Page  1
CONFORMED 
COPY 
CREDIT NUMBER 3834-2-PAK 
(Amendment) 
 
Second Agreement Amending the 
Development Credit Agreement  
 
(Second Poverty Alleviation Fund Project 
–
Second Additional Financing) 
 
between 
 
ISLAMIC REPUBLIC OF PAKISTAN 
 
and 
 
INTERNATIONAL DEVELOPMENT ASSOCIATION 
 
Dated May 2, 2007 
 
Page  2
-
2-
 
Page  3
CREDIT NUMBER 3834-2-PAK 
(Amendment)
 
SECOND AGREEMENT AMENDING THE 
DEVELOPMENT CREDIT AGREEMENT 
 
This SECOND AMENDING AGREEMENT is dated May 2, 2007, and is made 
between ISLAMIC REPUBLIC OF PAKISTAN (the 
“Borrower”) and 
INTERNATIONAL DEVELOPMENT ASSOCIATION (the “Association”). 
 
(A) 
WHEREAS pursuant to a development credit agreement dated 
 
January 20, 2004, between the Borrower and the Association, as amended to date (the 
“Development Credit Agreement”), the Association agreed to provide the Borrower with 
a
credit in an amount in various currencies equivalent to one hundred sixty-eight million 
one hundred thousand Special Drawing Rights (SDR 168,100,000) to assist in financing 
the Second Poverty Alleviation Fund Project described in Schedule 2 to the Development 
Credit Agreement (the “Project”); 
 
(B) 
WHEREAS pursuant to a project agreement dated January 20, 2004, 
between Pakistan Poverty Alleviation Fund (PPAF) and the Association, as amended to 
date (the “Project Agreement”), PPAF agreed to carry out the Project in accordance with 
the Implementation Program set forth in Schedule 2 to the Project Agreement; 
 
(C) 
WHEREAS pursuant to an Agreement Amending the Development 
Credit Agreement dated December 6, 2005 (the “Amending Agreement”), the 
Association agreed to provide additional financial assistance in support of the Project to 
support the relief, reconstruction and rehabilitation of communities affected by the 
earthquake which occurred in the Borrower’s territory on October 8, 2005 (the 
“Emergency”), by: (i) increasing the amount made available under the Development 
Credit Agreement by an amount in various currencies equivalent to sixty eight million 
nine hundred thousand Special Drawing Rights (SDR 68,900,000); and (ii) reallocating 
an amount in various currencies equivalent to three million five hundred thirty thousand 
Special Drawing Rights (SDR 3,530,000) to activities responding to the Emergency; 
 
(D) 
WHEREAS the Borrower has requested the Association to provide 
additional financial assistance in support of the relief, reconstruction and rehabilitation of 
communities affected by the Emergency, by increasing the amount made available under 
the Development Credit Agreement and the Amending Agreement by an amount in 
various currencies equivalent to ninety one million eight hundred thousand Special 
Drawing Rights (SDR 91,800,000); and 
 
(E) 
WHEREAS the Association has agreed, on the basis, among other 
things, of the foregoing to extend such additional financial assistance to the Borrower 
upon the terms and conditions set forth in this Second Amending Agreement; 
 
Page  4
-
2-
 
NOW THEREFORE the parties agree as follows: 
 
ARTICLE I 
 
General Conditions; Definitions 
 
Section 1.01.  
The “General Conditions Applicable to Development Credit 
Agreements” of the Association, dated January 1, 1985 (as amended through 
 
October 6, 1999) (the “General Conditions”) constitute an integral part of this Second 
Amending Agreement. 
 
Section 1.02.  Unless the context otherwise requires and except where otherwise 
defined in this Second Amending Agreement, all capitalized terms contained herein shall 
have the meanings given to them in the Development Credit Agreement, the Amending 
Agreement, the Preamble to this Second Amending Agreement, or in the General 
Conditions as the case requires. 
 
ARTICLE II 
 
Amending Provisions 
 
Section 2.01.  Section 1.02 of the Development Credit Agreement is amended by 
deleting the word “and” at the end of Sub-section (za), by replacing the full stop at the end 
of Sub-section (zb) with a semi-colon and by inserting the following new definition: 
 
“(zc)“Second Amending Agreement” means this Second Agreement Amending the 
Development Credit Agreement (Second Poverty Alleviation Fund Project) 
between the  Borrower and the Association dated                                  ; 2007.” 
 
Section 2.02.  Section 2.01 of the Development Credit Agreement is amended to 
read as follows: 
 
“Section 2.01. The Association agrees to make available to the Borrower, 
on the terms and subject to the conditions set out, or referred to, in the 
Development Credit Agreement, an amount in various currencies equivalent to 
three hundred twenty eight million eight hundred thousand Special Drawing 
Rights (SDR 328,800,000) (the “Credit”) which consists of: (a) an initial amount 
in various currencies equivalent to one hundred sixty-eight million one hundred 
thousand Special Drawing Rights (SDR 168,100,000) (the “Initial Credit”); 
 (b) an additional amount in various currencies equivalent to sixty eight million 
nine hundred thousand Special Drawing Rights (SDR 68,900,000) 
 
(the “Additional Credit”); and (c) a second additional amount in various 
currencies equivalent to ninety one million eight hundred thousand Special 
Drawing Rights (SDR 91,800,000) (the “Second Additional Credit”);”  
 
Page  5
-
3-
 
Section 2.03. A second proviso is added at the end of Section 2.04(b)(i) of the 
Development Credit Agreement reading as follows:  
 
“; provided however that the commitment charge on the Second 
Additional Credit shall accrue from a date sixty (60) days after the date of the 
signing of the Second Amending Agreement.” 
 
Section 2.04. A new Sub-Section (f) is added to Section 2.07 of the Development 
Credit Agreement reading as follows: 
 
“(f) 
Subject to paragraphs (b), (c) and (d) above, the Borrower shall 
repay the principal amount of the Second Additional Credit in semiannual 
installments payable on each February 1 and August 1 commencing 
 
August 1, 2017 and ending February 1, 2042. Each installment to and including 
the installment payable on February 1, 2027, shall be one and one-fourth percent 
(1-1/4%) of such principal amount, and each installment thereafter shall be two 
and one half percent (2-1/2%) of such principal amount.” 
 
Section 2.05. The table in paragraph A.1 of Schedule 1 to the Development Credit 
Agreement (Withdrawal of the Proceeds of the Credit), is amended to read as set forth in 
the Annex to this Second Amending Agreement.  
 
Section 2.06. A new paragraph is added to Schedule 1.A reading as follows: 
 
“8. 
Notwithstanding the provisions of paragraph 1 above, no 
withdrawals shall be made in respect of payments made for expenditures prior to 
the date of the Second Amending Agreement, except that withdrawals in an 
aggregate amount not exceeding the equivalent of twenty-five million United 
States dollars $25,000,000 may be made in respect of Categories (9), (10) and 
(11) on account of payments made for expenditures before that date but after 
August 1, 2006.  
 
Section 2.07.  Except as expressly provided in this Second Amending 
Agreement, all other provisions of the Development Credit Agreement shall remain in 
full force and effect. 
 
ARTICLE III 
 
Effective Date; Termination 
 
Section 3.01.  This Second Amending Agreement shall not become effective 
until a legal opinion or opinions satisfactory to the Association, showing that: (i) this 
Page  6
-
4-
 
Second Amending Agreement has been duly authorized or ratified by, and executed and 
delivered on behalf of the Borrower and is legally binding upon the Borrower in 
accordance with its terms, has been received by the Association; and (ii) the Second 
Agreement Amending the Project Agreement has been duly authorized or ratified by, and 
executed and delivered on behalf of PPAF and is legally binding upon PPAF in 
accordance with its terms, has been received by the Association. 
 
Section 3.02.  This Second Amending Agreement shall come into force and 
effect on the date upon which the Association shall dispatch to the Borrower notice of its 
acceptance of the evidence required pursuant to Section 3.01 of this Second Amending 
Agreement. 
 
Section 3.03. The date ninety (90) days after the date of this Second Amending 
Agreement is hereby specified for the purposes of Section 12.04 of the General 
Conditions. If this Second Amending Agreement shall terminate under the provisions of 
this Section, the Development Credit Agreement shall continue in full force and effect, as 
if this Second Amending Agreement had not been executed. 
 
ARTICLE IV 
 
Representatives of the Borrower; Addresses 
 
Section 4.01. The Secretary to the Government of Pakistan, Economic Affairs 
Division, or any Additional Secretary, Joint Secretary, Deputy Secretary or Section 
Officer of that Division is designated as representative of the Borrower for the purposes 
of Section 11.03 of the General Conditions. 
 
Section 4.02. The following addresses are specified for the purposes of 
Section 11.01 of the General Conditions: 
 
For the Borrower: 
 
Economic Affairs Division 
 
Islamabad 
 
Pakistan
 
Cable 
address: 
 Telex: 
  Facsimile: 
Page  7
-
5-
 
ECONOMIC 
 ECDIV-05-634 
 92 
51 
9205971 
 
Islamabad 
    92 
51 
9218976 
 
For the Association: 
 
International Development Association 
 
1818
H
Street, N.W. 
 
Washington, D.C. 20433 
 
United States of America 
 
Cable 
address: 
 Telex: 
  Facsimile: 
 
INDEVAS 
 
248423 (MCI) or 
(202) 477-6391 
 
Washington, D.C. 
  64145 (MCI) 
 
IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized 
representatives, have caused this Agreement to be signed in their respective names in 
Islamabad, Pakistan, as of the day and year first above written. 
 
ISLAMIC REPUBLIC OF PAKISTAN 
 
By /s/ Akram Malik 
Authorized Representative 
 
INTERNATIONAL DEVELOPMENT ASSOCIATION 
 
By  /s/ Yusupha B. Crookes 
 
Authorized Representative 
Annex 
 
SCHEDULE 1 
 
Withdrawal of the Proceeds of the Credit  
 
The table below sets forth the Categories of items to be financed out of the 
proceeds of the Credit (including the Initial Credit, the Additional Credit and the Second 
Page  8
-
6-
 
Additional Credit), the allocation of the amounts of the Credit to each Category and the 
percentage of expenditures for items so to be financed in such Category: 
 
Category
Amount of the 
Initial Credit 
Allocated 
(Expressed in 
SDR 
Equivalent)
Amount of the 
Additional 
Credit 
Allocated 
(Expressed in 
SDR 
Equivalent)
Amount of the 
Second Additional 
 Credit Allocated 
(Expressed in  
SDR Equivalent)
%
of
Expenditures  
to be Financed
(1) Sub-loans 
provided: 
(a) other than 
through EDF 
(b) through EDF 
 
92,670,0
00 
1,470,00
0
100% of 
amounts 
disbursed by 
PPAF 
(2) Grant for: 
 
100% of 
amounts 
disbursed by 
PPAF 
 
(a) SSIPs
 
35,860,00
0
(b) SSDPs
 
3,530,00
0
(3) Civil works 
1,260,00
0
90% 
 
(4) Equipment and 
vehicles for: 
 
100% of foreign 
expenditures, 
100% of local 
expenditures     
(ex-factory 
cost) and 70% 
of local 
expenditures for 
other items 
procured locally 
 
(a) PPAF 
490,000 
 
 
 
 
Page  9
-
7-
 
Category
Amount of the 
Initial Credit 
Allocated 
(Expressed in 
SDR 
Equivalent)
Amount of the 
Additional 
Credit 
Allocated 
(Expressed in 
SDR 
Equivalent)
Amount of the 
Second Additional 
 Credit Allocated 
(Expressed in  
SDR Equivalent)
%
of
Expenditures  
to be Financed
(b) POs 
3,460,00
0
Page  10
-
8-
 
Category
Amount of the 
Initial Credit 
Allocated 
(Expressed in 
SDR 
Equivalent)
Amount of the 
Additional 
Credit 
Allocated 
(Expressed in 
SDR
Equivalent)
Amount of the  
Second 
Additional 
Credit Allocated  
(Expressed in  
SDR Equivalent)
%
of
Expenditures  
to be Financed
(5) 
Consultants’ and  
 external 
services 
for 
 PPAF 
2,340,000  
 
88% 
of 
expenditures 
for foreign 
firms or 
individuals and 
98% of 
expenditures 
for local firms 
or individuals 
 
(6) Training for: 
 
(a) PPAF 
(b) POs 
(c) Beneficiaries 
 
490,00
0
1,910,000 
3,960,000 
 
100% 
(7) Incremental 
Operating Costs 
for: 
 
(a)  PPAF 
1,450,000 
 
 65% 
of 
expenditures for 
Year 1 of the 
Project, 55% of 
expenditures for 
Year 2 of the 
Project, 45% of 
expenditures for 
Year 3 of the 
Project, and 0% of 
expenditures for 
Year 4 of the 
Project 
 
Page  11
-
9-
 
Category
Amount of the 
Initial Credit 
Allocated 
(Expressed in 
SDR 
Equivalent)
Amount of the 
Additional 
Credit 
Allocated 
(Expressed in 
SDR
Equivalent)
Amount of the  
Second 
Additional 
Credit Allocated  
(Expressed in  
SDR Equivalent)
%
of
Expenditures  
to be Financed
(b)  POs 
14,270,00
0
100% of amounts 
disbursed by 
PPAF to finance, 
on a declining 
basis, such 
percentage of each 
PO’s operating 
costs as shall be 
determined by 
PPAF, based on 
the PO’s business 
plan 
 
(8) Unallocated 
1,410,00
0
Activities Under Part 
C
of the Project: 
 
(9) Grants under Part 
C.3; Equipment 
and vehicles 
for POs; Consul
10,334,849 16,620,000 
100% 
 
(10) Grants for Disaster
Recovery 
 
3,530,00
0
100% 
 
(11) Cash Grants 
 
58,565,151 
75,180,000 
100% 
 
TOTAL 
________
__ 
 168,100,0
_________ 
68,900,000
_________ 
91,800,000
Page  12
-
10-
 
Category
Amount of the 
Initial Credit 
Allocated 
(Expressed in 
SDR 
Equivalent)
Amount of the 
Additional 
Credit 
Allocated 
(Expressed in 
SDR
Equivalent)
Amount of the  
Second 
Additional 
Credit Allocated  
(Expressed in  
SDR Equivalent)
%
of
Expenditures  
to be Financed
00