Loan Agreement Public Disclosure Authorized (Minas Gerais Second Rural Development Project)

Public Disclosure Authorized

OFFICIAL DOCUMENTS LOAN NUMBER 1877 BR

between

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

Public Disclosure Authorized and

STATE OF MINAS GERAIS

Dated , 1980 Public Disclosure Authorized LOAN NUMBER 1877 BR

LOAN AGREEMENT

AGREEMENT, dated 15, 1980, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and STATE OF MINAS GERAIS (hereinafter called the Borrower).

WHEREAS (A) the Borrower has requested the Bank to assist in the financing of the Project described in Schedule 2 to this Agreement by making the Loan as hereinafter provided;

(B) the Federal Senate of the Guarantor has, by Resolution No. r72 , dated f&keD)I010 , authorized the Borrower to enter into this Loan Agreement, pursuant to the provisions of Article 42, IV, of the Guarantor's constitution;

(C) the Borrower intends to secure additional external financing in an amount equivalent to about fifty million dollars ($50,000,000) by June 30, 1981 (hereinafter called the Private Bank Loan) for purposes of assisting in financing the Project; and

(D) the Bank has agreed, on the basis, inter alia, of the foregoing, to make the Loan to the Borrower upon the terms and conditions hereinafter set forth;

NOW THEREFORE the parties hereto hereby agree as follows:

ARTICLE I

General Conditions; Definitions

Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein, (said General Conditions Applicable to Loan and Guarantee Agree- ments of the Bank 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 General Conditions have the respective meanings therein set forth, and the following additional terms have the following meanings: -2-

(a) "Project Area" means an area within the State of Minas Gerais of about 61,000 square kilometers which comprises the municipalities listed in Schedule 5 to this Agreement, as such Schedule may be amended from time to time.

(b) "PCU" means the project coordinating unit of the Bor- rower; and "Project Director" means the director of the PCU.

(c) "Participating Banks" means Banco do Brasil S.A., Banco do Estado de Minas Gerais S.A., Banco de Credito Real de Minas Gerais S.A. and Caixa Economica do Estado de Minas Gerais.

(d) "Participating Agencies" means the agencies and institutions set forth in Schedule 6 to this Agreement.

(e) "Collaborating Agencies" means the agencies and institutions set forth in Schedule 6 to this Agreement.

(f) "CAMIG" means Companhia Agricola de Minas Gerais, the Borrower's Agricultural Trading Company.

(g) "CASEMG" means Companhia de Armazens e Silos de Minas Gerais, the Borrower's storage company;

(h) "CEMIG" means Centrais Eletricas de Minas Gerais S.A., the Borrower's Electrification Company.

(i) "DAE" means Departamento de Agua e Energia Eletrica de Minas Gerais, the Borrower's Water and Electric Energy Agency.

(j) "DER-MG" means Departamento de Estradas de Rodagem do Estado de Minas Gerais, the Borrower's Highway Department.

(k) "EMATER-MG" means Empresa de Assist^ncia Tecnica e Extens2o Rural de Minas Gerais, the Borrower's Technical Assis- tance and Rural Extension Company.

(1) "EPAMIG" means Empresa de Pesquisa Agropecudria de Minas Gerais, the Borrower's Agricultural Research Institute.

(m) "IEF" means Instituto Estadual de Florestas, the Bor- rower's Forestry Institute. -3-

(n) "RURALMINAS" means Fundago Rural Mineira, Colonizagao e Desenvolvimento Agr5rio, a Rural Development Foundation located in the State of Minas Gerais.

(o) "SEA" means Secretaria de Estado da Agricultura de Minas Gerais, the Borrower's Secretariat of Agriculture.

(p) "SEE" means Secretaria de Estado da Educago de Minas Gerais, the Borrower's Secretariat of Education.

(q) "SEPLAN-MG" means Secretaria de Estado do Planejamento e Coordenago Geral de Minas Gerais, the Borrower's Secretariat of Planning and General Coordination.

(r) "SES" means Secrataria de Estado da Saude de Minas Gerais, the Borrower's Secretariat of Health.

(s) "SETAS" means Secretaria de Estado do Trabalho, Ago Social e Desportos de Minas Gerais, the Borrower's Secretariat of Labor, Social Action and Sports.

(t) "SUDECOOP" means Superintendencia de Cooperativismo da SEA, the Borrower's Superintendency of Cooperatives.

(u) "UFV" means Universidade Federal de Vigosa, the Guaran- tor's University of Vicosa.

(v) "MVR" means Maior Valor de Referencia, the monetary correction factor established and periodically adjusted by the Guarantor pursuant to the Guarantor's Law No. 6205, dated April 29, 1975, and the Guarantor's Decree No. 75704, dated May 8, 1975.

(w) "Beneficiary" means a small farmer in the Project Area who farms his own land or who is a sharecropper or a tenant farmer, and who lives on or near his farm and derives not less than 50% of total family income from agricultural activities.

(x) "Sub-loan" means a loan made for purposes of Part A of the Project by a Participating Bank to a Beneficiary in the Project Area, which the Borrower will partially finance out of the proceeds of the Loan, and which will be provided to Benefi- ciaries in the sub-regions of Nordeste and Vale do Rio Doce who own or cultivate less than 100 ha and to Beneficiaries in the sub-regions of Zona da Mata and Sul de Minas who own or cultivate -4-

less than 50 ha, with the exception of credit for reforestation purposes, which will be provided to Beneficiaries in the sub- regions referred to herein who own or cultivate less than 100 ha.

(y) "First Rural Development Project" means the rural development project in Minas Gerais being carried out under the Loan Agreement between the Bank and the Borrower dated February 23, 1977.

(z) "Small non-farm enterprise" means an enterprise having less than ten employees, fixed assets of less than 300 MVR and annual sales of less than 600 MVR.

ARTICLE II

The Loan

Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to sixty-three million dollars ($63,000,000).

Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank, for expenditures made (or, if the Bank 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 Loan.

Section 2.03. Except as the Bank shall otherwise agree, contracts for the purchase of goods or for civil works, to be financed out of the proceeds of the Loan, shall be governed by the provisions of Schedule 4 to this Agreement.

Section 2.04. The Closing Date shall be December 31, 1985 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of such later date.

Section 2.05. The Borrower shall pay to the Bank a commit- ment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. -5-

Section 2.06. The Borrower shall pay interest at the rate of eight and twenty-five hundredths per cent (8.25%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time.

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.

ARTICLE III

Execution of the Project

Section 3.01. The Borrower shall carry out the Project through 'the respective agencies and institutions of the Borrower and the Guarantor designated for that purpose in accordance with the provisions of Schedule 6 to this Agreement, with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and agricultural practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose.

Section 3.02. The B rower shall employ consultants whose qualifications, experienc and terms and conditions of employment shall be satisfactory to the Borrower and the Bank, such consultants for purposes of Part B (4) (b) of the Project to be employed not later than June 30, 1981.

Section 3.03. The Borrower shall: (a) cause SEPLAN-MG and SEA to enter into and maintain an agreement setting forth the administrative structure for the purpose of the execution of the Project and the responsibilities and obligations of SEA as the coordinating agent of the Project; (b) cause SEPLAN-MG and SEA to enter into an agreement with each Participating Agency setting forth the obligations of each Participating Agency in executing the Project, the targets of the Project, as described in Schedule 2 to this Agreement, the source of funds and the schedule for carrying out the Project; (c) cause the Participating Agencies to enter into agreements with the Collaborating Agencies setting forth the responsibilities and obligations of the Collaborating Agency under the Project; and (d) cause the Participating Agencies, prior to the initiation of construction of civil works, to enter into -6- agreements with the municipalities and the communities located in such municipalities in which such works are to be performed, setting forth operation and maintenance responsibilities of each of the contracting parties.

Section 3.04. The Borrower shall, not later than October 31 of each year, furnish to the Bank for review and comment, the annual budget proposal and work plan for the Project.

Section 3.05. The Borrower shall, for purposes of Part A of the Project:

(a) cause the credit program to be carried out in accordance with the lending policies and procedures set forth in Schedule 7 to this Agreement;

(b) promptly inform the Bank of any modification to the lending terms and conditions for standard rural credit in Brazil;

(d) take all reasonable action on its part to ensure that the Participating Banks, not later than June 30, 1982, establish not less than twenty (20) advance credit posts in addition to the number in existence on January 1, 1980.

Section 3.06. The Borrower shall ensure that the average cost per km of distribution line, including trunk and branch lines, of the rural electrification network to be financed under Part A (2) of the Project, shall not exceed $3,400 equivalent per km of network line and 100 equivalent per kva for transformer and meter installation.

Section 3.07. The Borrower shall, not later than June 30, 1982, employ and train the agricultural extension officers required under Part B (2) of the Project.

Section 3.08. The Borrower shall cause EPAMIG to publish on an annual basis in one of its monthly bulletins the results of its research activities under Part B (3) of the Project.

Section 3.09. The Borrower shall, for purposes of carrying out Part B (4) of the Project, cause RURALMINAS to: -7-

(a) not later than December 31, 1980, establish a system to eliminate unprogrammed subsidies;

(b) not later than June 30, 1983, establish and apply tariffs to recover full machinery operating costs, full replace- ment costs, and reasonable administrative costs related to on-farm investment; and

(c) furnish to the Bank, promptly as available but in any event, not later than January 1, 1982, a copy of each report prepared by the consultants referred to in Section 3.02 of this Agreement.

Section 3.10. The Borrower shall, for purposes of carrying out Part B (5) of the Project:

(a) not later than June 30, 1981, establish not less than seven new nurseries; and

(b) provide assistance under paragraph (a) of such Part B (5) to not more than 10 ha per Beneficiary. Section 3.11. The Borrower shall, for purposes of carrying out Part B (6) of the Project, not later than June 30, 1981, furnish to the Bank for review the results of the EPAMIG study on marketing problems and opportunities for small farmers in the Project Area and the CAMIG proposal for investments for storage facilities and agricultural input supply outlets.

Section 3.12. The Borrower shall, for purposes of carrying out Part C of the Project, cause SETAS to: (a) carry out, with the assistance of the consultants referred to in Section 3.02 of this Agreement, the studies under such Part C, on terms of reference satisfactory to the Bank, and furnish to the Bank promptly, but in any event not later than June 30, 1982, the results of such studies; and (b) furnish to the Bank, prior to the utilization of the marketing investment fund, the detailed terms and conditions, which shall be satisfactory to the Bank, for the use of such fund.

Section 3.13. The Borrower shall, for purposes of carrying out Part D (1) of the Project:

(a) ensure that the length of roads to be constructed under force account not exceed twenty per cent (20%) of the total length of feeder roads in the Project; -8-

(b) not later than June 30, 1981, prepare a draft maintenance program for municipal roads in the Project Area;

(c) cause essential municipal roads in the Project Area, in accordance with the recommendations of the consultants, to be adequately maintained; and

(d) provide, or cause to be provided, as and when needed, the funds, facilities, services and other resources needed for purposes of (c) above, such funds to be made available on a quarterly basis from January 1, 1982.

Section 3.14. The Borrower shall, for purposes of carrying out Part E (1) of the Project:

(a) furnish to the Bank for review and comment the results of the studies prepared under such Part E (1);

(b) not later than February 1, 1982 put into effect the new curriculum resulting from the studies; and

(c) provide, or cause to be provided, as and when needed, the funds, facilities and services and other resources required for the provision of meals in one school located in each of the municipalities listed in Schedule 5 to this Agreement.

Section 3.15. The Borrower shall, for purposes of carrying out Part E (2) of the Project;

(a) not later than December 31, 1980, furnish to the Bank the final plans to strengthen the central and regional health administration of SES;

(b) provide, or cause to be provided, adequate staff for SES in respect of the carrying out of Part E (2) (a) of the Project;

(c) furnish to the Bank for its approval the plans for the construction of water supply systems with costs of more than $120 equivalent per benefitting family; and

(d) provide, or cause to be provided, prior to the construction of water supply systems under Part E (2) (b) of the Project, the facilities and resources required for their efficient operation and maintenance. -9-

Section 3.16. The Borrower shall, for purposes of carrying out Part E (3) of the Project:

(a) prior to initiating construction, but in any event not later than March 31, 1981, furnish to the Bank the engineering plans and cost estimates of models of the four types of community centers to be constructed;

(b) furnish to the Bank for approval construction plans for community centers 2 with costs exceeding $150/m equivalent; and

Section 3.17. The Borrower shall, for purposes of carrying out Part E (4) of the Project:

(a) furnish to the Bank, not later than December 31, 1982 or the date on which $300,000 equivalent have been disbursed from the community development fund for purposes of such Part E (4), whichever is earlier, an evaluation of the operational results of the community development fund;

(b) suspend disbursements from such fund during the review by the Bank of the evaluation referred to in (a) above; and

Section 3.18. The Borrower shall: (a) maintain an adequate and qualified staff in the PCU and in its regional offices; and

(b) exchange views with the Bank in the event that the Project Director is to be replaced.

Section 3.19. (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 Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. - 10 -

(b) Except as the Bank shall otherwise agree, all goods and services financed out of the proceeds of the Loan shall be used exclusively for the Project until its completion.

Section 3.20. (a) The Borrower shall furnish to the Bank, 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 Bank shall reasonably request.

(b) The Borrower shall: (i) maintain records and procedures adequate to record *and monitor the progress of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Loan, and to disclose their use in the Project; (ii) enable the Bank's accredited representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) furnish to the Bank at regular intervals all such information as the Bank shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds, including, but not limited to, quarterly project reports on the progress made in the carrying out of the Project, such quarterly reports to be furnished within one month of their preparation, but in any event not later than three months after the end of each quarter.

(c) Promptly after completion of the Project, but in any event not later than six months after the Closing Date, the Borrower shall prepare and furnish to the Bank a completion report, of such scope and in such detail as the Bank shall reasonably request, on the execution of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Bank of their respective obligations under the Loan Agreement and the accomplishment of the purposes of the Loan.

(d) The Borrower shall, with the assistance of UFV: (i) not later than January 31, 1981, carry out baseline studies on the health and educational situation and the income and employment levels in the Project Area; (ii) not later than December 31 of - 11 -

each year, furnish to the Bank an evaluation report on the pre- vious fiscal year of the Borrower with respect to existing development trends in the Project Area and setting forth specific recommendations with respect to anticipated developments in the Project Area; and (iii) not later than six months after the Closing Date, furnish to the Bank a project evaluation report of such scope and in such detail as the Bank shall reasonably request.

Section 3.21. 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 the construction and operation of the facilities in the Project, including, inter alia, the works referred to in Parts B (6), D (1), E (2) and E (3) of the Project.

ARTICLE IV

Other Covenants

Section 4.01. Without in any way limiting the generality of Section 3.01 of this Agreement or any of its obligations under this Agreement, the Borrower shall:

(a) provide, or make the necessary arrangements for the provision of, funds to finance through the Participating Banks seasonal short-term credit required by the Beneficiaries for annual crops and establishment of two-year crops;

(b) provide, promptly as needed, counterpart funds in the amount of at least thirty-four million dollars ($34,000,000) equivalent to finance activities complementary to the Project, including, inter alia, the following: (i) the construction by DAE and CEMIG of all necessary trunk lines for the rural electrification network, with the costs of such trunk lines to constitute not less than forty per cent (40%) of the installation costs of the total rural electrification network in which Beneficiary connec- tions would be financed under Part A (2) of the Project; (ii) credit to about 950 small enterprises for working capital and investment purposes; and (iii) construction, not later than June 30, 1983, of about 486 km of municipal roads as described in Schedule 8 to this Agreement and the adequate maintenance of such roads; and - 12 -

(c) provide, promptly as needed, funds to finance the construction in the Project Area of any public storage facility of 3,000 tons or larger, as determined by the EPAMIG study and the findings of consultants employed pursuant to Section 3.02 of this Agreement.

Section 4.02. The Borrower shall cause the facilities included in the Project to be efficiently operated and adequately maintained, and the services to be provided thereunder to be furnished promptly as needed, all in conformity with appropriate practices and by competent personnel in adequate numbers and shall provide, or cause to be provided, as and when needed, the funds, facilities, services and other resources required for these purposes.

Section 4.03. The Borrower shall:

(a) cause the PCU and the Participating Agencies to maintain separate accounts adequate to reflect therein, in accordance with consistently maintained sound accounting practices, their respective operations, resources and expenditures in respect of the Project, which accounts shall be audited annually and made available to the Bank for examination;

(b) cause the PCU to have the accounts referred to in paragraph (a) above audited annually on a consolidated basis, in accordance with appropriate auditing principles consistently applied by independent auditors acceptable to the Bank;

(c) furnish to the Bank as soon as available, but in any event not later than six months after the end of each fiscal year of the Borrower, the report of such audit by said auditors, referred to in paragraph (b) above, of such scope and in such detail as the Bank shall have reasonably requested, including, without limitation to the foregoing, separate opinion or opinions by said auditors as to whether the proceeds of the Loan withdrawn from the Loan Account on the basis of certificates of expenditures have been used to make payments for goods received, or works or services performed, and that such goods, works and services were eligible for financing under the Loan Agreement and were used in the carrying out of the Project; and

(d) furnish to the Bank such other information concerning the accounts referred to in paragraph (a) above and the audit thereof as the Bank shall from time to time reasonably request. - 13 -

Section 4.04. The Borrower, a political subdivision of the Guarantor, acknowledges that the obligations undertaken by the Guarantor pursuant to Section 3.01 of the Guarantee Agree- ment cover any lien on any of the assets of the Borrower, of any of its political or administrative subdivisions, -and on any entity owned or controlled by, or operating for the account or benefit of, the Borrower, guaranteeing an external debt, as provided in such Section; and, without limitation on the preceding, hereby undertakes with regard to such assets, mutatis mutandis, the obligations undertaken by the Guarantor pursuant to such Section.

ARTICLE V

Remedies of the Bank

Section 5.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof:

(a) that any agreement referred to in Section 3.03 of this Agreement shall have been materially amended without the concurrence of the Bank, or any of the parties thereto shall have failed to perform any of its respective obligations or covenants thereunder;

(b) any political subdivision of the Guarantor, including the Borrower, or any agency of such subdivision, shall have taken any action which would materially and adversely affect the performance by the Borrower of any of its obligations under this Agreement; and

(c) the agreement or agreements providing for the Private Bank Loan, in form and substance satisfactory to the Bank, have not been entered into by June 30, 1981, or such other date as may be agreed between the Bank and the Borrower, or the right of the Borrower to utilize the Private Bank Loan shall have been sus- pended or cancelled in whole or in part pursuant to the terms thereof or any part of the principal amount of the Private Bank Loan has become due and payable in advance of maturity pursuant to the terms thereof.

Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: - 14 -

(a) any event specified in paragraphs (a) or (b) of Section 5.01 of this Agreement shall occur; and

(b) the Private Bank Loan shall have become due and payable prior to its agreed maturity in accordance with the terms thereof.

ARTICLE VI

Effective Date; Termination

Section 6.01. The following event is specified as an additional condition to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions, namely, that the Loan Agreement has been duly registered by Banco Central do Brasil.

Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank:

(a) that the Loan Agreement has been duly registered by Banco Central do Brasil; and

(b) that all necessary acts, consents, and approvals to be performed or given by the Guarantor and the Borrower, their political subdivisions or agencies, or any agency of such political subdivisions, or otherwise to be performed or given in order to authorize the carrying out of the Project and to enable the Borrower to perform all of its respective obligations pursuant to this Agreement, together with all necessary powers and rights in connection therewith, have been performed or given.

Section 6.03. The date Nocwou'iMO , is hereby specified for the purposes of Section 12.04 of the General Conditions.

ARTICLE VII

Addresses

Section 7.01. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: - 15 -

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: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For the Borrower:

Secretaria de Estado do Planejamento e Coordenaqo Geral de Minas Gerais Rua da Bahia 1600 30000 Belo Horizonte, MG Brazil

Cable address: Telex:

SEPLAN-MG 0311343 Belo Horizonte

IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, 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.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

By /s/AAL AcU Bcu Regional Vice President Latin America and the Caribbean

STATE OF MINAS GERAIS

By Authorized Representative - 16 -

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 Dollar Equivalent) to be Financed (1) Credit program (Part A of the Pro- ject)

(a) On-farm 7,500,000 34% investment (Part A (1) of the Project)

(b) Rural electri- 6,000,000 34% fication (Part A (2) of the Project)

(2) Land titling services 200,000 34% (Part B (1) of the Pro- ject)

(3) Agricultural extension 6,300,000 34% (Part B (2) of the Pro- ject)

(4) Adaptive research 1,800,000 34% (Part B (3) of the Pro- ject)

(5) Land reclamation 1,000,000 34% (Part B (4) of the Pro- ject)

(6) Reforestation 1,000,000 34% (Part B (5) of the Project) - 17 -

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

(7) Marketing services 2,200,000 34% (Part B (6) of the Project)

(8) Cooperative associa- 2,000,000 34% tions (Part B (7) of the Project)

(9) Small non-farm enter- 1,200,000 34% prises (Part C of the Project)

(10) Feeder roads 11,500,000 34% (Part D (1) of the Project)

(11) Telephone communica- 600,000 34% tion (Part D (2) of the Project)

(12) Education (Part E (1) 3,000,000 34% of the Project)

(13) Health and sanitation (Part E (2) of the Pro- ject)

(a) Health services 2,000,000 34%

(b) Sanitation 1,200,000 34%

(14) Community centers 2,200,000 34% (Part E (3) of the Project)

(15) Community development 800,000 34% (Part E (4) of the Project) - 18 -

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

(16) Project management (Part F of the Project)

(a) Administration 1,200,000 34%

(b) Monitoring .500,000 34%

(17) Unallocated 9,500,000 34%

TOTAL 63,000,000

2. The disbursement percentages have been calculated in compliance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the Guarantor 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 respect of any item to be financed out of the proceeds of the Loan decreases or increases, the Bank 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 Bank.

3. Notwithst-anding the provisions of paragraph I above, no withdrawals shall be made in respect of payments made for:

(a) expenditures prior to the date of this Agreement, except that withdrawals in an aggregate amount not exceeding the equivalent of $500,000 may be made on account of payments made for expenditures before that date but after April 1, 1980;

(b) expenditures for agricultural research under Part B (3) of the Project unless a farm-management specialist has been employed as part of the Project research staff; - 19 -

(c) expenditures for marketing activities under Part B (6) of the Project unless the counterpart staff for the consultants for such Part B (6) has been employed and is in place;

(d) expenditures for the construction of storage facilities and agricultural input supply outlets under Part B (6) of the Project unless the location and construction plans are satisfactory to the Bank;

(e) expenditures for the construction and upgrading of feeder roads under Part D (1) of the Project unless the counterpart staff for the consultants for such Part D (1) has been employed and is in place;

(f) expenditures for the construction of community centers under Part E (3) of the Project unless the Bank has been furnished with evidence satisfactory to it on the acquisition of the respective sites;

(g) expenditures for Project activities in the Zona da Mata region unless funds under the First Rural Development Project are not available for the completion to the satisfaction of theBank of the corresponding activity under such Project in the municipalities listed in Schedule 5 to this Agreement;

(h) expenditures for each activity to be carried out under Parts B, C, D and E of the Project, unless the Bank has been furnished with evidence in form and substance satisfactory to the Bank of the execution of the agreement between SEPLAN-MG and SEA and the Participating Agency responsible for each such activity; and

(i) expenditures for the credit program under Part A of the Project unless the Bank has been furnished with evidence in form and substance satisfactory to the Bank of the execution of the agreement between the Borrower and each of the Participating Banks.

4. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may, after consultation with the Borrower, by notice to the Borrower: (i) reallocate to such Category, to the - 20 -

extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category Pnd which in the opinion of the Bank 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.

5. If the Bank 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 expenditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as, in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. - 21 -

SCHEDULE 2

Description of the Project

The purpose of the Project is to support the Borrower's rural development policy which gives priority to increasing productivity and raising living standards in poverty areas of the Borrower. The Project consists of the following Parts:

Part A: Credit

(1) Agricultural Credit

Carrying out of a credit program for about 30,000 Benefici- aries (including about 3,000 landless farmers) to provide medium- and long-term credit for establishing permanent crops (including reforestation); land reclamation, works; on-farm investment, including construction of on-farm storage facilities, fencing, and stables; and livestock development.

(2) Rural Electrification Credit

Carrying out of a credit program to provide to about 5,500 Beneficiaries credit for obtaining electric power, including house connection and metering equipment, but excluding in-house wiring and electrical equipment.

Part B: Agricultural Support Services

(1) Land Titling Services

Expansion of the land surveying and titling services of RURALMINAS in the Project Area, including the promotion of such services, for the issuance of 1,nd titles to about 9,000 Benefi- ciaries by the provision of incremental staff, legal services, vehicles, equipment and materials for land surveying and document preparation.

(2) Agricultural Extension

(a) Expansion of the agricultural and marketing extension services in the Project Area by the provision of about 100 agricultural extensionists, about 12 land reclamation extensionists, about 80 social extensionists, vehicles, equipment, materials and supplies; and (b) training of farmers, farm families, and extensionists serving in the Project Area. - 22 -

(3) Agricultural Research

Carrying out of: (a) an adaptive agricultural research pro- in gram to improve productivity of crops, pasture and livestock half the Project Area in experimental stations and with at least of the program carried out on farms of Beneficiaries; (b) a research program to improve on-farm storage techniques; (c) an of agro-forestry research program to increase the productivity reforested areas of small farms; and (d) a survey of the marketing opportunities for small farmers in the Project Area; by the for these provision of staff, vehicles, equipment and materials purposes.

(4) Land Reclamation

Carrying out of: (a) reclamation of about 6,000 ha of swampland for about 1,800 Beneficiaries and development and establishment of an appropriate system of land reclamation for small farmers, by the provision of technical assistance staff, land reclamation equipment, vehicles, related equipment and materials for four regional offices; and (b) strengthening of RURALMINAS by preventative improving its cost accounting system, organizing a equipment maintenance system and improving operational procedures, by the provision of consultant services.

(5) Reforestation

(a) Reforestation of about 10,000 ha for about 4,100 Bene- ficiaries by the provision of trees, fertilizers and pesticides about during the first two years of planting; (b) establishment of 12 new tree nurseries and equipping of about 13 new extension ha of offices in the I?roject Area; and (c) planting of about 300 land in the Project Area for experimentation in agroforestry; by for the provision of staff, vehicles, equipment and materials these purposes. (6) Marketing Services

Execution of a program for: (a) the construction of storage tons facilities for agricultural products of not more than 3,000 each and agricultural input supply outlets in the Project Area; surveys in the (b) the carrying out of marketing studies and Project Area by the provision of staff, consultants to CAMIG, vehicles and materials; and (c) the training of administrative and field-level personnel. - 23 -

(7) Cooperative Associations

(a) Establishment or strengthening of about 14 cooperative associations, about 120 precooperatives and about 350 farmer groups in the Project Area; and (b) the carrying out of studies on development opportunities for cooperatives in the Project Area; by the provision of technical assistance, training in cooperative matters of cooperative officers, farmers and students, staff, vehicles, equipment and materials for these purposes and the placement of managerial and technical staff in selected cooperatives.

Part C: Small Non-Farm Enterprises

(1) Execution of a program of technical assistance to about 1,100 small non-farm enterprises, about 530 artisans, and about 500 individuals intending to start small enterprises, all in the Project Area, by the provision of training for field assistants to execute and expand such a program, staff, vehicles, equipment and materials; (2) preparation of a study on appropriate techniques and marketing opportunities for such enterprises by the provision of consultant services; and (3) establishment of a marketing investment fund to finance marketing activities related to small non-farm enterprises assisted under the Project. Part D: Physical Infrastructure

(1) Feeder roads

Execution of a program in accordance with the design standards specified in Schedule 9 to this Agreement: (a) to design and improve about 3,360 km of existing municipal roads in the Project Area; (b) to design and construct about 100 km of new feeder roads in the Project Area; and (c) to prepare and carry out a road maintenance program for essential municipal roads in the 102 municipalities of the Project; by the provision of equipment, vehicles, hand tools, spare parts; training of road maintenance personnel; consultants to assist in the design and supervision of municipal road works, the preparation of the maintenance program, and training of road maintenance personnel; staff; vehicles; and materials for these purposes.

(2) Telephone Communication

Installation of public pay telephones in about 34 municipalities in the Project Area. - 24 -

Part E: Social Infrastructure

(1) Education

(a) Execution of a program to study and introduce a revised curriculum in the primary schools in the Project Area; (b) improvement of school canteens, and school gardens in the Project Area; and (c) improvement of one primary agricultural school in the Project Area and four secondary agricultural schools in adjacent municipalities serving the Project Area; by the provision of training for educational and supervisory personnel, training courses for the operation of school canteens, staff, vehicles, equipment and materials for these purposes.

(2) Health and Sanitation

(a) Health Services

(i) Construction or improvement of about 200 health centers or health posts in the Project Area; (ii) equipping of about 90 health posts in the Project Area; and (iii) strengthening of the supervisory system of SES to improve the effectiveness of its information system and its material and medicine delivery system by the provision of health administration courses for doctors and training of supervisory personnel and health attendants in the Project Area; by the provision of staff, vehicles, equipment and materials for these purposes.

(b) Sanitation

(i) Construction of about 85 simple water supply systems in the Project Area; (ii) construction and placement of about 8,000 sanitary installations in the Project Area; (iii) carrying out a Chagas disease control program for about 3,100 families in two municipalities in the Project Area; and (iv) carrying out a detection program of Schistosomiasis in swampland to be reclaimed under the Project; by the provision of staff, vehicles, equipment and materials for these purposes.

(3) Construction of Community Centers

(a) Carrying out of preliminary studies to establish the appropriate location for 32 community centers in the Project Area and the design suitable for community needs; (b) construction of these community centers; and (c) provision of basic equipment for health posts and school rooms located in these centers. - 25 -

(4) Community Development

(a) Execution of a program to assist about 21 communities to stimulate community activities and to mobilize community resources by the provision of staff, consultants, vehicles, equipment and materials; and (b) establishment of a fund to finance community originated projects.

Part F: Project Management

(1) Administration

(a) Establishment and operation of one central and four regional coordinating offices to administer the Project; and (b) installation of an effective cost control system; by the provision of consultants, staff, vehicles, equipment and materials for these purposes.

(2) Monitoring

Installation of an appropriate Project monitoring system and preparation of quarterly monitoring reports and a Project completion report; by the provision of staff, vehicles, equipment and materials for these purposes.

(3) Evaluation

Provision of staff, consultant services, vehicles, equipment and materials for the purposes of evaluating development in the Project Area.

The Project is expected to be completed on June 30, 1985. - 26 -

SCHEDULE 3

Amortization Schedule

Payment of Principal Date Payment Due (expressed in dollars)*

On each February 15 and August 15

beginning February 15, 1984 through August 15, 1995 - 2,625,000

* To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equiva- lents determined as for purposes of withdrawal. - 27 -

Premiums on Prepayment

The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the General Conditions:

Time of Prepayment Premium

Not more than three years before maturity 1.65%

More than three years but not more than six years before maturity 3.30%

More than six years but not more than eleven years before maturity 6.00%

More than eleven years but not more than thirteen years before maturity 7.15%

More than thirteen years. before maturity 8.25% - 28 -

SCHEDULE 4

Procurement

A. International Competitive Bidding

1. Land reclamation equipment under Part B (4) and equipment and vehicles, including initial stock of spare parts, under Part D (1) shall be procured under contracts awarded in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines.

2. For goods to be procured on the basis of international of competitive bidding, and in addition to the requirements paragraph 1.2 of the Guidelines, the Borrower shall prepare and forward to the Bank as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender made by the Borrower or prequalification documents relating thereto, as the case may be, a general procurement notice, in such form and detail and containing such information as the Bank shall reasonably request; the Bank will arrange for the publication of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods and works in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods or works remain to be procured on the basis of international competitive bidding.

3. Identical or similar equipment and materials shall be grouped a size together for purposes of bidding, such groups to be of satisfactory to the Bank and the Borrower.

4. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international state competitive bidding: (i) bidders shall be required to 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 similar taxes on domestically supplied goods, shall be excluded; and (iii) the cost to the Borrower of inland freight to the and other expenditures incidental to the delivery of goods place of their use or installation shall be included. - 29 -

B. Preference for Domestic Manufacturers

In the procurement of goods in accordance with the procedures described in Part A of this Schedule, goods manufactured in Brazil may be granted a margin of preference in accordance with, and subject to, the following provisions:

1. All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids.

2. After evaluation, responsive bids will be classified in one of the following two groups:

(1) Group A: bids offering goods manufactured in Brazil if the bidder shall have established to the satisfaction of the Borrower and the Bank that such goods contain components manufactured in Brazil equal to at least 50% of the value of the complete goods.

(2) Group B: bids offering any other goods.

3. All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes (including merchant fleet renewal and port improvement taxes) on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evaluated bid of each group. Such lowest evaluated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A is the lowest, it shall be selected for the award.

4. If, as a result of the comparison under paragraph 3 above, the lowest bid is a bid from group B, all group B bids shall be further compared with the lowest evaluated bid from group A after adding: (i) to the evaluated bid price of the imported goods offered in each group B bid, for the purpose of this further comparison only, an amount equal to: (A) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group B bid; or (B) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price; and (ii) to the - 30 - evaluated bid price of the domestically supplied goods offered in each group B bid an amount equal to: (A) the amount of customs duties and other import taxes which would be levied on such goods if they originated from the same foreign country as the goods involved in a group B bid which enjoy the lowest customs duties and other import taxes; or (B) 15% of the ex-factory 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 shail be selected for the award; if not, the bid from group B which as a result of the comparison under paragraph 3 is the lowest evaluated bid shall be selected.

C. Other Procurement Procedures

1. Farm inputs and goods and services for on-farm development under Part A and spare parts and hand tools under Part D (1) of the Project may be purchased through regular commercial channels at a reasonable price, account being taken also of othe. relevant factors such as time of delivery and efficiency and reliability of the goods and availability of maintenance facilities and spare parts therefor, and, in the case of services, of the quality and competence of Lhe parties performing them.

2. Civil works under Part D (1), for not more than 20% of the length of feeder road improvements, D (2) and E (2) (b) of the Project may be carried out by force account.

3. Civil works for the rural electrification network to be financed under Part A (2) of the Project may be carried out by force account.

4. Civil works under Parts B (6), D (1) except as specified in Part C.2 above, E (1) (c), E (2) (a) and E (3) of the Project shall be procured under contracts awarded in accordance with the Borrower's procedures in force on the date of this Agreement, which include competitive bidding locally advertised, and in accordance with Part D of this Schedule.

5. Civil works for Part D (1) of the Project shall be divided into lots in a manner satisfactory to the Bank.

D. Review of Procurement Decisions by the Bank

1. Review of prequalification. The Borrower shall, before qualification is invited by it, inform the Bank in detail of the procedure to be followed, and shall introduce such modifications - 31 -

in said procedure as the Bank shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and of the reasons for the exclusion of any appli- cant for prequalification shall be furnished by the Borrower to the Bank for its comments before the applicants are notified of the Borrower's decision, and the Borrower shall make such additions to, deletions from, or modifications in, the said list as the Bank shall reasonably request.

2. Review of invitations to bid and of proposed awards and final contracts:

With respect to all contracts for goods procured in accordance with Part A of this Schedule and with respect to all contracts for civil works under Part D (1) of the Project:

(a) Before bids are invited by the Borrower, the Borrower shall furnish to the Bank, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders.

(b) After bids have been received and evaluated, the Bor- rower shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and shall furnish to the Bank, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination.

(c) The terms and conditions of the contract shall not, without the Bank's concurrence, materially differ from those on which bids were asked or prequalification invited.

(d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. - 32 -

3. With respect to each contract not governed by the preceding paragraph, the Borrower shall furnish to the Bank, promptly after its execution and prior to the submission to the-Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. - 33 -

SCHEDULE 5

Municipalities included in the Project Area Sub-region I Sub-region II Sub-region III Sub-region IV Nordeste Vale do Rio Doce Zona da Mata Sul de Minas

Berilo Alvarenga Alto do Rio Alagoa Doce

Capelinha Congonhas do Araponga Alterosa Norte

Carai Coroaci Braz Pires Arantina

Carbonita Joanésia Cipotânea Belo Vale

Chapada do Passabem Coimbra Bom Jesus da Norte Penha

Diamantina São Geraldo Descoberto Capitólio da Piedade

Espinosa São Sebastião Diogo de Carvalhópolis do Rio Preto Vasconcelos

Felicio dos Sardoá Divinésia Casa Grande Santos

Felisberto Virgolândia rores do Turvo Conceição das Caldeira Pedras

Francisco Guiricema Conceição do Badaró Par&

Gouvea Itamarati de Congonhal Minas

Itacambira Lamim Consolação

Itaipé Miradouro Corrego do Bom Jesus

Itamarandiba Olaria Cel. Xavier Chaves - 34 -

Sub-region I Sub-region II Sub-region III Sub-region IV Nordeste Vale do Rio Doce Zona da Mata Sul de Minas

Itinga Paiva Crucilândia

Ladainha Paula Cândido Desterro de Entre Rios

Mato Verde Pedra do Anta Espirito Santo do Dourado

Minas Novas Pedro Teixeira Estiva

Padre Paraiso Piranga Extrema

Poté Presidente Fama Bernardes

Rio Pardo de São Geraldo Formiga Minas

Sto. Antonio São Miguel do Gonçalves do Jacinto Anta

São João Senador Firmino Guapé do Paraiso

Senador Senhora de Igaratinga Modestino Oliveira Gonçalves Teixeiras Itumirim

Turmalina Jacui

Jeceaba

Nova Resende

Nova Serrana

Pedra do Indaiá

Piedade dos Gerais - 35 -

Sub-region I Sub-region II Sub-region III Sub-region IV Nordeste Vale do Rio Doce Zona da Mata Sul de Minas

Piracema

Prados

Resende Costa

Ritápolia

Santana dos Montes

São Gonçalo Pará

Sélo João da Mata

São Pedro da União

São Sebastião do Oeste

São Tiago

Senhora dos Remédios

Turvolandia - 36 -

SCHEDULE 6

Agencies and Institutions Responsible for Execution of the Project

Collaborating Project Component Participating Agency Agency

Part A (1) Agricultural Participating Banks credit

Part A (2) Rural electri- Participating Banks, EMATER-MG fication DAE, CEMIG credit

Part B (1) Land titling RURALMINAS services

Part B (2) Agricultural EMATER-MG extension

Part B (3) Adaptive EPAMIG IEF, EMATER-MG, research UFV

Part B (4) Land reclama- RURALMINAS EMATER-MG tion

Part B (5) Reforestation IEF EMATER-MG

Part B (6) Marketing SEA CAMIG, EPAMIG, services EMATER-MG CASEMG, SUDECOOP, UFV

Part B (7) Cooperative SUDECOOP EMATER-MG associations

Part C Small non-farm SETAS EMATER-MG, enterprises SUDECOOP

Part D (1) Feeder roads DER-MG EMATER-MG - 37 -

Collaborating Project Component Participating Agency Agency

Part D (2) Telephone com- DAE munication

Part E (1) Education SEE EKATER-MG Part E (2) Health and SES EMATER-MG, sanitation DAE Part E (3) Construction SEA SETAS of community centers

Part E (4) Community SETAS EMATER-MG devel%)pment

Part F (1) Project SEA administration

Part F (2) Project SEA UFV monitoring

Part F (3) Project UFV evaluation - 38 -

SCHEDULE 7

Lending Policies and Procedures

1. Credit Amounts

The aggregate principal amount outstanding of loans made to the same Beneficiary including Sub-loans made under Part A of the Project may not exceed the equivalent of 100 times the MVR, except in such cases where the amount outstanding of loans includes Sub- loans made for land reclamation, electrification or charcoal pro- duction, in which case such amount may not exceed 180 times the MVR.

2. Rate of interest

Sub-loans will bear a rate of interest consistent with the rate of interest for standard rural credit in Brazil.

3. Repayment terms

Sub-loans will have a repayment term consistent with the repayment term for standard rural credit in Brazil.

4. Farm plans.

Sub-loans will be made only on the basis of a farm plan prepared or approved by EMATER-MG.

Credit will be made for the purchase of livest( .cprovided that such purchase is part of an integrated crop and livestock farm plan approved by EMATER-MG. - 39 -

SCHEDULE 8

Municipal Roads to be Improved

Approximate length in Road Kilometers Novo Cru:iro-Itaipe 31 Itaipe-BR/116 20

Carai-BR/116 30

Ladainha-BR/217 (POTE) 43

Rio Pardo de Minas-Sc Joao do Paraiso 96

Virgolandia-BR/314 (COROACI) 25

S. Geraldo da Piedade-BR/259 (SARDOA) 22

Sant. dos Montes-BR/040 18

Belo Vale-BR/040 20

Senhora dos Remedios-BR/040 25

Nova Rezende-Bom Jesus da Penha 40

Araponga-Canaa-S. Miguel do Anta 36

Jacui-Fortaleza de Minas 27

Jacui-BR/491 (GUAXUPE) 38

BR/367-BR/451 (CARBONITA) 15 SCHEDULE 9

Design Standards for Municipal Roads

Cross-Slope Intermunicipal Roads 1/ Intra-Municipal Roads 2/ of Natural Full Length Improvements Spot Improvements Description Ground Class E Class F

Design Speed 50% 50 (km/h) 20% 40 applicable. 70% 30

Mins. Radius for 5% 70 No improvement unless exceptional Horizontal Curves (m) 20% 45 conditions require widening at 70% 30 curve.

Maximum Grade (%) 5% 8 No improvement unless roadbed material 20% 10 and grade combine to make ascent 70% 12 impossible during the rains.

Minimum Stopping Sight 5% 50 Distance (m) 20% - 70%

Minimum Platform 5% - 6.0* 3.50 m plus ditches 3/ Width (m) 20% 6.0* 3.50 m plus ditches 3/ 70% 6.0* 3.50 m plus ditches 3/

Stream Crossings - Culverts and Culverts and paved fords unless depth and Bridges or Fords duration of high water dictates a bridge.

Surfacing Gravel or selacted Spot selected material where essential material for vehicular passage.

Approximate Traffic (v.p.d.) - 0-75

1/ BNDE/DNER/IBRD Feeder Roads Manual 3/ Passing bays as required 2/ Priority on steep grades, water crossings * Includes ditches and drainage improvements INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

CERTIFICATE

I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment.

In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this day of ,198 0.

FOR SECRETARY