Page 1 June 18, 1992 Mr. A. Daba Acting Minister of Finance Ministry of Finance P.O. Box 1905 Addis Ababa Ethiopia Re: ETHIOPIA: Credit No. 2103-ET (Market Towns Development Project) Amendments Dear Sir: 1. We refer to the Development Credit Agreement for the Market Towns Development Project dated March 1990, between Ethiopia (the Borrower) and the International Development Association (the Association). We also refer to discussions between Ethiopia and the Association on reallocating funds under the Project for the purpose of financing emergency requirements in urban areas. 2. We are pleased to inform you that the Association has agreed to amend the Development Credit Agreement as follows: (a) Section 2.02 (b) shall be amended to read as follows: "(b) The Borrower shall, for the purposes of the Project, open and maintain in dollars in the National Bank of Ethiopia on terms and conditions satisfactory to the Association, including appropriate protection against setoff, seizure or attachment: (i) a special account (the HSB Special Account) for the purposes of Parts A.2 and E.5 of the Project; (ii) a special account (the WSSA Special Account) for the purposes of Parts C and E.2 of the Project; (iii) a special account (the AIDB Special Account) for the purposes of Parts D and E.3 of the Project; and (iv) a special account (the MUDH Special Account) for the purpose of Part A.1, B and E.1 of the Project. Deposits into, and payments out, of the Special Accounts shall be made in accordance with the provisions of Schedule 4 to this Agreement." (b) The table in paragraph 1 of Schedule 1 to the Development Credit Agreement is hereby amended to read as in the attachment to this letter. (c) A new paragraph 3 is hereby added to part C of Schedule 2 to the Development Credit Agreement as follows: "3. Acquisition of vehicles, equipment, materials and spare parts for emergency rehabilitation of water supply systems in Wollo, Tigray and Gondar regions." (d) Paragraph l(a) of Schedule 4 to the Development Credit Agreement shall be amended to read as follows: "(a) the term "eligible Categories" means in the case of the: (i) HSB Special Account, Categories (2)(c)(iii), (3)(c) and (4); (ii) WSSA Special Account, Categories (1)(c), (2)(a), (2)(c)(ii), (2)(d) and (3)(b); (iii) AIDB Special Account, Categories (2)(c)(iv), (2)(e), (3)(d) and (5); and (iv) MUDH Special Account, Categories (1)(a), (1)(b), (2)(b), (2)(c)(i), (2)(c)(vi), (3)(a), and (6) set forth in the table in paragraph 1 of Schedule I to this Agreement;" (e) Paragraph (1)(c) of Schedule 4 to the Development Credit Agreement shall be amended as follows: "(c) the term "Authorized Allocation" means an amount to be withdrawn from the Credit Account and deposited into the Page 2 respective Special Accounts pursuant to paragraph 3(a) of this Schedule equivalent to: (i) $1,500,000 in the case of the HSB Special Account; (ii) $2,000,000 in the case of the WSSA Special Account; (iii) $1,000,000 in the case of the AIDB Special Account; and (iv) $1,500,000 in the case of the MUDH Special Account." Please confirm your agreement to the amendment by countersigning and returning to us the enclosed copy of this letter. Sincerely yours, Francis X. Colaco, Director Eastern Africa Department CONFIRMED ETHIOPIA By: Authorized Representative Alemayu Daba Acting Minister of Finance Date: July 14, 1992 ATTACHMENT SCHEDULE I Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated (Expressed in % of Expenditures Category SDR Equivalent) to be Financed (1) Civil works: (a) under Part A.1 625,000 100% of foreign of the Project expenditures and 70% of local expenditures (b) under Parts B 1,910,000 100% of foreign of the Project expenditures and 70% of local expenditures (c) under Part C 3,900,000 100% of foreign of the Project expenditures and 55% of local expenditures (2) Goods (a) Pipes and Fittings 4,520,000 100% of foreign for Part C of the expenditures and Project 55% of local expenditures Page 3 (b) Building mate- 1,480,000 100% of foreign rials for Part expenditures A.2 of the Project (c) Vehicles and 100% of foreign equipment for: expenditures (i) MUDH 585,000 (ii) WSSA 55,000 (iii) HSB 280,000 (iv) AIDB 125,000 (v) HASIDA 155,000 (vi) Phase-one 935,000 towns Amount of the Credit Allocated (Expressed in % of Expenditures Category SDR Equivalent) to be Financed (d) Electrical and 1,685,000 100% of foreign Mechanical expenditures and Equipment for 55% of local Part C of the expenditures Project (e) Machinery and 2,940,000 100% of foreign Equipment for expenditures Part D of the Project (f) Vehicles, mate- 3,380,000 100% of foreign rials, equipment expenditures and spare parts for Part C.3 of the Project (3) Consultants' services, 100% training and studies for: (a) MUDH 673,000 (b) WSSA 1,055,000 (c) HSB 280,000 (d) AIDB 90,000 (e) HASIDA 335,000 (4) Loans for house 2,885,000 75% construction (5) Loans for: (a) Micro-Scale 380,000 80% Enterprises (b) Small-Scale 360,000 50% Enterprises (6) Salaries for: (a) Project Manage- 73,000 100% of foreign ment Office of expenditures and MUDH 50% of local expenditures (b) UDPO 750,000 100% of foreign Page 4 expenditures and 50% of local cost (7) Refunding of Project 75,000 Amount due pur- Preparation Advance suant to Sec- tion 2.02 (c) of this Agreement (8) Unallocated 1,869,000 TOTAL 31,400,000 ==========