LOAN NUMBER 2412 BR
OFFICIALDOCUMENTS
Loan Agreement(Urban Basic Education Project for
North and Centerwest Regions)
between
FEDERATIVE REPUBLIC OF BRAZIL
and
INTERNATIONAL BANK FOR RECONSTRUCTIONAND DEVELOPMENT
Dated , 1984
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LOAN NUKBER 2412 BR
LOAN AGREEMENT
AGREEMENT, dated 3&0 , 1984, betweenFEDERATIVE REPUBLIC OF BRAZIL;(her inafter called the Borrower)and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (here-inafter called the Bank).
WHEREAS (A) the Borrower has requested. the Bank to assist inthe financing of the Project described in Schedule 2 to thisAgreement by making the Loan as hereinafter provided;
(B) Parts A through G, and H (iii) and (iv) of the Projectwill be carried out by the Borrower in the North and CenterwestRegions of its territories with the necessary participation of anumber of States and Federal Territories of the Borrower to whichthe Borrower will make available part of the proceeds of the Loanand the corresponding counterpart funds, all as hereinafterprovided; and
WHEREAS the Bank has agreed, on the basis, inter alia, ofthe foregoing, to make the Loan to the Borrower upon the termsand 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 theprovisions of the General Conditions Applicable to Loan and Gua-rantee Agreements of the Bank, dated October 27, 1980, with thesame 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 Condi-tions).
Section 1.02. Wherever used in this Agreement, unless thecontext otherwise requires, the several terms defined in theGeneral Conditions have the respective meanings therein set forthand the following additional terms have the following meanings:
(a) "Sub-project" means a set of activities: (i) for purpo-ses of Parts B through G of the Project carried out or, if thecontext so requires, proposed to be carried out, in respect of a
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Basic Education school under the jurisdi-tion of a ParticipatingState, or under the jurisdiction of a Se., .cted Municipality (asthe terms are defined in paragraph (c) and \,) below); (ii) whichhas been approved by SEPS (as the term is defined in paragraph(k) below); and (iii) which is intended to be partly financed outof the proceeds of the Loan.
(b) "North and Centerwest Regions" means the regions in theBorrower's territories comprised of the following political sub-divisions of the Borrower: the States of Acre, Amazonas, Goias,Mato Grosso du Sul, Mato Grosso, Para and Rondonia, and theFederal Territories of Amapa and Roraima; and each of such poli-tical subdivisions will be hereinafter called "the State" and allurban areas in such political subdivisions will be hereinaftercalled the "Project Area".
(c) "Participating State" means any of the political sub-divisions (States or Federal Territories) comprised in the Northand Centerwest Region which has entered with the Borrower into aProject Agreement.
(d) "Project Agreement" means any of the agreements betweenthe Borrower and a State to be entered into pursuant to Section3.01 (c) of this Agreement, and the term "Sub-Project Agreement"means any of the a reements between a State and a Selected Muni-cipality to be entered into pursuant to the last sentence ofparagraph A.2 of Schedule 6 to this Agreement.
(e) "Basic Education" means primary education comprised oftwo cycles, lower primary grades (1 to 4, normally for students 7to 10 years old) and upper primary grades (5 to 8, normally forstudents 11 to 14 years old).
(f) "Project School" means a school in the Project Areaunder the jurisdiction of a Participating State or a SelectedMunicipality within such State, which provides Basic Educationservices for grades I to 4 and in respect of which at least oneSub-project is being carried out or will be carried out under theProject.
(g) "Special Account" means the account to be opened andthereafter maintained pursuant to Section 2.02 (b) of this Agree-ment.
(h) "Initial Deposit" means the amount of the proceeds ofthe Loan to be withdrawn from the Loan Account through one or
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more withdrawals under Category (5) of the table set forth inparagraph 1 of Schedule 1 to this Agreement and deposited in theSpecial Account pursuant to paragraph 3 of Schedule 5 to thisAgreement.
(i) "Account Bank" means Banco Central do Brasil, theBorrower's Central Bank and "Project Account" means the projectaccount to be opened and operated by one Executing Entity under,and where advances shall be deposited pursuant to, Section 3.07(a) of this Agreement.
(j) "FAE" means Fundarao de Assistdncia ao Estudante(Student Assistance Foundation), a foundation established, on thebasis of the formerly existing Fundagao Nacional de MaterialEscolar, by the Borrower's Lei No. 7091 which amended, for thepurpose, the Borrower's Lei No. 5327 as amended by Borrower'sDecreto-Lei No. 979, and operating as a separate legal entityunder the Estatuto approved by the Borrower's Decreto No. 88295,as published in the Borrower's Diario Oficial dated May 12, 1983;
(k) "MEC" means the Borrower's Ministry of Education andCulture, "SEPS" means MEC's Secretaria de Ensino de Primeiro eSegundo Graus, and "SEAC" means Secretaria Adjunta de Coordenagaoof SEPS.
(1) "INEP" means the Borrower's Instituto Nacional deEstudos e Pesquisas Educacionais (National Institute for Educa-tional Research and Studies) established by the Borrower's LeiNo. 378 as a body with administrative and financial autonomyintegrated into MEC's General Secretariat, and which operates inaccordance with the terms of Portaria No. 612 of November 12,1981.
(m) "CEDATE" means Centro de Desenvolvimento e ApoioTecnico a Educagao (Center for the Technical Development of, andsupport to, Education) a body with administrative and financialautonomy integrated into MEC's General Secretariat, all in termsof Portaria No. 566 of October 8, 1981.
(n) "Program Council" means the Council established byPortaria No. 121, dated October 21, 1983, as published in theBorrower's Diario Oficial on November 3, 1983, as modified byPortaria No. 032 dated April 5, 1984, as published in theBorrower's Diario Oficial on April 10, 1984.
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(o) "Project Management Team" means the team established byPortaria No. 31 dated March 30, 1984, in SEPs Coordenadoria deEnsino de Primeiro Grau, which is headed by the Project Manager.
(p) "SEC" means each Secretary of Education in each Parti-cipating State.
(q) "State Implementation Team" means the team in eachParticipating State responsible for identification, preparation,monitoring and evaluation, and sometimes active participation inthe implementation of Sub-projects, as to be provided for undereach Project Agreement in accordance with paragraph A.3 (i) ofSchedule 6 to this Agreement.
(r) "Executing Entities" means each of INEP, SEAC andProject Management Team, and the term includes CEDATE, FAE andIRHJP, these three being entities through which federal activi-ties solely consisting of provision of technical assistance arechanneled, all in accordance with paragraph (c) of Section 3.02of this Agreement.
(s) "Selected Municipality" means a Municipality within aParticipating State which: (i) (A) has been selected by theBorrower to participate in the execution of one or more Sub-projects located in such State, or (B) has been nominated to sub-stitute one Municipality selected originally and included in thelist set forth in the corresponding Project Agreement, or (C) hasbeen added to the aforesaid list, all in accordance with thecriteria or procedures, as the case may be, set forth in Sched-ule 7 to this Agreement; and (ii) which has put into force andeffect a teacher's charter (Estatuto do Magistdrio and Plano deCarreira) or, which lacking one, has undertaken the responsibil-ity, under the corresponding Sub-project Agreement, to have onepresented to its legislative body not later than January 1, 1986.
(t) "Advance Contract" means the Agreement between theBorrower and Banco Central do Brasil referred to in Section 3.07of this Agreement.
(u) "Manuals" means the documents listed in Article 1 ofPortaria No. 017 of March 23, 1984.
(v) "IRHJP" means the Borrower's Instituto de RecursosHumanos (Human Resources Institute) Joao Pinheiro established bythe Borrower's Decred No. 38460 as published in the Borrower'sDiario Oficial on December 28, 1955.
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ARTICLE II
The Loan
Section 2.01. The Bank agrees to lend to the Borrower, onthe terms and conditions set forth or referred to in this Agree-ment, an amount in various currencies equivalent to forty milliondollars ($40,000,000).
Section 2.02. (a) The amount of the Loan may be withdrawnfrom the Loan Account in accordance with the provisions ofSchedule 1 to this Agreement, as such Schedule may be amendedfrom time to time by agreement between the Borrower and the Bank,for expenditures made (or, if the Bank shall so agree, to bemade) in respect of the reasonable cost of goods and servicesrequired for the Project and to be financed out of the proceedsof the Loan.
(b) The Borrower shall, for the purposes of the Project,open and thereafter maintain in the Account Bank a specialaccount in dollars on terms and conditions satisfactory to theBank. Deposits into, and payments out of, the Special Accountshall be made in accordance with the provisions of Schedule 5 tothis Agreement.
Section 2.03. Except as the Bank shall otherwise agree,procurement of the goods and civil works required for the Projectand to be financed out of the proceeds of the Loan shall begoverned by the provisions of Schedule 4 to this Agreement.
Section 2.04. The Closing Date shall be February 28, 1990 orsuch later date as the Bank shall establish. The Bank shallpromptly notify the Borrower of such later date.
Section 2.05. (a) The Borrower shall pay to the Bank a feeequivalent to ninety-nine thousand seven hundred fifty-onedollars ($99,751).
(b) On or promptly after the Effective Date, the Bankshall, on behalf of the Borrower, withdraw from the Loan Accountand pay to itself the amount of the said fee in such currency orcurrencies as the Bank shall determine.
Section 2.06. The Borrower shall pay to the Bank a commit-ment charge at the rate of three-fourths of one per cent (3/4 of
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1%) per annum on the principal amount of the Loan not withdrawnfrom time to time.
Section 2.07. (a) The Borrower shall pay interest on the
principal amount of the Loan withdrawn and outstanding from timeto time at a rate per annum for each Interest Period equal to onehalf percent per annum above the Cost of Qualified Borrowings forthe last Semester ending prior to the commencement of suchInterest Period.
(b) As soon as practicable after the end of each Semester,the Bank shall notify the Borrower of the Cost of QualifiedBorrowings for such Semester.
(c) For purposes of this Section:
(i) "Interest Period" means the six-month periodcommencing on each date specified in Section 2.08of this Agreement, including the Interest Periodin which this Agreement is signed.
(ii) "Cost of Qualified Borrowings" means the cost,expressed as a percentage per annum, as reasonablydetermined by the Bank, provided that the amountof $8,520.5 million referred to in (iii) (B)hereunder shall be reckoned at a cost of 10.93%per annum.
(iii) "Qualified Borrowings" means: (A) outstandingborrowings of the Bank drawn down after June 30,1982; and (B) until July 1, 1985, the amount of$8,520.5 million (representing borrowings of theBank between July 1, 1981 and June 30, 1982) lessany part thereof repaid earlier than July 1, 1985.
(iv) "Semester" means the first six months or thesecond six months of a calendar year.
Section 2.08. Interest and other charges shall be payablesemiannually on February 15 and August 15 in each year.
Section 2.09. The Borrower shall repay the principal amountof the Loan in accordance with the amortization schedule setforth in Schedule 3 to this Agreement.
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Section 2.10. The Head of the Project Management Team or theperson or persons he designates in writing is designated asrepresentative of the Borrower for the purposes of taking anyaction required or permitted to be taken under the provisions ofSection 2.02 of this Agreement and Article V of the GeneralConditions.
ARTICLE III
Execution of the Project
Section 3.01. (a) The Borrower declares its commitment tothe objectives of the Project as set forth in Schedule 2 to thisAgreement, and to this end, shall carry out the Project throughMEC assisted by the Executing Entities with due diligence andefficiency and in conformity with appropriate administrative,financial and educational practices and with the Manuals, andshall provide, promptly as needed, the funds, facilities, serv-ices and other resources required for the purpose, including thestaff mentioned in the Annex to Schedule 1 to this Agreement.
(b) Without limitation to its obligations under paragraph(a) of this Section, the Borrower shall establish, and thereaftermaintain, local funding procedures, satisfactory to the Bank,that will ensure that funds required for the carrying out of theProject will be available to all Participating States and Exe-cuting Entities on a timely basis.
(c) The Borrower shall enter into a Project Agreement witheach of the States, represented by the corresponding SEC, stip-ulating the basis for such State's participation in the carryingout of Sub-projects for purposes of Parts B through G of theProject on terms and conditions satisfactory to the Bank, includ-ing those set forth in Schedule 6 to this Agreement.
(d) The Borrower shall, not later than October 31, 1984,enter into agreements with FAE and IRHJP, on terms and conditionssatisfactory to the Bank, for purposes of carrying out Parts Band D, and C, respectively, of the Project.
(e) Unless otherwise agreed with the Bank, the Borrowershall not assign, amend, abrogate, or fail to comply with any ofthe agreements referred to in paragraphs (c) and (d) of thisSection or any provision thereof.
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Section 3.02. The Borrower shall: (a) maintain the ProjectManagement Team, which shall be responsible for coordinating andreviewing the annual Project operational plans and activities ofthe Executing Entities, appraising annual State investment pro-grams which will serve as a framework for such State Sub-projects, initial screening of proposed Sub-projects, and circu-lation to applicable Executing Entities for appraisal thereof,supervision of institution building at State and Municipallevels, providing the Program Council and SEPS' Secretary withinformation necessary to carry out their Project functions, andmonitoring all Project activities, all in accordance with theManuals;
(b) maintain the Program Council which shall be responsiblefor approving annual operating plans of the Executing Entities,participating in the yearly review stipulated in Section 3.08 ofthis Agreement and, reviewing and making recommendations to theSecretary of SEPS regarding special implementation problems ofthe Project or Sub-projects, or both, on an ad hoc basis; and
(c) channel, through the Executing Entities, all of theProject activities at the federal level, as follows: CEDATE,Part A of the Project; FAE, Part B of the Project; IRHJP, Part Cof the Project; FAE, Part D of the Project; CEDATE, Parts Ethrough G of the Project; SEAC, Part H (i) of the Project; INEP,Part H (ii) of the Project; and the Project Management Team,Parts H (iii) and H (iv) of the Project.
Section 3.03. In order to assist the Borrower in carryingout all Parts of the Project other than Part D, the Borrowershall employ consultants whose qualifications, experience andterms and conditions of employment shall be satisfactory to theBank, such consultants to be selected in accordance withprinciples and procedures satisfactory to the Bank on the basisof the "Guidelines for the Use of Consultants by World BankBorrowers and by the World Bank as Executing Agency" published bythe Bank in August 1981.
Section 3.04. (a) The Borrower undertakes to insure, or makeadequate provision for the insurance of, the imported goods to befinanced out of the proceeds of the Loan against hazards incidentto the acquisition, transportation and delivery thereof to theplace of use or installation, and for such insurance any indem-nity shall be payable in a currency freely usable by the Borrowerto replace or repair such goods.
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(b) The Borrower shall cause all goods and servicesfinanced out of the proceeds of the Loan to be used exclusivelyfor the purposes of the Project.
Section 3.05. (a) The Borrower shall furnish to the Bank,promptly upon their preparation, the plans, specifications,reports, contract documents and construction and procurementschedules for the Project, and any material modifications thereofor additions thereto, in such detail as the Bank shall reasonablyrequest.
(b) The Borrower: (i) shall maintain records and proceduresadequate to record and monitor the progress of the Project(including its cost and the benefits to be derived from it), toidentify the goods and services financed out of the proceeds ofthe Loan, and to disclose their use in the Project; (ii) shallenable the Bank's representatives to visit the facilities andconstruction sites included in the Project and to examine thegoods financed out of the proceeds of the Loan and any relevantrecords and documents; and (iii) shall furnish to the Bank atregular intervals all such information as the Bank shall reason-ably request concerning the Project, its cost and, where appro-priate, the benefits to be derived from it, the expenditure ofthe proceeds of the Loan and the goods and services financed outof such proceeds.
(c) Upon the award by the Borrower of any contract forgoods, works or services to be financed out of the proceeds ofthe Loan, the Bank may publish a description thereof, the nameand nationality of the party to whom the contract was awarded andthe contract price.
(d) Promptly after completion of the Project, but in anyevent not later than six months after the Closing Date or suchlater date as may be agreed for this purpose between the Borrowerand the Bank, the Borrower shall prepare and furnish to the Banka report, of such scope and in such detail as the Bank shallreasonably request, on the execution and initial operation of theProject, its cost and the benefits derived and to be derived fromit, the performance by the Borrower and the Bank of their respec-tive obligations under the Loan Agreement and the accomplishmentof the purposes of the Loan.
Section 3.06. The Borrower shall take or cause to be takenall such action as shall be necessary to acquire as and when
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needed all such land and rights in respect of land as shall be
required for carrying out each Sub-project under Parts F and G of
the Project, and shall retain, until one year after the Closing
Date, all documentation, satisfactory to the Borrower and the
Bank, gathered by the Borrower from the Participating States and
Selected Municipalities as evidence that such land and rights in
respect of land are available for purposes related to the
Project.
Section 3.07. The Borrower shall: (a) enter into an agree-
ment satisfactory to the Bank with Banco Central do Brasil pro-
viding for advances in cruzeiros to be deposited by Banco Central
do Brasil, as and when requested by MEC, into a Project Account
to be opened and operated, by one of the Executing Entities on
behalf of itself and the remainder of such Entities and the
Participating States, exclusively for purposes of the Project;
and
(b) not assign, amend, abrogate, fail to comply or waive
such agreement or any provision thereof unless the Bank shall
otherwise agree.
Section 3.08. The Borrower and the Bank shall hold, not
sooner than on June 1 or later than July 31 each year, a review
of all aspects of Project implementation during the preceding
calendar year. The first of such reviews shall take place in the
year 1984 and the last one in the year in which the Closing Date
shall fall. All of such reviews shall be based on such reports as
the Bank shall reasonably request pursuant to Section 3.05 (b) of
this Agreement.
Section 3.09. The Borrower shall ensure that no Sub-project
for purposes of Part C of the Project is carried out unless: (i)
the Sub-project in question is consistent with existing training
and teacher support programs; and (ii) there is an appropriate
network of institutions located within the corresponding State
or, if the case may be, Selected Municipality, for the provision
of the services in question.
Section 3.10. When reviewing and analyzing each Sub-project
for purposes of Parts E, F or G of the Project for approval, the
Borrower, through SEPS, shall take all such steps as shall be
necessary to ensure that the works under such Sub-project have
been justified by, and are within the framework of, the mapping
study to be carried out under Part A of the Project, and will be
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carried out in accordance with the standards set forth in theManuals.
Section 3.11., In respect of Part H (i) of the Project, theBorrower undertakes to have the following items completed by thedates specified below:
(i) upgrading of statistics and developing social demandindicators, and improving unit cost analysis, byJuly 31, 1985;
(ii) analyzing impact of teacher wage policies, by July 31,1986;
(iii) mastering Basic Education models, by July 31, 1987; and
(iv) preparing an atlas, by July 31, 1988.
In order to start taking the action required in respect ofeach of the preceding items, the Borrower shall furnish to theBank, for comment, not later than 6 months in advance of each ofthe above deadlines, a draft report with the findings and recom-mendations to be made by SEAC in respect of each of the aforesaiditems.
ARTICLE IV
Other Covenants
Section 4.01. (a) It is the policy of the Bank, in makingloans to, or with the guarantee of, its members not to seek, innormal circumstances, special security from the member concernedbut to ensure that no other external debt shall have priorityover its loans in the allocation, realization or distribution offoreign exchange held under the control or for the benefit ofsuch member. To that end, if any lien shall be created on anypublic assets (as hereinafter defined), as security for anyexternal debt, which will or might result in a priority for thebenefit of the creditor of such external debt in the allocation,realization or distribution of foreign exchange, such lien shall,unless the Bank shall otherwise agree, ipso facto, and at no costto the Bank, equally and ratably secure the principal of, andinterest and other charges on, the Loan, and the Borrower, increating or permitting the creation of such lien, shall makeexpress provision to that effect; provided, however, that, if for
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any constitutional or other legal reason such provision cannot be
made with respect to any lien created on assets of any of its
political or administrative subdivisions, the Borrower shallpromptly and at no cost to the Bank secure the principal of, andinterest and other charges on, the Loan by an equivalent lien onother public assets satisfactory to the Bank.
(b) The foregoing undertaking shall not apply to: (i) anylien created on property, at the time of purchase thereof, solely
as security for payment of the purchase price of such property oras security for the payment of debt incurred for the purpose offinancing the purchase of such property; and (ii) any lien
arising in the ordinary course of banking transactions and
securing a debt maturing not more than one year after its date.
(c) As used in this Section, the term "public assets" means
assets of the Borrower, of any political or administrative sub-division thereof and of any entity owned or controlled by, oroperating for the account or benefit of, the Borrower or any such
subdivision, including gold and foreign exchange assets held byany institution performing the functions of a central bank or
exchange stabilization fund, or similar functions, for the
Borrower.
Section 4.02. (a) The Borrower shall maintain or cause tobe maintained separate accounts and records adequate to reflectin accordance with consistently maintained sound accountingpractices the operations, resources and expenditures, in-respect
of the Project, of the States and the departments or agencies of
the Borrower responsible for carrying out the Project or any part
thereof.
(b) Without limitation on the foregoing, the Borrower
shall: (i) maintain or cause to be maintained separate accountsreflecting all expenditures on account of which withdrawals arerequested from the Loan Account on the basis of statements of
expenditures; (ii) retain, until one year after the Closing Date,
all records (contracts, orders, invoices, bills, receipts and
other documents) evidencing the expenditures on account of whichwithdrawals are requested from the Loan Account on the basis ofstatements of expenditures; and (iii) enable the Bank's repre-
sentatives to examine such records.
(c) The Borrower shall: (i) have the accounts referred toin paragraphs (a) and (b) of this Section for each fiscal year
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audited, in accordance with appropriate auditing principlesconsistently applied, by independent auditors acceptable to theBank; (ii) furnish to the Bank as soon as available, but in anycase not later than four months after the end of each such year,a certified copy of the report of such audit by said auditors, ofsuch scope and in such detail as the Bank shall have reasonablyrequested, including, without limitation to the foregoing, aseparate opinion by said auditors in respect of the expenditure;and records referred to in paragraph (b) of this Section as towhether the proceeds of the Loan withdrawn from the Loan Accounton the basis of statements of expenditure have been used for thepurpose for which they were provided; and (iii) furnish to theBank such other information concerning said separate accounts,records and expenditures and the audit thereof as the Bank shallfrom time to time reasonably request.
Section 4.03. (a) The Borrower shall have the SpecialAccount audited annually by independent auditors, acceptable tothe Bank and, promptly after the audit and not later than fourmonths after the close of the Account Bank's fiscal year, theBank shall be provided with certified copies of such audit,together with a certified copy of the auditor's report, includinga description of the audit procedures.
(b) The Borrower shall cause the Account Bank to furnish tothe Bank each month certified statements of the Special Account,and from time to time such other information concerning suchSpecial Account, the monthly statements, and the audit referredto in paragraph (a) of this Section, as the Bank shall reasonablyrequest.
ARTICLE V
Remedies of the Bank
Section 5.01. For the purposes of Section 6.02 of theGeneral Conditions, the following additional events are specifiedpursuant to paragraph (k) thereof:
(a) the Borrower or any of the Participating States shallhave failed to comply with any of the provisions of the ProjectAgreement in question;
(b) a Participating State and a Selected Municipality shallhave failed to comply with any of the provisions of the Sub-
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Project Agreement in question related to the objectives of the
Project;
(c) Banco Central do Brasil shall have failed to make the
advances referred to in Section 3.07 of this Agreement for rea-
sons other than those expressly stipulated in the Advance Con-
tract or the funds advanced by Banco Central do Brasil pursuant
to such Section shall have been used or allocated for financing
expenditures not eligible for finncing under the Loan; and
(d) Portaria No. 017 dated March 23, 1984 or any regula-
tion, portaria, or other administrative instrument dealing with
or related to any of the Manuals or providing for the local
funding procedures referred to in Section 3.01 (b) of this Agree-
ment shall have been amended, suspended, abrogated, repealed or
waived, or the Borrower shall have failed to apply such Manuals,
all in such a way as to, in the Bank's opinion materially and
adversely affect: (i) the ability of the Borrower or any Execut-
ing Entity to execute the Project, or of the Participating State
or the Selected Municipality, to participate in carrying out a
Sub-project; or (ii) the timely availability of counterpart funds
required to carry out the Project; or (iii) the ability of the
Borrower, any Executing Entity or a State to carry out their
respective covenants, agreements and obligations set forth or
referred to in the Loan Agreement or in the Project Agreement.
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:
(a) any event specified in paragraphs (a) or (b) of Section
5.01 of this Agreement shall occur and shall continue for a
period of 30 days after notice thereof shall have been given by
the Bank to the Borrower; and
(b) any event specified in paragraphs (c) or (d) of Section
5.01 of this Agreement shall occur.
ARTICLE VI
Effective Date; Termination
Section 6.01. The following events are specified as addi-
tional conditions to the effectiveness of the Loan Agreement
within the meaning of Section 12.01 (c) of the General Condi-
tions:
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(a) that the Loan Agreement has been duly registered by theBanco Central do Brasil;
(b) that all necessary acts, consents and approvals to beperformed or given by the Borrower, its political subdivisions oragencies, by any agency thereof, or otherwise to be performed orgiven in order to authorize the carrying out of the Project andto enable the Borrower to perform its obligations pursuant tothis Agreement, together with all necessary powers and rights inconnection therewith, have been performed or given;
(c) that the regulations, portarias, instructions and anyother instructions and legal or administrative action necessaryto put into effect the funding procedures referred to in Sec-tion 3.01 (b) of this Agreement and the Advance Contract havebeen issued or taken by the Borrower and its political andadministrative subdivisions or agencies; and
(d) that the Borrower and Banco Central do Brasil haveentered into the Advance Contract.
Section 6.02. The following is specified as an additionalmatter, within the meaning of Section 12.02 (c) of the GeneralConditions, to be included in the opinion or opinions to befurnished to the Bank, namely, that, no law, decree, or legal oradministrative provision other than those referred to in Section6.01 (c) of this Agreement is required to put into effect thefunding procedures referred to in Section 3.01 (b) of thisAgreement.
Section 6.03. The date 4 (J eAY & 1574 , is hereby
specified for the purposes of Section 12.04 of the General Condi-
tions.
ARTICLE VII
Representative of the Borrower; Addresses
Section 7.01. The Minister of Finance of the Borrower isdesignated as representative of the Borrower for the purposes of
Section 11.03 of the General Conditions.
Section 7.02. The following addresses are specified for thepurposes of Section 11.01 of the General Conditions:
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For the Borrower:
Minist'rio da FazendaEsplanada dos Ministerios70048-Brasilia, D.F.Brazil
Cable address: Telex:
MINIFAZ 611506Brasilia, Brazil
With copies to:
Ministerio da Educarao e CulturaEsplanda dos Ministerios70047-Brasilia, D.F.Brazil
Cable address: Telex:
SG-MEC 611068 MNEC
Brasilia, Brazil
For the Bank:
International Bank forReconstruction and Development
1818 H Street, N.W.Washington, D.C. 20433United States of America
Cable address: Telex:
INTBAFRAD 440098 (ITT)Washington, D.C. 248423 (RCA) or
64145 (WUI)
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IN WITNESS WHEREOF, the parties hereto, acting through theirrepresentatives thereunto duly authorized, have caused thisAgreement to be signed in their respective names in AA br.le'cr'Pf &em4ia'e 14(S4.564r Of e*ef% as of the day and yearfirst above written.
FEDERATIVE REPUBLIC OF BRAZIL
By g' / w WZitnessed by Antonio Delfim Netto Authorized Representative
Ministro de Planejamento
INTERNATIONAL BANK FORRECONSTRUCTION AND DEVELOPMENT
ByAwA$A Regional Vice PresidentLatin America and the Caribbean
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SCHEDULE 1
Withdrawal of the Proceeds of the Loan
1. The table below sets forth the Categories of items to befinanced out of the proceeds of the Loan, the allocation of theamounts of the Loan to each Category and the percentage ofexpenditures for items so to be financed in each Category:
Amount of theLoan Allocated % of
(Expressed in ExpendituresCategory Dollar Equivalent) to be Financed
(1) Works 10,400;000 35%
(2) Goods other 1,700,000 35%than educa-tionalmaterials
(3) Consultants' ser-vices and educa-tional materials
(a) 6,300,000 80%
(b) 12,600,000 41%
(4) Costs for ProjectAdministrationsubstantially asdetailed in theAnnex to thisSchedule
(a) 1,500,000 60%
(b) 1,200,000 41%
(5) Initial deposit 3,000,000in SpecialAccount
(6) Fee 99,751 Amount due underSection 2.05 (a)of this Agreement
- 19 -
Amount of theLoan Allocated % of(Expressed in Expenditures
Category Dollar Equivalent) to be Financed
(7) Unallocated 3,200,249
TOTAL 40,000,000
2. Disbursements in respect of Categories (3) and (4) shall bemade first from Sub-Categories (3) (a) and (4) (a) until theearlier of December 31, 1985 or the date on which the amountsallocated to such Sub-Categories have been fully disbursed. Anyamount remaining undisbursed in each of such Sub-Categories afterDecember 31, 1985 shall be reallocated by the Bank to Sub-Catego-ries (3) (b) and (4) (b), respectively.
3. The disbursement percentages have been calculated in com-pliance with the policy of the Bank that the proceeds of the Loanshall not be disbursed on account of payments for taxes leviedby, or in the territory of, the Borrower on goods or services, oron the importation, manufacture, procurement or supply thereof;on this basis, if the amount of any such taxes levied on or inrespect of items in any Category decreases or increases, the Bankmay, by notice to the Borrower, increase or decrease the dis-bursement percentage then applicable to such Category as requiredto be consistent with the aforementioned policy of the Bank.
4. Notwithstanding the provisions of paragraph 1 above, nowithdrawals shall be made in respect of:
(a) expenditures made prior to the date of this Agreement,except that withdrawals, in an aggregate amount not exceeding theequivalent of $4,000,000, may be made on account of expendituresmade before that date but after June 1, 1983; and
(b) expenditures in respect of a Sub-project, unless theBank has been furnished with evidence satisfactory to the Bankthat the Project Agreement with the corresponding State and, ifsuch is the case, the Sub-Project Agreement between such Stateand the Selected Municipality in question, have been executed andare in good order.
- 20 -
5. Notwithstanding the allocation oA 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 Cate-
gory, the Bank may, by notice to the Borrower: (i) reallocate to
such Category, to the extent required to meet the estimated
shortfall, proceeds of the Loan which are then allocated to
another Category and 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 disburse-
ment 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 Bank shall have reasonably determined that the pro-
curement of any item in any Category is inconsistent with the
procedures set forth or referred to in this Agreement, no expen-
diture for such item shall be financed out of the proceeds of the
Loan, and the Bank may, without 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 -
ANNEX TO SCHEDULE 1TO THE LOAN AGREEMENT
Disbursement against Incremental Costsfor Project Administration
1. Salaries of additional staff of the Project Management Teamwhose services are assigned full-time to Project-relatedactivities: (i) one Project Manager; (ii) one Project Coordina-tor; (iii) nine specialists, with at least one in each of theareas of teacher training, educational materials, planning, eval-uation and administration, and training other than teacher train-ing; (iv) one financial programmer; (v) one accountant; and (vi)three support staff members.
2. Salaries of supplemental staff of the other Executing Enti-ties whose services are assigned full-time to Project-relatedactivities, as follows:
CEDATE: (i) one coordinator; (ii) three specialists, withat least two architects; and (iii) one supportstaff member.
FAE: (i) one coordinator; (ii) three specialists inprimary school textbook and educational materials;(iii) one support staff member; and (iv) onesupervisor of school meal programs.
IRHJP: (i) one coordinator; (ii) three specialists inteacher training; and (iii) one support staffmember;
INEP: one specialist in primary education; and
SEAC: (i) one coordinator/education planner; (ii) threespecialists, with at least one education plannerand one economist; and (iii) one support staffmember.
3. Salaries of supplemental staff of each State ImplementationTeam: (i) one coordinator; and (ii) up to 4 specialists, with notmore than one in each of the following areas: training, educationmaterials, school facilities, and education planning and evalua-tion.
4. Office equipment, other than furniture, related to admini-stration of the Project.
5. Travel expenses, exclusively for purposes of the Project, bythe aforesaid personnel.
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SCHEDULE 2
Description of the Project
The Project is the Borrower's 1984-1988 investment plan forBasic Education in the Project Area. The objectives of theProject are: (i) improvement in the quality and efficiency ofexisting primary schools (grades I to 4); (ii) expansion ofaccess to Basic Education for children in grades 1 to 4; and(iii) building of the institutional-management and investmentcapacity for Basic Education at Municipal, State, and Federallevels of Government. The Project consists of:
Part A: School Mapping
Execution by the States with technical assistance fromCEDATE and overall coordination by the Project Management Team,of a school mapping study of the Project Area which will collectdata for determining the location of new schools to be con-structed under Parts F and G of the Project as a function of thepossible refurbishing of existing classrooms under Part E of theProject, and for improving standards and school designs forschool construction and remodeling.
Part B: Carrying out of Sub-projects for the provision ofEducational Materials, consisting of:
(i) provision of a minimum of two and four books, .to eachstudent in grades 1 and 2, and in grades 3 and 4,respectively, either through direct acquisition by theProject School in question or through the Borrower'sProgram for Basic Eduction Textbooks (PLIDEF), andutilization of the books so acquired to cover the corecurriculum.
(ii) provision of essential teaching materials, a basicstudent packet and a classroom-minimum-learning-resources packet, to each teacher, student and class-room, respectively, in grades 1 to 4 of each ProjectSchool, to cover minimum needs for a complete schoolyear;
(iii) establishment of an adequate system of school libraries
in the Project Area, including: (a) a permanent librarycollection in Project Schools to be constructed under
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Parts F and G of the Project or where physical space isavailable, in Project Schools to be refurbished underPart E of the Project; (b) traveling libraries whichwould rotate among adjacent Basic Education schools inthe Project Area; and (c) libraries in large ProjectSchools which will serve as a library nucleus forsurrounding Basic Education schools;
(iv) training of teachers, students and the community atlarge in techniques of conservation and re-utilizationof student textbooks through a Textbook Bank Program(Banco do Livro) to be applied to Basic Educationschools in the Project Area.
Part C: Carrying out of Sub-projects for the provision ofTraining and Teacher Support Services, consisting of:
(i) short-term, in-service teacher training courses inspecific priority skills organized at the State levelfor Project School teachers of grades 1 to 4, inspecific priority skills including: (a) literacy andnumeracy in grades 1 and 2; (b) use of textbooks andother teaching materials; (c) alternative teachingmethods and classroom organization; (d) interactionbetween a school and the community it serves; and (e)implementation of the Textbook Bank Program included inPart B (iv) of the Project; and
(ii) short-term training courses for Project School prin-cipals and supervisors oriented toward: (a) improvingschool administration practices; (b) initiating schoolconsumable-materials budgets; (c) providing pedagogicalsupport for teachers; and (d) creating a permanentstaff-development environment in the school; and
(iii) initial and in-service training courses in hygiene andfood storage for Project School cooks and mealsupervisors.
Part D: Carrying out of Sub-projects for Student Nutritionconsisting of:
Ci) construction and equipping of feeding facilities ineach Project School to be constructed under Parts F and
- 24
G of the Project and, if warranted, remodeling and re-
equipping feeding facilities of schools to be refur-
bished under Part E of the Project; and
(ii) specific supervision of on-going nutrition programs, to
be done by means of visits by FAE's supervisors and
provision of technical assistance thereby.
Part E: Carrying out of Sub-projects for the Refurbishing of
Existing Schools for Grades 1 to 4 which are in Poor
Condition, consisting of:
Refurbishing, furnishing and equipping inadequate classrooms
in existing schools in Project Area, including, in selected
cases, the replacement of certain classrooms.
Part F: Carrying out Sub-projects for the purpose of reducing
excess utilization of existing facilities, consisting
of:
Construction, furnishing and equipping new schools in cities
in the Project Area where existing facilities are operating with
three or more shifts daily.
Part G: Carrying out Sub-projects for the provision of Addi-
tional Project School Facilities for Grades 1 to 4,
consisting of:
Construction, equipping and furnishing of additional schools
to expand student access to the first four grades of primary
school.
Part H: Building Institutional Management and Investment Capa-
city, consisting of:
(i) Long-term planning and pre-investment activities in the
education sector at federal and state levels, by a
special task force operating under SEAC, with emphasis
on upgrading Basic Education statistics and developing
relevant social demand indicators, mastering the most
common Basic Education planning models, improving unit
cost analysis, analyzing the impact of alternative
teacher wage policies on federal, state and municipal
budgets, and overall budget trends, and preparing an
atlas of imbalances and disparities in Basic Education.
- 25 -
(ii) Execution of special projects in the North and Center-west Regions in any one of the following fields: (a)teaching literacy in grades 1 and 2; (b) techniques fortraining untrained grade 1 and 2 teachers;(c) increas-ing student time available for learning; and (d) im-proving school administration.
(iii) Strenthening state and municipal educational authori-ties by means of: (a) regular training and technicalassistance to the State Implementation Teams on moni-toring and financial aspects of Sub-project implementa-tion; (b) technical and professional training for stateand municipal personnel directly involved in the prep-aration and implementation of Sub-projects, includingfellowships, study tours, seminars and workshops; (c)supplementing services of state or municipal personnel,or both, required for the implementation of the Sub-projects in question; (d) acquisition and utilizationof equipment and consumable materials required by eachState for the implementation of Sub-projects; and (e)strengthening of certain state or municipal educationalauthorities, or both, in specific aspects of Sub-project implementation.
(iv) Enhancement of capabilities for project monitoring andevaluation at State and Federal levels.
The Project is expected to be completed by April 30, 1989.
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SCREDULE 3
Amortization Schedule
Payment of Principal
Date Payment Due (expressed in dollars)*
On each February 15 and August 15
beginning February 15, 1988
through February 15, 1999 1,665,000
On August 15, 1999 1,705,000
* The figures in this column represent dollar equivalents
determined as of the respective dates of withdrawal; see
General Conditions, Section 3.04.
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Premiums on Prepayment
The following percentages are specified as the premiumspayable on repayment in advance of maturity of any portion of theprincipal amount of the Loan pursuant to Section 3.04 (b) of theGeneral Conditions:
Time of Prepayment Premium
The interest rate (ex-pressed as a percentageper annum) applicable tothe balance outstandingon the Loan on the dayof prepayment multipliedby:
Not more than three years 0.20before maturity
More than three years but 0.40not more than six yearsbefore maturity
More than six years but 0.73not more than 11 yearsbefore maturity
More than 11 years but not 0.87more than 13 yearsbefore maturity
More than 13 years 1.00before maturity
- 28 -
SC1EDUL 4
Procurement
A. International Competitive Bidding
1. Except as provided in Part C hereof, goods and civil works
shall be procured under contracts awarded in accordance with pro-
cedures consistent with those set forth in the current edition of
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 bid-
ding as described in Part A of the Guidelines.
2. For goods and works to be procured on the basis of inter-
national competitive bidding, in addition to the requirements of
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 or prequalification documents relating
thereto, as the case may be, a general procurement notice, insuch form and detail and containing such information as the Bank
shall reasonably request; the Bank will arrange for the publica-
tion 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. For the purpose of evaluation and comparison of bids for the
supply of goods to be procured on the basis of international com-
petitive bidding: (i) bidders shall be required to state in their
bid the c.i.f. (port of entry) price for the imported goods, or
the ex-factory price or off-the-shelf price of other goods,
offered in such bid; (ii) customs duties and other import taxes
levied in connection with the importation, or the sales and
similar taxes levied in connection with the sale or delivery,
pursuant to the bid, of the goods shall not be taken into account
in the evaluation of the bids; and (iii) the cost of inland
freight and other expenditures incidental to the delivery of the
goods to the place of their use or installation shall be
included.
- 29 -
B. Preference for Domestic Manufacturers
In the procurement of goods in accordance with the proce-dures described in Part A of this Schedule, goods manufactured inBrazil may be granted a margin of preference in accordance with,and subject to, the following provisions:
1. All bidding documents for the procurement of goodsshall clearly indicate any preference which will be granted, theinformation required to establish the eligibility of a bid forsuch preference and the following methods and stages that will befollowed in the evaluation and comparison of bids.
2. After evaluation, responsive bids will be classified inone of the following two groups:
(1) Group A: bids offering goods manufactured inBrazil if the bidder shall have established to thesatisfaction of the Borrower and the Bank thatsuch goods contain components manufactured inBrazil equal to at least 50% of the value of thecomplete goods.
(2) Group B: bids offering any other goods.
3. In order to determine the lowest evaluated bid of eachgroup, all evaluated bids in each group shall first be comparedamong themselves, without taking into account customs duties andother import taxes levied in connection with the importation, andsales and similar taxes levied in connection with the sale ordelivery, pursuant to the bids, of the goods. Such lowestevaluated bids shall then be compared with each other, and if, asa result of this comparison, a bid from group A is the lowest, itshall be selected for the award.
4. If, as a result of the comparison under paragraph 3above, the lowest bid is a bid from group B, all group B bidsshall be further compared with the lowest evaluated bid fromgroup A after adding (i) to the c.i.f. bid price of goods to beimported in each group B bid an amount equal to the smaller of(A) the amount of customs duties and other import taxes which anon-exempt importer would have to pay for the importation ofgoods offered in such group B bid, or (B) 15% of the c.i.f. bidprice of such goods, and (ii) to the ex-factory bid price ofgoods supplied domestically offered in each group B bid an amount
- 30 -
equal to the smaller of (A) the amount of customs duties andother import taxes which would be levied on the goods offered insuch group B bid if they originated from the same foreign countryas the bid included in group B which enjoys the lowest customsduties and other import taxes, or (B) 15% of the ex-factory bidprice of such goods. If, as a result of this comparison, the bidfrom group A is the lowest, it shall be selected for the award;if not, the lowest evaluated bid from group B, as determined
under paragraph 3 above, shall be selected for the award.
C. Other Procurement Procedures
1. Contracts for civil works for Sub-projects underParts B (iii), D (i), E, F or G of the Project or for goods
grouped pursuant to paragraph 2 below or for printing services,may be awarded on the basis of competitive bidding procedureslocally advertised, to the extent that the procedures in questionare satisfactory to the Bank.
2. Contracts for goods, shall be grouped in sizable pack-
ages so as to enable competitive bidding procedures locallyadvertised for the procurement of such contracts. Contracts thatcannot be so grouped shall be procured after soliciting and
obtaining not less than three quotations from reputable suppliers
within Brazil, and shall be awarded to the supplier who quotes
the lowest price; provided, however, that the contracts so
awarded shall not exceed, in the aggregate, the equivalent of
$1,000,000, $600,000 and $350,000, for educational materials,furniture and equipment, respectively.
D. Review of Procurement Decisions by the Bank
1. Except for contracts on account of which withdrawals are
allowed from the Loan Account on the basis of statements ofexpenditures, 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 LoanAccount 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 Bankshall reasonably request. The Bank shall, if it determines thatthe award of the contract was not consistent with the Guidelinesor this Schedule, promptly inform the Borrower and state the
reasons for such determination.
- 31 -
2. Before agreeing to any material modification or waiver ofthe terms and conditions of a contract, or granting an extensionof the stipulated time for performance of such contract, orissuing any change order under such contract (except in cases ofextreme urgency) which would increase the cost of the contract bymore than 15% of the original price, the Borrower shall informthe Bank of the proposed modification, waiver, extension orchange order and the reasons therefor. The Bank, if it determinesthat the proposal would be inconsistent with the provisions ofthis Agreement, shall promptly inform, the Borrower and state thereasons for its determination.
E. Procurement Without Contracting
Civil works for the remodeling and refurbishing of existingschools under Part D.1 and E, respectively, may be carried out byforce account of a Participating State, to the extent that theaggregate of works to be so procured does not exceed theequivalent of $4,000,000.
- 32 -
SCHEDULE 5
Special Account
1. For the purposes of this Schedule:
(a) the term "Categories" means, collectively, Category 1,Category 2, Category 3 and Category 4, all of the table in para-
graph I of Schedule I to this Agreement, and the term "Category"
means any one of them; and
(b) the term "Eligible Expenditures" means expenditures in
respect of the reasonable cost of goods and services required for
the Project and to be financed out of the proceeds of the Loan
allocated from time to time to the Categories in accordance with
the provisions of, and in the percentage stipulated in, the table
set forth in paragraph 1 of Schedule 1 to this Agreement.
2. Payments out of the Special Account shall be made exclu-
sively for Eligible Expenditures in accordance with the provi-
sions of this Schedule. The Account Bank shall authorize withdra-
wals from the Special Account on the basis of the evidence that
the Bank shall have reasonably determined and provided that: (i)
payment of the corresponding Eligible Expenditures has been made
out of the Project Account; or (ii) funds for such payment are
readily available in the Project Account. For each such withdra-
wal so authorized, the Account Bank shall debit the Special
Account with the dollar equivalent of the amount of the Eligible
Expenditures in question in cruzeiros or any other currency other
than dollars, determined on the basis of the rate of exchange
between the dollar and such currency in effect at the time each
payment for Eligible Expenditures was made.
3. The Bank shall, at the request of the Borrower, and after
evidence satisfactory to the Bank of the establishment of the
Project Account has been furnished to the Bank, withdraw on
behalf of the Borrower from the Loan Account and deposit into the
Special Account the Initial Deposit. The amount of the Initial
Deposit originally allocated to Category (5) of the Table set
forth in paragraph 1 of Schedule 1 to this Agreement may at the
request of, and by notice to the Borrower, be increased in order
to adjust the level of the Special Account to the disbursement
requirements of the Project. In such cases, the Bank may also
adjust the amount formerly allocated to the aforesaid Category
(5). Deposits other than the Initial Deposit(s) shall be made in
- 33 -
the Special Account on the basis of requests by the Borrowerfurnished to the Bank at such intervals as the Bank shall spe-cify. If so requested, the Bank shall further so withdraw fromthe Loan Account and deposit into the Special Account suchamounts as shall be required to replenish the Special Accountwith amounts equal to payments made out of the Special Accountfor Eligible Expenditures, but only to the extent that the amountof any such deposit, together with any amount remaining on depo-sit in the Special Account as of the date of such request, shallnot exceed in the aggregate the equivalent of the Initial Depo-sit. Except as the Bank may otherwise agree, each such depositother than the Initial Deposit shall be withdrawn by the Bankfrom the Loan Account under the respective Category or Catego-ries, and in the respective equivalent amounts, as shall havebeen justified by the evidence supporting the request for suchdeposit furnished pursuant to paragraph 4 of this Schedule.
4. Prior to or at the time of each request by the Borrower fora deposit by the Bank into the Special Account other than theInitial Deposit, the Borrower shall furnish to the Bank inrespect of each payment made by the Borrower out of the SpecialAccount such documents and other evidence as the Bank shallreasonably request, showing that such payment was made forEligible Expenditures.
5. Notwithstanding the provisions of paragraph 3 of this Sched-ule, any request for a further deposit into the Special Accountmay be denied by the Bank (a) when the Bank shall have determined
at any time that all further withdrawals can be made directly bythe Borrower from the Loan Account in accordance with the provi-sions of paragraph (a) of Section 2.02 of this Agreement, or (b)when the total unwithdrawn amount of the Loan allocated to the
Categories minus the amount of any outstanding qualified agree-ment to reimburse entered into by the Bank and of any outstandingspecial commitment made by the Bank pursuant to Section 5.02 ofthe General Conditions, with respect to the Categories, shall beequal to the equivalent of twice the amount of the Initial Depo-sit, as such amount might have been adjusted pursuant to para-graph 3 hereof. Withdrawal from the Loan Account of the remainingunwithdrawn amount of the Loan allocated to the Categories shallfollow such procedures as the Bank shall specify by notice to theBorrower and shall, except as the Bank shall otherwise agree, bemade only after and to the extent the Bank shall have been satis-
fied that all such amounts remaining on deposit in the SpecialAccount as of the date of such notice have been or will beutilized in making payments for Eligible Expenditures.
- 34-
6. If the Bank shall have determined at any time that:
(a) any payment out of the Special Account (i) was made forany expenditure or in any amount not eligible pursuant to para-graph 2 of this Schedule, or (ii) was not justified by the evi-dence furnished pursuant to paragraph 4 of this Schedule, theBorrower shall, promptly upon notice from the Bank and, unlessotherwise agreed by the Bank, prior to any further deposit intothe Special Account by the Bank, deposit into the Special Accountor, if the Bank shall so request, refund to the Bank an amountequal to the amount of such payment or the portion thereof not soeligible or justified; or
(b) any a-mount outstanding in the Special Account will notbe required to cover further payments for Eligible Expenditures,the Borrower shall, promptly upon notice from the Bank, andunless otherwise agreed by the Bank, refund to the Bank suchamount then outstanding in the Special Account.
- 35 -
SCHEDULE 6
The Project Agreements andthe Sub-project Agreements
(A) Project Agreements
The terms and conditions of each Project Agreement to besigned between the Borrower and each State shall include (but notbe limited to) those set forth below. As an annex to each suchAgreement, there will be (i) a list of the Municipalities withinthe State included in the Project in accordance with the criteriaset forth in 1 (a), 1 (b) and 1 (c) of Schedule 7 to this Agree-ment; and (ii) a Municipality substitutability provision as setforth in such Schedule 7.
1. Whenever used in the Project Agreement, unless the contextshall otherwise require, the several terms defined in the LoanAgreement will maintain, after translated, the meanings thereinset forth.
2. Each State shall participate in the execution of Sub-projects with due diligence and efficiency, in conformity withappropriate administrative, educational and financial practices,and the Borrower shall transfer, as a grant, to each State theportion of the proceeds of the Loan and the federal counterpartfunds required for the purpose. The State shall refrain fromtaking any action which would prevent or interfere with theperformance by an Executing Entity of any of its respectivecovenants, agreements and obligations contained in the ProjectAgreement and will take or cause to be taken all action whichshall be necessary to enable the Executing Entities to performsuch covenants, agreements and obligations. Whenever the Sub-project will be carried out in respect of a school under thejurisdiction of a Selected Municipality, the State shall enterinto an agreement (Sub-project Agreement) whereby it shall under-take such obligations and cause the Selected Municipality toundertake such other obligations additional to those set forth inParts B and C of this Schedule, all as shall be necessary toensure compliance by the State of its respective obligationsunder the Project Agreement.
3. Each State shall: (i) establish, staff and maintain untilthe completion of the Project, a State Implementation Team, inaccordance with the Manual de Programagao e Ger6ncia included in
- 36 -
the Borrower's Portaria No. 017 dated March 23, 1984, throughwhich the State shall discharge its obligations under the ProjectAgreement. Such Team shall be established within each State'srespective SEC and assisted and supported, whenever necessary, by
technical staff from the Executing Entities, and shall liaisewith the Project Management Team for purposes of Part H (iii) ofthe Project; and (ii) deliver to Project Management Team theavailable information necessary for the preparation of the
reports referred to in Section 3.08 of the Loan Agreement.
4. Each State shall: (i) enable the Bank's accredited repre-
sentatives to visit the facilities and construction sites includ-
ed in the Project and to examine the goods financed out of theproceeds of the Loan and any relevant records and documents; (ii)take or cause to be taken all such action as shall be necessaryto acquire as and when needed all such land and rights in respect
of land as shall be required for the construction and operationof the facilities included in the Project and shall furnish tothe Project Management Team, promptly after each such acquisi-tion, evidence satisfactory to the Borrower. and the Bank thatsuch land and rights in respect of land are available for purpo-ses related to the Project; (iii) cause all goods and servicesfinanced out of the proceeds of the Loan to be used exclusivelyfor the Project, except as the Bank shall otherwise agree; and(iv) adequately maintain or cause to be maintained the buildings,
equipment and furniture of the educational institutions includedin the Project and make, or cause to be made, all necessary re-pairs and renewals thereof, all in accordance with sound admin-istrative and.technical standards.
5. Each State shall, in order to be assisted in its participa-tion in Sub-projects and for purposes of Part H (iii) of theProject, employ consultants whose qualifications, experience andterms and conditions of employment shall be satisfactory to theBank; such consultants to be selected in accordance with princi-
ples and procedures satisfactory to the Bank on the basis of the
"Guidelines for the Use of Consultants by World Bank Borrowersand by the World Bank as Executing Agency" published by the Bank
in August 1981.
6. Each State shall ensure that the procurement of the goods
and civil works required for Sub-projects located in such State
and financed out of the proceeds of the Loan is governed by theprovisions of Schedule 4 to the Loan Agreement.
- 37 -
7. Each State shall take out and maintain with responsibleinsurers, or shall make other provisions satisfactory to the Bankfor, insurance against such risks and in such amounts as shall beconsistent with appropriate practice.
8. Each state shall maintain or cause to be maintained separateaccounts and records adequate to reflect, in accordance with con-sistently maintained sound accounting practices, the operations,resources and expenditures, in respect of the part of the Projectunder the responsibility of each such State, of the departmentsor of the agencies of such State responsible for carrying out anypart of the Project.
9. Before any construction is being undertaken in respect ofa Sub-project for Parts D.1, E, F or G, and particularly in thecase of remodeling, the State shall make available to the Proj-ect Management Team a pluriannual investment program, financialplan included, for the general maintenance of the school orschools in respect of which the Sub-project in question is to becarried out, and a commitment to operate such school or schoolson a maximum of two daytime shifts.
10. Each State shall accept that each Sub-project shall beidentified, prepared, appraised, executed, supervised, monitoredand evaluated, all in accordance with the Manuals and, particu-larly, that the principles stipulated in B.3 below shall beapplied in carrying out Sub-projects under Part C of the Project.
B. Sub-Project Agreements
The terms and conditions of each Sub-project Agreement to besigned between a State and each Selected Municipality locatedwithin such State's territory shall, in addition to those obliga-tions to be undertaken by the Selected Municipality, pursuant tothe last sentence of A.2 of this Schedule, include those setforth below:
1. Each Municipality shall establish and adequately staff itsimplementation team.
2. Each head of a Municipal Government (Prefeito) of any of theSelected Municipalities lacking a teachers' charter as describedbelow shall, present to the respective legislative body (CamaraMunicipal) a bill to establish a teachers' charter (Estatuto doMagistgrio and Plano de Carreira) to define teachers' rights andduties, privileges and obligations.
- 38 -
3. Each Municipality shall: (I) (i) in selecting candidates for
courses under Part C of the Project, grant priority to those
teachers already employed in Project Schools under its jurisdic-
tion; (ii) not terminate, without due cause, the employment, inschools under its jurisdiction, of the teachers successfully com-
pleting such courses, for at least 2 years after the end of suchcourses; (iii) grant priority to teachers successfully completing
such courses on the application of the benefits and privilegesunder the teachers' charter; and (iv) in hiring teachers for
Project Schools, require that such teachers (a) have a minimumeducational level corresponding to the fourth grade of basic
education; (b) be already trained or receive training in teachingtechniques under Part C of the Project; and (c) teach a minimum
of one four-hour shift per day during the academic year; and (II)
in selecting candidates for courses under Part C (ii) of the
Project, require: (i) a minimum educational level corresponding,at least, to the end of secondary education; and (ii) substantial
teaching supervisory experience.
4. Each Municipality shall:
(i) 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;
(ii) 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 included in the Project and shallfurnish to the State Implementation Team, promptly after such
acquisition, evidence that such land and rights in respect of
land are available for purposes related to the Project;
(iii) cause all goods and services financed out of the pro-
ceeds of the Loan to be used exclusively for the Project, exceptas the Bank shall otherwise agree; and
(iv) adequately maintain or cause to be maintained the
buildings, equipment and furniture of the educational institu-
tions included in the Project and make, or cause to be made, all
necessary repairs and renewals thereof, all in accordance with
sound administrative and technical standards.
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5. Each Municipality shall participate in the execution ofSub-projects with due diligence and efficiency, in conformitywith appropriate administrative, educational and financial prac-tices, and the State in whose territory the Municipality islocated shall transfer to each Municipality, as a grant, theportion of the proceeds of the Loan and of the federal counter-part funds required for the --urpose.
6. Each Municipality shall maintain or cause to be maintainedrecords adequate to reflect in accordance with consistently main-tained sound accounting practices the operations, resources andexpenditures, in respect of the part of the Project under theresponsibility of each such Municipality.
C. Project Agreement and Sub-project Agreements
All of these Agreements will have a clear description of themechanism and procedures for the flow of Loan proceeds andfederal counterpart funds, including those to be establishedpursuant to Section 3.01 (b), 3.07 (a) and 2.02 (b) of the LoanAgreement.
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SCHEDUIE 7
Substitution and Addition of Municipalities
1. In the event that, after a reasonable period of time, a
Sub-Project Agreement is not signed between a State a a
Municipality designated in the respective State's Project Agree-
ment with the Borrower, the State may propose to the Project
Management Team the substitution of any such Municipality by
another one, chosen in accordance with the following criteria,
which are also to be applied in selecting the original Munici-
palities or in adding more Municipalities to the original ones:
(a) Municipalities with a population greater than 20,000,
of which not less than -50% is urban and whose rate of growth
between 1970 and 1980, both inclusive, has been greater than 4%.
(b) From those Municipalities which fulfilled the criteria
set forth in (a) above, all those which are above or below (as
the case may be) the corresponding State average for the follow-
ing indicators, will be the object of a further selection to be
made giving first priority to those Municipalities which rank:
(i) highest in: (A) repetition in grades 1 and 2; (B) dropout
from grades 1 to 4; (C) frequency of the use of school space; and
(ii) lowest in: net enrollment rates for children from 7 to 14
years of age. These indicators will be obtained in respect of all
schools within a Municipality.
(c) Municipalities being assisted in construction of facil-
ities by means of the integrated rural development projects being
carried out by the Borrower and financed by the Bank, would be
selected only for Sub-projects under Part B, C or D of the Proj-
ect.
2. Upon receipt of proposals from each State, the Project Man-
agement Team will review them to assure that the proposed Munici-
palities have been selected in accordance with the above criteria
and that the number of classrooms to be built or remodelled and
educational personnel to be trained under the Sub-project in
question, when added to the classrooms to be built and personnel
to be trained under other Sub-projects in the same State, are
within the financial limits for such State.
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%
FOR SECRETARY
