Page 1 CONFORMED COPY CREDIT NUMBER 3379-2-TA (Second Amendment) Second Agreement Amending Development Credit Agreement (Programmatic Structural Adjustment Credit) between UNITED REPUBLIC OF TANZANIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated February 15, 2002 CREDIT NUMBER 3379-2-TA (Second Amendment) SECOND AGREEMENT AMENDING DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated February 15, 2002, between UNITED REPUBLIC OF Page 2 TANZANIA (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS (A) the Borrower and the Association have entered into a Development Credit Agreement (Programmatic Structural Adjustment Credit), dated July 21, 2000 (the Development Credit Agreement), for the purpose of providing support during the execution of the Borrower’s program designed to achieve structural adjustment of the Borrower’s economy as described in Recital (A) of the Development Credit Agreement (the Program); (B) pursuant to an Agreement Amending Development Credit Agreement (Programmatic Structural Adjustment Credit) between the Borrower and the Association, dated January 29, 2001, the Association has agreed to provide additional assistance in support of the Program; (C) the Borrower has requested the Association to provide additional assistance in support of the Program, by increasing the amount made available under the Development Credit Agreement by an amount in various currencies equivalent to five hundred and eighty thousand Special Drawing Rights (SDR 580,000); and WHEREAS the Association has agreed on the basis, inter alia , of the foregoing, to provide such additional assistance, representing the FY2002 allocation under the Association’s Fifth Dimension Program established in 1998, to the Borrower upon the terms and conditions set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Amendments to the Development Credit Agreement Section 1.01. Section 1.02 of the Development Credit Agreement is amended as follows: (a) the “and” at the end of paragraph (y) is deleted, and the period at the end of paragraph (z) is replaced with a semicolon and the word “and”; and (b) adding a new paragraph (aa) which shall read as follows: “(aa) “Second Amending Agreement” means the Second Agreement Amending the Development Credit Agreement (Programmatic Structural Adjustment Credit) between the Borrower and the Association, dated February 15, 2002.” Section 1.02. Section 2.01 of the Development Credit Agreement is amended to read as follows: “Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Development Credit Agreement, an amount in various currencies equivalent to one hundred forty-two million nine Page 3 hundred eighty thousand Special Drawing Rights (SDR 142,980,000) (the Credit), which includes: (a) an original amount in various currencies equivalent to one hundred forty-one million eight hundred thousand Special Drawing Rights (SDR 141,800,000) (the Initial Financing); (b) an additional amount in various currencies equivalent to six hundred thousand Special Drawing Rights (SDR 600,000) (the First Additional Financing); and (c) an additional amount in various currencies equivalent to five hundred eighty thousand Special Drawing Rights (SDR 580,000) (the Second Additional Financing).” Section 1.03. Section 2.02 of the Development Credit Agreement is amended in its entirety to read as follows: “Section 2.02. (a) Subject to the provisions of paragraphs (b), (c), (d), (e), and (f) of this Section, the Borrower shall be entitled to withdraw the proceeds of the Credit from the Credit Account in support of the Program. (b) The Borrower shall open, prior to furnishing to the Association the first request for withdrawal from the Credit Account, and thereafter maintain in its central bank, a deposit account in US dollars on terms and conditions satisfactory to the Association. All withdrawals from the Credit Account shall be deposited by the Association into the Deposit Account. (c) The Borrower undertakes that the proceeds of the Credit shall not be used to finance expenditures excluded pursuant to the provisions of Schedule 1 to this Agreement. If the Association shall have determined at any time that any proceeds of the Credit shall have been used to make a payment for an expenditure so excluded, the Borrower shall, promptly upon notice from the Association, (i) deposit into the Deposit Account an amount equal to the amount of said payment, or (ii) if the Association shall so request, refund such amount to the Association. Amounts refunded to the Association upon such request shall be credited to the Credit Account for cancellation. (d) No withdrawals shall be made from the Credit Account after the aggregate of the proceeds of the Credit withdrawn from the Credit Account shall have reached the equivalent of SDR 22,400,000, unless the Association shall be satisfied, after an exchange of views as described in Section 3.01 of this Agreement based on evidence satisfactory to the Association: (i) with the progress achieved by the Borrower in the carrying out of the Program; (ii) that the macroeconomic policy framework of the Borrower is satisfactory, as measured on the basis of indicators agreed between the Borrower and the Association; and (iii) that the actions described in Schedule 2 to this Agreement have Page 4 been taken in respect of the respective Tranche. If, after said exchange of views, the Association is not so satisfied, the Association may give notice to the Borrower to that effect and, if within 90 days after such notice, the Borrower shall not have taken steps satisfactory to the Association, in respect of (i), (ii) and (iii) above, then the Association may, by notice to the Borrower, cancel the unwithdrawn amount of the Credit or any part thereof. (e) After a date twelve months from the date of the Amending Agreement, no withdrawal shall be made from the Credit Account in respect of expenditures to be financed out of the proceeds of the Additional Financing. At any time after such date, the Association may, by notice to the Borrower, cancel the unwithdrawn amount of the Additional Financing from the Credit Amount or any part thereof. (f) After a date twelve months (or such later date as the Association shall establish and promptly notify the Borrower) from the date of the Second Amending Agreement, no withdrawal shall be made from the Credit Account in respect of expenditures to be financed out of the proceeds of the Second Additional Financing. At any time after such date, the Association may, by notice to the Borrower, cancel the unwithdrawn amount of the Second Additional Financing from the Credit Amount or any part thereof.” Section 1.04. Paragraph (b) (i) of Section 2.04 of the Development Credit Agreement is amended by adding after the term “cancelled” the following proviso reading: “provided, however, that any commitment charge on: (A) the Additional Financing shall accrue from a date sixty days after the date of the Amending Agreement; and (B) the Second Additional Financing shall accrue from a date sixty days after the date of the Second Amending Agreement.” Section 1.05. The amount set forth in Category (3) (Economic Governance Tranche) of the table in paragraph 1 of Schedule 1 to the Development Credit Agreement is amended from “29,850,000” to “30,430,000”. ARTICLE II Effective Date; Termination Section 2.01. This Second Amending Agreement shall not become effective until evidence satisfactory to the Association shall have been furnished to the Association that the execution and delivery of this Second Amending Agreement on behalf of the Borrower has been duly authorized or ratified by all necessary governmental action. Section 2.02. As part of the evidence to be furnished pursuant to Section 2.01 of this Second Amending Agreement, there shall be furnished to the Association an opinion or opinions Page 5 satisfactory to the Association of counsel acceptable to the Association showing, on behalf of the Borrower, that this Second Amending Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and is legally binding upon the Borrower in accordance with its terms. Section 2.03. This Second Amending Agreement shall come into force and effect on the date upon which the Association shall dispatch to the Borrower notice of its acceptance of the evidence required by Section 2.01 of this Second Amending Agreement. Section 2.04. If this Second Amending Agreement shall not have come into force and effect by a date ninety (90) days after the date of this Second Amending Agreement, this Second Amending Agreement and all obligations of the parties hereunder shall terminate, unless the Association establishes a later date for the purposes of this Section. If this Second Amending Agreement shall terminate under the provisions of this Section, the Development Credit Agreement shall continue in full force and effect, as if this Second Amending Agreement had not been executed. IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Second Amending 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. UNITED REPUBLIC OF TANZANIA By /s/ Mustafa Nyang’anyi Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Pamela Cox Acting Regional Vice President Africa Page 6 Annex SCHEDULE 1 Withdrawal of the Proceeds of the Credit and Excluded Expenditures 1. Subject to the provisions set forth or referred to in this Schedule, the table below sets forth the amounts in SDR allocated to the specific Tranches to be withdrawn from the Credit Account. Category Amount of the Credit Allocated (Expressed in SDR Equivalent ) % of Expenditures to be Financed (1) Effectiveness Tranche 22,400,000 100% (2) Short Term Tranche 29,850,000 100% (3) Economic Governance Tranche 30,430,000 100% (4) Business Environment Tranche 29,850,000 100% (5) Privatization and Regulation Tranche 29,850,000 100% (6) IDA Reflows Tranche 600,000 __________ 100% TOTAL 142,980,000 =========