72,47,

CONFORMED Public Disclosure Authorized

CREDIT NUMBER 681 EGT Public Disclosure Authorized

DEVELOPMENT CREDIT AGREEMENT

(Education Project)

between

ARAB REPUBLIC OF

and

INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized Public Disclosure Authorized

Dated March 7, 1977 DEVELOPMENT CREDIT AGREEMENT

AGREEMENT, dated March 7, 1977, between ARAB REPUBLIC OF EGYPT (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). - 2 -

ARTICLE I

General Conditions; Definitions

Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated March 15, 1974, with the same force and _2fect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agree- ments of the Association being hereinafter called the General Conditions).

Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the Gen- eral Conditions have the respective meanings therein set forth and the following additional terms have the following meanings:

(a) "MOE" means the Borrower's Ministry of Education, or its successors;

(b) "MOHAR" means the Borrower's Ministry of Housing and Reconstruction, or its successors;

(c) "MOHE" means the Borrower's Ministry of Higher Education, or its successors; and

(d) "MOIMR" means the Ministry of Industry and Mineral Resources, or its successors. -3-

ARTICLE II

The Credit

Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equiva- lent to twenty-five million dollars ($25,000,000).

Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time, for expenditures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 and to be financed out of the proceeds of the Credit.

Section 2.03. Except as the Association shall otherwise agree, contracts for the purchase of goods to be financed out of the pro- ceeds of the Credit, shall be procured in accordance with the pro- visions of Schedule 3 to this Agreement.

Section 2.04. The Closing Date shall be June 30, 1979, or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date.

Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time.

Section 2.06. Service charges shall be payable semi-annually on March 15 and September 15 in each year.

Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each March 15 and September 15 commencing September 15, 1987, and ending March 15, 2027, each installment to and including the installment payable on March 15, 1997, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount.

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.

Section 2.09. The following ,)fficials of the Borrower or their authorized representatives are designated as representa.tives of the Borrower for the purposes of taking any action required or permitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions: (a) the Min- ister of Education with respect to expenditures under Categories (1), (2), (7) and (8); (b) the Minister of Housing and Reconstruc- tion with respect to expenditures under Categories (3) and (4); and (c) the Minister of Industry and Mineral Resources with respect to expenditures under Categories (5) and (6) of the table set forth in paragraph 1 of Schedule 1 to this Agreement. -5-

ARTICLE III

Execution of the Project

Section 3.01. The Borrower shall carry out the Project with due diligence and efficiency and in conformity with appropriate administrative, engineering, financial, architectural and educational practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose.

Section 3.02. Not later than December 31, 1977, or such later date as the Borrower and the Association may agree, the Borrower shall enter into an agreement or agreements satisfactory to the Borrower and the Association with one or more educational insti- tutions acceptable to the Borrower and the Association, or make such other arrangements as shall be acceptable to the Borrower and the Association, for the purpose of (a) providing the Borrower with the services of consultants and specialists (about 24 man- years), whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Borrower and the Association, to assist the Borrower in carrying out Part B (1) (a) and (c) through (g) of the Project, and (b) assisting the Borrower in carrying out Part B (2) of the Project.

Section 3.03. The Borrower shall, not later than eighteen months after the date of this Agreement, or such later date as the Borrower and the Association may agree, cause the studies included in Part B (1) (a) of the Project to be completed and the recommendations arising from such studies promptly to be sent to the Association for its prompt review and comments. Section 3.04. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit against hazards in- cident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any in- demnity shall be payable in a currency freely usable by the Bor- rower to replace or repair such goods.

(b) Except as the Borrower and the Association shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the Project.

Section 3.05. (a) The Borrower shall furnish to the Associa- tion, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall rea- sonably request.

(b) The Borrower: (i) shall maintain records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the pro- ceeds of the Credit, and to disclose the use thereof in the Project; (ii) shall enable the Association's accredited represen- tatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the pro- ceeds of the Credit and any relevant records and documents; and (iii) shall furnish to the Association all such information as the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. -7-

Section 3.06. The Borrower shall take or cause to be taken all such action as shall be necessary to acquire as and when needed all such land and rights in respect of land as shall be required for carrying out the Project and shall furnish to the Association, promptly after such acquisition, evidence satisfactory to the Asso- ciation that such land and rights in respect of land are available for purposes related to the Project.

Section 3.07. The Borrower shall cause all buildings to be acquired for use as vocational training centers under the Project to meet the space requirements agreed upon with the Association.

Section 3.08. The Borrower shall causez (a) MOE, MOHAR, MOHE and MOIMR each to assign experienced staff for the purpose of supervising Project implementation; and (b) MOE to employ additional architects, as and when needed, to assist the Buildings Unit of MOE in carrying out its activities under the Project. - 8-

ARTICLE IV

Other Covenants

Section 4.01. The Borrower shall maintain or cause to be main- tained records adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations, re- sources and expenditures, in respect of the Project, of the de- partments or agencies of the Borrower responsible for carrying out the Project or any part thereof.

Section 4.02. Except as the Borrower and the Association may otherwise agree, the Borrower shall:

(a) cause to be taken not later than two and one- half years after the date of this Agreement, all action necessary to obtain detailed data on the current needs, and the projected needs for the next ten-year period, for trained personnel in each sector of the Borrower's economy;

(b) not later than one and one-half years after the date of this Agreement, cause to be developed, in consultation with the Association, a tracer system which will enable the Borrower to chart adequately the attitudes, backgrounds and achievements in the theoretical and practical studies of students within the Borrower's comprehensive schools and their respective job placement and performance after graduation; and - 9 -

(c) (i) cause to be established and to be fully opera- tional in each technician training school and insti- tute included in the Project by the opening date of such school and institute, an advisory committee comprising representatives oi industry, commerce and government to help assure the continuing relevance of the instructional programs in the schools and institutes to the needs of business and industry; and (ii) cause the existing follow-up system for tracing graduates' placement and perform- ance to be improved and applied in the technician training schools and institutes included in the Project by the time such schools and institutes graduate students for the first time.

Section 4.03. (a) The Borrower shall: (i) operate the educa- tional institutions included in the Project in accordance with sound administrative and educational policies and practices and with due regard to economy; and (ii) cause said institutions to be staffed with qualified teachers and administrators in adequate numbers.

(b) The Borrower shall cause the buildings, furniture and equipment of the educational institutions included in the Project to be adequately maintained and shall cause all necessary repairs and renewals thereof properly to be made. - 10 -

ARTICLE V

Termination

Section 5.01. The date July 5, 1977, is hereby specified for the purposes of Section 12.04 of the General Conditions.

Section 5.02. The obligations of the Borrower under Sections 4.01, 4.02(b) and (c) and 4.03 of this Agreement shall cease and determine on the date on which the Development Credit Agree- ment shall terminate or on a date twelve years after the date of this Agreement, whichever shall be the earlier. - 11 -

ARTICLE VI

Representative of the Borrower; Addresses

Section 6.01. The Minister of Economy and Economic Cooperation or the Under-Secretary of State for Economic Organizations and International Finance of the Ministry of Economy and Economic Cooperation 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 Economy and Economic Cooperation 8 Adly Pasha Street Arab Republic of Egypt

Cable address: Telex:

Ministry of Economy and GAFEC 348 Economic Cooperation Cairo Cairo

For the Association:

International Development Association 71818 H Street, N.W. Washington, D.C. 20433 United States of America

Cable address: Telex:

INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (wUI) - 12 -

IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment 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.

ARAB REPUBLIC OF EGYPT

By /s/ Abdel-Moneim El-Kaissouni Authorized Representative

INTERNATIONAL DEVELOPMENT ASSOCIATION

By /s/ Robert S. McNamara President - 13 -

SCHEDULE 1

Withdrawal of the Proceeds of the Credit

1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amount 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 Dollar Equivalent) to be Financed

A. MOE

(1) Equipment: 5,000,000

(a) imported 100% of foreign expenditures

(b) procured 75% of local locally expenditures

(2) Technical Assistance 800,000

(a) fellowships and 100% of foreign expatriate consultant expenditures and specialist services

(b) local consultant and 80% specialist services

B. MOHAR

(3) Furniture and 6,600,0o0 Equipment:

(a) imported 100% of foreign expenditures (b) procured 75% of local locally expenditures - 114 -

Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed

(4) Technical Assistance 300,000

(a) fellowships and 100% of foreign expatriate consultant expenditures and specialist services

(b) local consultant and 80% specialist services

C. MOIMR

(5) Furniture and 2,500,000 Equipment:

(a) imported 100% of foreign expenditures

(b) procured 75% of local locally expenditures

(6) Technical Assistance 6o,ooo

(a) fellowships and 100% of foreign expatriate consultant expenditures and specialist services

(b) local consultant and 80% specialist services

D. MOHE

(7) Furniture and Equipment: 7,200,000

(a) imported 100% of foreign expenditures - 15 -

Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (b) procured locally 75% of local expenditures

(8) Technical Assistance 500,000

(a) fellowships and 100% of foreign expatriate consultant expenditures and specialist services

(b) local consultant and 80% specialist services

(9) Unallocated 2,040,000

TOTAL 25,000,000 - 16 -

2. For the purposes of this Schedule:

(a) the term "foreign expenditures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower;

(b) the term "local expenditures" means expenditures in the currency of the Borrower and for goods or services supplied from the territory of the Borrower; and

(c) the term "local consultant and specialist services" means services provided by a citizen of the Arab Republic of Egypt or a corporation or firm whose majority beneficial owner- ship is effectively vested in one or more citizens of the Arab Republic of Egypt or in one or more of such corporations; and the term "expatriate consultant and specialist services" means any other consultant and specialist services.

3. The disbursement percentages have been calculated in compli- ance with the policy of the Association that no proceeds of the Credit shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in re- spect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Association. - 17 -

4. Notwithstanding the provisions of paragraph 1 above, no with- drawals shall be made in respect of payments made for expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding the equivalent of $300,000, may be made in respect of Categories (2), (4), (6) and (8) on account of payments made for such expenditures before that date but after September 15, 1976.

5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allo- cated to another Category and which in the opinion of the Associ- ation are not needed to meet other expenditures; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made.

6. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expendi- tures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or - 18 -

limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, can- cel such amount of the Credit as, in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 19 -

SCHEDULE 2

Description of the Project

The Project is designed to assist the Borrower in: (a) expand- ing, diversifying and upgrading primary, secondary, and technical and vocational education within its territories, including (i) the construction or acquisition of buildings for, and/or equipping and furnishing of, the institutions included in the Annex to this Schedule, as such Annex may be amended from time to time, (ii) the increasing and upgrading of the training of primary school teachers, technical and vocational teachers and workshop instructors of the above institutions, and (iii) introducing comprehensive preparatory and secondary schooling, on a pilot basis, to provide more instruc- tion in practical courses; and (b) improving planning of education training and manpower development through anpropriate studies. The Project consists of:

Part A: (1) Construction or acquisition of buildings for, and furnishing and equipping of, vocational training centers and instructor training centers (MOHAR), and technical training institutes (MOHE).

(2) Furnishing and equipping of:

(a) comprehensive nilot schools, technician train- ing schools and a technical teacher training school (MOE); - 20 -

(b) industrial vocational training centers and industrial instructor training centers (MOIMR); and

(c) technical training institutes (MOHE).

Part B: (1) (a) Educational planning studies (MOE).

(b) Pre-investment architectural designs for schools not included in Part A of the Project (MOE and MOIMR).

(c) Teacher training in use and maintenance of instructional equipment (MOE and MOHE).

Cd) Initiation of new training courses in the industrial and building trades (MOIMR and MOHAR).

(e) Development of curricula and equi-ment lists for technical training institutes (MOHE).

(f) Preparation of basic equipment lists as re- quired for comprehensive schools (MOE).

(g) Development of curricula and preparation of equipment lists for about 23 education and training institutions not included in Part A of the Project (MOE, MOHE and MOIMR). - 21 -

(2) Provision of about 65 man-years of fellowship and overseas training for selected and qualified teaching and administrative staff.

* * * *

The Project is expected to be completed by December 31, 1978. - 22 -

ANNEX TO SCHEDULE 2

Capacity List of Institutions Existing New Location

Comprehensive Schools: Comprehensive Lower Secondary 480 48o Comprehensive Upper Secondary 2,160 Tanta and Souhag

Four Technician Training Schools 4,200 Tanta, Shoubra, , Mostorod Technical Teacher Training School 1,500 Kobba

Vocational Training Centers:

Ten Industrial Trades Centers 8,570 Cairo (5), Alex- andria (2), , El Mansoura, Industrial Trades In- structor Center 200 Cairo Twenty Building Trades 6,000 Greater Cairo (3), Centers Port Said, Zifta, Dananhour, Desouk, Kafr El Sheik, , El Mansoura, Kafr Saad, Ashmoon, Berkit El Saba, El Fayoum, Belbis, Beni Suif, Assiut, Qena, Aswan, El Wasta

Three Building Trades 600 El Mansoura, Instructor Centers ismailia, Beni Suif

Technical Training 5,400 6,000 , Institutes Aswan, , Mataria, Zagazig - 23 -

SCHEDULE 3

Procurement

A. International Competitive Bidding

1. Except as provided in Part B hereof, contracts for the purchase of equipment estimated to cost the equivalent of more than $50,000 shall be procured in accordance with procedures con- sistent with those set forth in Part A of the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in August 1975 (hereinafter called the Guidelines), on the basis of international competitive bidding.

2. To the extent practicable, equipment shall be grouped in bid packages estimated to cost more than $50,000 equivalent each.

B. Other Procurement Procedures

1. Notwithstanding the provisions set forth in Part A.1 above:

(a) contracts for: Ci) equipment which cannot be grouped in accordance with Part A.2 above and which are each estimated to cost the equivalent of $50,000 or less, (ii) specialized items, acceptable to the Association, and (iii) furniture, may be procured on the basis of competitive bidding in accordance with procurement procedures of the Borrower, acceptable to the Association, provided, however, that (A) for equipment and specialized items contracts, quotations shall be obtained from at least three suppliers, and (B) for furniture contracts, items -214 - shall be grouped to the extent possible in large packages to permit such bulk procurement as shall be possible, consistent with sound procurement practices; and

(b) Contracts for equipment which the Association agrees must be compatible with other equipment procured in accordance with Part A.1 above, may be procured under negotiated contracts, acceptable to the Association, with the manufacturers of such equipment.

2. Contracts for equipment or for specialized items procured by each Ministry of the Borrower in accordance with the Drocedures set forth in Part B.1 above shall in the aggregate not exceed 20% of the total cost of equipment and specialized items procured under the Project by such Ministry, provided, however, that the aggregate amount of contracts so procured by all Ministries under the Project shall not exceed $4,400,000 equivalent.

C. Evaluation and Comparison of Bids for Goods; Preference for Domestic Manufacturers

1. For the purpose of evaluation and comparison of bids for the supply of goods: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex- factory price for domestically manufactured goods; (ii) customs duties and other import taxes on imported goods, and sales and sim- ilar taxes on domestically supplied goods, shall be excluded; and (iii) the cost to the Borrower of inland freight and other expen- ditures incidental to the delivery of goods to the place of their use or installation shall be included. - 25 -

2. Goods manufactured in the Arab Republic of Egypt may be granted a margin of preference in accordance with, and subject to, the following provisions:

(a) All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the infor- mation required to establish the eligibility of a bid for such preference and the following methods and stages that will be fol- lowed in the evaluation and comparison of bids.

(b) After evaluation, responsive bids will be classified in one of the folloving three groups:

(1) Group A: bids offering goods manufactured in the Arab Republic of Egypt if the bidder shall have established to the satisfaction of the Borrower and the Asso- ciation that the manufacturing cost of such goods includes a value added in the Arab Republic of Egypt equal to at least 20% of the ex-factory bid price of such goods.

(2) Group B: all other bids offering goods manufactured in the Arab Republic of Egypt.

(3) Group C: bids offering any other goods.

(c) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evalu- ated bid of each group. Such lowest evaluated bids shall then be - 26 -

compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award.

(d) If, as a result of the comparison under paragraph (c) above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the c.i.f. bid price of the imported goods offered in each group C bid, for the purpose of this fur- ther comparison only, an amount equal to (i) the amount of cus- toms duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid; or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph (c) is the lowest evaluated bid shall be selected.

D. Review of Procurement Decision by the Association

1. Before bids are invited, the Borrower shall send to the Association for its approval:

(a) lists of all items of equipment and furniture required for the Project, incorporating specifications and the estimated unit and total price for each item, indexing and coding the same to identify education and training institutions for which items are required, and identifying all items or categories of items estimated to cost the equivalent of more than $10,000 and -27 -

indicating the grouping proposed to permit such bulk procurement as shall be consistent with sound technical and procurement practices;

(b) the text of the invitations to bid together with a description of the advertising procedures to be followed for the bidding, the draft bid documents and draft contracts.

2. The Borrower shall make such modifications in the documents referred to in Part D.1 above as the Association shall reasonably request. Any further modification to said documents shall re- quire the Association's concurrence before it is issued to the prospective bidders.

3. Financing out of the proceeds of the Credit will be limited to those items of furniture and equipment on the lists and state- ment sent to the Association under Part D.1 above and identified in contract documents by the same indexes, codes and numbers as in such lists.

4. After bids have been received and evaluated:

(a) in any case where it is proposed to award a contract to other than the lowest evaluated bidder, or where a proposed award involves a difference in price of 15% or more from the original estimate as shown pursuant to Part D.1 above, or where such an award involves a contract for the purchase of equipment to be awarded in accordance with Part A.1 above, the Borrower shall obtain the Association's comments before making an award, and to - 28 -

this end shall furnish the Association, in sufficient time for its review, a summary and analysis of the bids received, together with justification (with due regard to conformity with specifica- tions and to price) for the proposed award, and the Association shall promptly inform the Borrower whether it has any objection to the intended award and shall state the reasons for any objec- tion it may have; and

(b) in all other cases the Borrower may defer submission of bid analysis and justification to the Association until contracts have been awarded.

5. Pro.mptly after a contract has been signed and before submis- sion to the Association of the first application for withdrawal of funds in respect of such contract, the Borrower shall send to the Association two certified copies of the contract awarded and such other information as the Association may reasonably request.

6. The Association shall promptly inform the Borrower if it finds that the award of the contract is not consistent with the Guidelines or with the provisions of this Schedule, or if its terms and conditions shall, without the Association's concurrence, materially differ from those on which bids were asked and in such event, no expenditures under such contract shall be financed out of the proceeds of the Credit.