June 18, 1993
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June 18, 1993 Ilmo. Senhor Dr. Fernando Henrique Cardoso Ministro da Fazenda Esplanada de Ministerios - Bloco "P" Public Disclosure Authorized 70.048-900, Brasilia, DF Brazil Ilmo. Senhor Dr. Waldeck Vieira Ornelas Secretario do Planejamento, Ciencia e Tecnologia do Estado da Bahia Centro Administrativo da Bahia 41.746-900, Salvador, Bahia Brazil Dear Sirs: Re: Loan 2761-BR (Northeast Rural Development Project - Bahia) Amendment to the Loan and Project Agreements Public Disclosure Authorized Please refer to the Loan Agreement dated July 20, 1987, for the above-referenced Project (the Loan Agreement) between the Federative Republic of Brazil (die Borrower) and International Bank for Reconstruction and Development (the Bank), to the Project Agreement (the Project Agreement) of even dated therewith, between the State of Bahia (the. State) and the Bank, both as amended, and to the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated January 1, 1985. We are pleased to inform you that, pursuant to your request and our recent discussions on the subjects the Bank agrees to amend the Loan and Project Agreements as follows: I. Amendments to the Loan A Agreement (a) Paragraph (c) of Section 1.02 is amended by substituting the words "after consultation with SUDENE", in line 4, by the words "to the Bank"; Public Disclosure Authorized (b) Paragraph (d) of Section 1.02 is amended by substituting the words "the Interior, the regional coordinator of the Northeast Rural Development Program", in lines 2 and 3, by the words "Regional Integration"; (c) Paragraph (k) of Section 1.02 is amended by substituting the word "cruzado", in line 1, by the word "cruzeiro"; (d) new paragraphs (u), (v), (w) and (x) are added to Section 1.02 to read as follows: "(u) "Eligible Community" means a community where the activities financed by a grant under Part F (ii) of the Project are carried out;"; "(v) "Approved Grant" means a grant to be provided to an Eligible Community under Part F (ii) of the Project, through CAR;% "(w) "Approved Municipal Grant" means a grant to be provided to an Eligible Community, under Part F (ii) of the Project, through a Public Disclosure Authorized municipality located in the Project Area; and"; "(x) "Operational Manual" means "Diretrizes e Criterios Basicos para a Implementacao do Programa Reformulado de Apoio ao Pequeno Produtor Rural (PAPP)", the manual for the implementation of Part F (ii) of the Project, referred to in Section 2.06 of the Project Agreement, approved by Portaria No. --, of the Secretary of Planning, Science and Technology of the State, dated --- the terms and conditions for the provision of Approved Grants and Approved Municipal Grants, including the procedures for the procurement of goods and services under such Grants and for the selection of municipalities where Approved Municipal Grants are to be carried out, as such Manual may be amended from time to time by agreement between the Bank and the State. "; (e) Section 2.08 is amended by substituting the words "Central Bank", in line 1, by the words "the Secretary of the Treasury of the Borrower’s Ministry of Finance"; (f) Paragraph (d) of Section 3.01 is amended by deleting the words "cause the Central Bank", in line 8, and the words "pursuant to the terms of the agreement between the Borrower and the Central Bank, dated April 5, 1984, providing therefor", in lines 10, 11 and 12, and the words " or waive such agreement or any provision thereof or", in line 14, and by substituting the word "cruzado", in line 8, by the word "cruzeiro’; (g) Section 3.03 is deleted and a new Section 3.03 is inserted, to read as follows: "Section 3.03.(a) The Borrower shall take all measures necessary to include in its annual budget the amounts required to carry out the Project, and to be financed under the Loan, during the respective succeeding year, and shall take all action necessary to release, promptly as needed, all the amounts required by the State for the timely execution of the Project, in accordance with the arrangements referred to in Section 3.01 (e) of this Agreement. (b) For such purpose, the Borrower shall furnish to the Bank its proposed budget allocations for the financing of the activities under the Project, by not later than August 30 of each year, starting on August 30, 1993"; (h) a new paragraph (g) is added to Section 5.01 to read as follows: "(g) the Operational Manual shall have been amended, suspended, abrogated, repealed or waived by the State or the State shall have failed to apply the provisions thereof in such a way as to materially and adversely affect the efficient execution of Part F (ii) of the Project."; (i) the address for the Borrower in Section 7.02 is amended to read as follows: "For the Borrower: Procuradoria Geral da Fazenda Nacional Ministdrio da Fazenda Esplanada dos Ministerios - Bloco "P" - 8’ andar 70048 Brasilia, D.F. BRAZIL Cable address: Telex: MEFP 61-1506 MFAZ BR Brasilia, Brazil With copies to: (i) Secretaria do Tesouro Nacional Ministerio da Fazenda Esplanada dos Ministeiros - Bloco "P" - Anexo - 1o andar 70.048-900 Brasilia, D.F. BRAZIL Telex: 61-1008 (ii) Secretaria de Assuntos Internacionais da Secretaria de Planejamento, Orcamento e Coordenarcao da Presidencia da Republica Esplanada dos Ministerios - Bloco, "K" - 5o andar 70.063-900 Brasilia, D.F. BRAZIL Telex: 61-2207 (j) the table set forth in paragraph I of Schedule 1 is amended to read as follows: Loan Allocated % of (Expressed in Expenditures "Category Dollar Equivalent to be Financed (1) Goods and services for Part A 17,369,722.82 70% of the Project (other than Parts A (i) and (iii) of the Project (2) Goods and services for Part A 1,700,000.00 70% (i) of the Project (3) Goods and services for Part A 149,260.46 70% (iii) of the Project (4) Goods and services for Part B 3,583,789.12 50% of the Project (5) Goods and services for Part C 8,550,000.00 50% of the Project (6) Sub-loans under Part D of the 1,004,060.54 50% of the amount of Project the Sub-loan (7) Goods and services for Part E 1,252,492.86 50% of the Project (other than construction of retail shops) (8) Grants under Part F of the Project: (a) Grants and other 19,000,000.00 70% expenditures under Part F (i) and (iii) of the Project (b) Approved Grants under Part F (ii) of the 68,000,000.00 70% of the amounts disbursed Project by the State under any Approved Grant (c) Approved Municipal 2,000,000.00 70% of the amounts disbursed Grants under Part F by the State under any (ii) of the Project Approved Municipal Grant (9) Under Part G of the Project: (a) Goods, services and 15,000,000.00 20% operating costs for Part G. 1 of the Project (b) Training under Part 1,700,000.00 50% G.2 of the Project (c) Training, technical 5,900,000.00 100% assistance and studies under Part G.3 of the Project (10) Under Part H of the Project: (a) Goods and services under Parts H(i) and 704,351.85 50% H(ii) of the Project (b) Goods and services under 2,295,648.15 50% Parts H(iii) and H(iv) of the Project (11) Unallocated 22,790,674.20 TOTAL 171,000,000.00"; (k) in paragraph 2 (a) of Schedule 1, the following words are inserted after the date "January 1, 1986", in line 8: "and that withdrawals, in an aggregate amount not exceeding the equivalent of $500,000, may be made on account of payments made for expenditures under Categories 8(b) and 8(c) of the table in paragraph 1 hereof, before June 18, 1993, but after March 15, 1993"; (1) new paragraphs (d), (e) and (f) are inserted in paragraph 2 of Schedule 1, to read as follows: "(d) in respect of payments made for Approved Grants unless the State, through CAR, shall have entered into contractual arrangements with the beneficiary of any such Grant, defining the responsibilities of any such beneficiary in the carrying out of the activities financed by the respective Approved Grant, in accordance with a model of contract satisfactory to the Bank;" "(e) in respect of payments made for Approved Municipal Grants, unless the State, through CAR, shall have entered into contractual arrangements with the municipality where any such Grant is to be carried out, defining the responsibilities of any such municipality in the approval and administration of such Grants, and unless the municipality shall have entered into contractual arrangements with the beneficiary of any Approved Municipal Grants, defining the responsibilities of any such beneficiary in the carrying out of the activities financed by the respective Approved Municipal Grant, all in accordance with the Operational Manual and of model of contracts satisfactory to the Bank; and"; and "(f) in respect of payments under Categories (1), (2), (3), (4), (5) and (7), for expenditures incurred on or after May 1, 1993."; (m) paragraph 3 of Schedule 1 is amended by deleting the words "(9) (a) and (9) (b)", line 4, the words ",$9,700,000 under Sub-category (9) (a) and $1,400,000 under Sub-category (9) (b)", in lines 7 and 8, and the words ", $13,400,000 under Sub-category (9) (a) and $2,000,000 under Sub-category (9) (b)", in lines 12 and 13; and (n) Parts A through H of Schedule 2 are amended to read as follows: "Part A: Water Resource Development (i) construction of a public irrigation scheme at Itapera (Sobradinho) providing irrigation to an area of about 912 hectares; (ii) carrying out of feasibility studies on the irrigation potential of areas covering about 2,500 hectares; (iii) construction of about thirty irrigation schemes as may be justified in the Bank’s opinion pursuant to the studies referred to in paragraph (ii) above; (iv) construction of about 1,607 simple rural water supply systems in communities with less than 500 inhabitants; (v) acquisition and distribution of about 1,200,000 fingerlings for stocking of ponds and lakes; (vi) strengthening the technical skills of the irrigation department of Companhia de Engenharia Rural da Bahia; and (vii) carrying out of feasibility studies of the irrigation potential of an area of about 1,011 hectares additional to those referred to in Part A (ii) above.