
the term “Authorized Allocation” means an amount equivalent to $4,000,000 to 
be withdrawn from the Loan Account and deposited into the Special Account pursuant to 
paragraph 3 (a) of this Schedule, provided, however, that unless the Bank shall otherwise agree, 
the Authorized Allocation shall be limited to an amount equivalent to $2,000,000 the aggregate 
amount of withdrawals from the Loan Account plus the total amount of all outstanding special 
commitments entered into by the Bank pursuant to Section 5.02 of the General Conditions shall 
be equal to or exceed the equivalent of $10,000,000.
2.
Payments out of the Special Account shall be made exclusively for eligible expenditures 
in accordance with the provisions of this Schedule.
3.
After the Bank has received evidence satisfactory to it that the Special Account has been 
duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish 
the Special Account shall be made as follows:
(a)
For withdrawals of the Authorized Allocation, the Borrower shall, through 
MOHE, furnish to the Bank 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 Bank shall, on behalf of the Borrower, withdraw from 
the Loan Account and deposit into the Special Account such amount or amounts as the 
Borrower’s MOHE shall have requested.
(b)
(i)
For replenishment of the Special Account, the Borrower shall, through 
MOHE, furnish to the Bank requests for deposits into the Special 
Account at such intervals as the Bank shall specify.
(ii)
Prior to or at the time of each such request, the Borrower shall, through 
MOHE, furnish to the Bank the documents and other evidence required 
pursuant to para-graph 4 of this Schedule for the payment or payments in 
respect of which replenishment is requested. On the basis of each such 
request, the Bank shall, on behalf of the Borrower, withdraw from the 
Loan Account and deposit into the Special Account such amount as the 
Borrower’s MOHE 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 
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withdrawn by the Bank from the Loan Account under the respective 
eligible Categories, and in the respective equivalent amounts, as shall 
have been justified by said documents and other evidence.
4.
For each payment made by the Borrower, through MOHE, out of the Special Account, 
the Borrower shall, through MOHE, at such time as the Bank shall reasonably request, furnish to 
the Bank such documents and other evidence showing that such payment was made exclusively 
for eligible expenditures.
5.
Notwithstanding the provisions of paragraph 3 of this Schedule, the Bank shall not be 
required to make further deposits into the Special Account:
(a)
if, at any time, the Bank shall have determined that all further withdrawals 
should be made by the Borrower directly from the Loan Account in accordance with the 
provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this 
Agreement;
(b)
if the Borrower’s MOHE shall have failed to furnish to the Bank, within the 
period of time specified in Section 4.01 (b) (ii) of this Agreement, any of the audit reports 
required to be furnished to the Bank pursuant to said Section in respect of the audit of the records 
and accounts for the Special Account;
(c)
if, at any time, the Bank shall have notified the Borrower of its intention to 
suspend in whole or in part the right of the Borrower to make withdrawals from the Loan 
Account pursuant to the provisions of Section 6.02 of the General Conditions; or
(d)
once the total unwithdrawn amount of the Loan allocated to the eligible 
Categories, minus the total amount of all outstanding special commitments entered into by the 
Bank 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 Loan Account of the remaining unwithdrawn amount of the 
Loan allocated to the eligible Categories shall follow such procedures as the Bank shall specify 
by notice to the Borrower.  Such further withdrawals shall be made only after and to the extent 
that the Bank shall have been satisfied that all such amounts remaining on deposit in the Special 
Account as of the date of such notice will be utilized in making payments for eligible 
expenditures.
6.
(a)
If the Bank shall have determined at any time that any payment out of the 
Special Account: (i) was made for an expenditure or in an amount not eligible pursuant to 
paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished to the Bank, the 
Borrower shall, promptly upon notice from the Bank: (A) provide such additional evidence as the 
Bank may request, or (B) deposit into the Special Account (or, if the Bank shall so request, 
refund to the Bank) an amount equal to the amount of such payment or the portion thereof not so 
eligible or justified. Unless the Bank shall otherwise agree, no further deposit by the Bank into 
the Special Account shall be made until the Borrower has provided such evidence or made such 
deposit or refund, as the case may be.
(b)
If the Bank shall have determined at any time that any amount outstanding in the 
Special Account will not be required to cover further payments for eligible expenditures, the 
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Borrower shall promptly upon notice from the Bank, refund to the Bank such outstanding 
amount.
(c)
The Borrower may, upon notice to the Bank, refund to the Bank all or any 
portion of the funds on deposit in the Special Account.
(d)
Refunds to the Bank made pursuant to paragraphs 6 (a), (b) and (c) of this 
Schedule shall be credited to the Loan Account for subsequent withdrawal or for cancellation in 
accordance with the relevant provisions of this Agreement, including the General Conditions.