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                                        March 12, 1993
His Excellency
Ato Alemayehu Daba
Minister of Finance
The Ministry of Finance
P.O. Box 1905
Addis Ababa, Ethiopia
Dear Mr. Minister:
      ETHIOPIA - Transport Project (Cr. 2002-ET)
     Amendment of the Development Credit Agreement
          We refer to the Development Credit Agreement (Transport
Sector Project) dated May 30, 1989 between the People's Democratic
Republic of Ethiopia (the Borrower) and the International
Development Association (the Association) as amended by letter
agreement dated May 12, 1992 between Ethiopia and the Association.
We also refer to the discussions between officials of Ethiopia and
the Association regarding amendments to the Development Credit
Agreement.  On the basis of said discussions, the Association hereby
proposes that the Development Credit Agreement be amended as
follows:
     1 .  in Section 1.02 (q) by the deletion of the definition
"Letter Agreement";
     2.   in Section 3.01:
          (a)  by the deletion of paragraph (a) and the
               substitution therefor of the following new
               paragraph:
     "Section 3.01 (a)  The Borrower declares its commitment to the
objectives of the Project as set forth in Schedule 2 to this
Agreement and, to this end, shall:  (i) carry out through MOTAC and
MOF Parts A (3), C, D (1), (2), (5) and (6), E and F of the Project;
and (ii) cause (A) CBE to carry out Part A (2) (b) of the Project,
(B) EFTC to carry out Parts A (1) and (2) (a) and (c), and (D) (3)
of the Project, and (C) MTSC to carry out Parts B and D (4) of the
Project, all with due diligence and efficiency and in conformity
with appropriate administrative and financial practices, and shall
provide, promptly as needed, the funds, facilities, services and
other resources required for the Project"; and
     (b)  by the deletion in paragraph (e) of the provisions "and
an interest rate of 4 % per annum" occurring in that paragraph and
the substitution therefore of the following new provisions "and
provisions requiring an adequate spread for CBE acceptable to the
Association";
     3. by the deletion of Section 3.02 and the substitution
therefor  of  the  following  new  Section:
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          "Section 3.02. The Borrower shall by June 30 of each year,
review with the Association the rates charged by CBE for on-lending
of the proceeds of the Credit under Part A (2) (b) of the Project";
     4. by the addition next after Section 3.04 of the following
     new Section:
     "Section 3.05.  The Borrower shall establish, within MOTAC, a
Project Implementation  Unit with functions, organization and
staffing satisfactory to the Association;" and
     5.  in Schedule 2 by the deletion of Part A (2) of the Project
and the substitution therefor of the following new Part:
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     "(2) Assistance to private truckers for:
     (i)  acquisition of spare parts to rehabilitate about 475
     trucks;
     (ii) provision of credit for the acquisition and utilization
          of about 130 trucks and trailers with loading capacity
          of about 27 tons each; and
     (iii)acquisition and utilization of spare parts and tires."
     Please indicate your agreement with the amendments proposed
above by signing the form of confirmation on this letter and the
enclosed copy and returning the copy to the Association.
                      Sincerely,
                   Francis X. Colaco
                       Director
               Eastern Africa Department
CONFIRMED:
By:
     Authorized Representative
Date:
Cleared with and cc: "Jiessrs./Mmes. Boubacar (LEGAF), Reedy
                     (LOAAF), Roberts (AF2CO),
                     Weissman, Goris (o/r) (AF21N)
cc: Messrs.  Lethem (AF2DR), Thomas (AF2IN), Carter (AF2CO), Femando
    (o/r) (LOAAF)