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CONFORMED COPY
CREDIT NUMBER 2953 YEM
GRANT NUMBER TF 020452
Development Grant Agreement
(In conjunction with the Social Fund Project)
between
REPUBLIC OF YEMEN
and
THE INTERNATIONAL DEVELOPMENT ASSOCIATION
Acting as Administrator on behalf of
THE MINISTER FOR DEVELOPMENT COOPERATION
OF THE NETHERLANDS
Dated September 8, 1998
CREDIT NUMBER 2953 YEM
GRANT NUMBER TF 020452
DEVELOPMENT CREDIT AGREEMENT
AGREEMENT, dated September 8, 1998, between THE REPUBLIC OF YEMEN 
(the Beneficiary) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the 
Association) acting as Administrator (the Administrator) on behalf of the 
MINISTER FOR DEVELOPMENT COOPERATION OF THE NETHERLANDS (the Minister).
WHEREAS (A) Pursuant to a Development Credit Agreement (Social Fund 
for Development Project) dated September 12, 1997, between the 
Beneficiary and the Association (the Development Credit Agreement), the 
Association has agreed to extend to the Beneficiary a credit in an amount 
in various currencies equivalent to twenty one million seven hundred 
thousand Special Drawing Rights (SDR 21,700,000) to assist in the 
financing of the Project described in Schedule 2 to the Development 
Credit Agreement (the Project);
(B)
the Minister wishes to make available to the Beneficiary a 
grant in an amount equivalent to two million Dutch guilders (NLG 
2,000,000) (the Dutch Grant) to assist the Beneficiary in the financing 
of the Project and on the terms and conditions hereinafter set forth;
(C)
Pursuant to the General Arrangement, dated May 24, 1995, 
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entered into between the Minister and the Association (the Administration 
Arrangements), the Minister has appointed the Association as 
Administrator of the Grant and has authorized the Association to do all 
such acts and things as may be necessary or appropriate to carry out such 
administration, including entering into this Development Grant Agreement 
on behalf of the Minister, and to extend the Grant on the terms and 
conditions set forth in this Agreement; and
(D)
the Association has agreed, on the basis, inter alia, of the 
foregoing to act as Administrator of the Grant;
NOW THEREFORE the parties hereto hereby agree as follows:
ARTICLE I
General Conditions; Definitions
Section 1.01. The “General Conditions Applicable to Development 
Credit Agreements” of the International Development Association, dated 
January 1, 1985, (as amended through December 2, 1997) with the 
modifications set forth below (the General Conditions), constitute an 
integral part of this Agreement:
(a)
the term “Association”, whenever used in the General 
Conditions (except in the phrase “member of the Association” in Sections 
2.01 (5) and 6.02 (e) (i)), means the Association acting as Administrator 
of the Grant;
(b)
the term “Borrower” whenever used in the General Conditions, 
means the Beneficiary;
(c)
the term “Credit”, whenever used in the General Conditions, 
means the Grant;
(d)
the term “Credit Account”, whenever used in the General 
Conditions, means the separate account opened by the Administrator in its 
books in the name of the Beneficiary, pursuant to Section 7.01 of the 
Administration Arrangements, to which the amount of the Grant is 
credited;
(e)
the term “Development Credit Agreement”, whenever used in 
the General Conditions, means this Development Grant Agreement;
(f)
Sections 3.02, 3.03, 3.04, 3.05, 4.02, 4.03, 4.06, 6.05, 
7.01, 8.01 (a) 12.02 and 12.05, are deleted; and
(g)
in Sections 2.01 and 6.02, the term “Association” shall 
include also the Association acting in its own capacity.
Section 1.02. Wherever used in this Agreement, unless the context 
otherwise requires, the several terms defined in the General Conditions 
and the Development Credit Agreement have the respective meanings therein 
set forth.
ARTICLE II
The Grant
Section 2.01. The Administrator agrees to extend to the 
Beneficiary, on the terms and conditions herein set forth or referred to 
in this Agreement and subject to the receipt of the funds to be made 
available to the Administrator pursuant to Section 5.03 of the 
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Administration Arrangements, a grant in an amount equivalent to two 
million Dutch guilders (NLG 2,000,000).
Section 2.02. (a) The amount of the Grant may be withdrawn from the 
Grant Account in accordance with Section 2.02 (a) of the Development 
Credit Agreement for expenditures made in respect of the reasonable cost 
of goods, works and services required for the Project and to be financed 
out of the proceeds of the Grant.
(b)
Whenever a disbursement from the Grant Account is required 
to be made in a currency other than Dutch guilders for the purposes of 
this Agreement, the Administrator shall withdraw from the Grant Account 
an amount in Dutch guilders sufficient for the Association to purchase 
the required amount of the appropriate currency.
Section 2.03. Except as the Administrator shall otherwise agree, 
procurement of the goods, works and consultants’ services required for 
the Project and to be financed out of the proceeds of the Grant shall be 
governed by the provisions of Schedule 1 to the Project Agreement between 
the Association and the Social Fund for Development, dated September 12, 
1997.
Section 2.04. The Closing Date shall be June 30, 2001, or such 
later date as the Administrator shall establish.  The Administrator shall 
promptly notify the Beneficiary of such later date.
ARTICLE III
Effective Date; Termination; Representatives
Section 3.01.  The following event is specified as an additional 
condition to the effectiveness of this Agreement within the meaning of 
Section 12.01 (b) of the General Conditions, namely, that the Association 
shall have received the first installment of the funds referred to in 
Section 2.01 of this Agreement.
Section 3.02.  The date one hundred twenty (120) days after the 
date of this Agreement is hereby specified for the purposes of Section 
12.04 of the General Conditions.
Section 3.03.  The Minister of Planning and Development of the 
Beneficiary shall be the representative of the Beneficiary for the 
purposes of Section 11.03 of the General Conditions.
Section 3.04.  The addresses specified in Section 6.02 of the 
Development Credit Agreement shall be the addresses specified for the 
purposes of Section 11.01 of the General Conditions.
ARTICLE IV
Transfer of Rights and Obligations
Section 4.01.  In accordance with Section 5.03 of the 
Administration Arrangements, the rights and obligations of the 
Administrator under this Agreement may be transferred to the Minister or 
one of its agencies designated by him.  The Beneficiary accepts and 
agrees that, upon notice by the Administrator to the Beneficiary to that 
effect, the Minister (or the agency designated by him) shall, ipso facto, 
from the date specified in such notice, be substituted in all rights and 
obligations of the Administrator under this Agreement as if the Minister 
or such agency had been an original party to this Agreement, without any 
further action or formality required on the part of any party, and from 
such date the Administrator shall cease to have any rights or obligations 
as a party under this Agreement.
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IN WITNESS WHEREOF, the parties hereto, acting through their duly 
authorized representatives, have caused this Agreement to be signed in 
their respective names in the District of Columbia, United States of 
America, and Sana’a, Republic of Yemen, as of the day and year first 
above written.
REPUBLIC OF YEMEN
By /s/ Ahmed Sofan
Authorized Representative
INTERNATIONAL DEVELOPMENT ASSOCIATION
   as Administrator on behalf of the
   MINISTER OF DEVELOPMENT COOPERATION
   OF THE NETHERLANDS
By /s/ Inder K. Sud
Country Director, 
Middle East Department