Common use of Financial Covenants Clause in Contracts

Financial Covenants. (a) The Borrower shall establish and maintain a financial management system acceptable to the Bank in the PMU, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the Borrower shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR), which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards a format acceptable to the BankAssociation, adequate to reflect the operations, resources and expenditures related to Parts A, C, D and E of the Project. (b) The Borrower shall: (i) have the records, accounts and financial statements referred to in paragraph (a) of this Section and the records and accounts for the Special Accounts for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the BankAssociation, consistently applied, by independent auditors acceptable to the BankAssociation; (ii) furnish to the Bank Association as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank)year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on such statements statements, records and accounts and report of such audit, by said auditors, in of such scope and in such detail satisfactory to as the BankAssociation shall have reasonably requested; and (iii) furnish to the Bank Association such other information concerning such records and accounts, and the audit of such financial statementsthereof, and concerning said auditors, as the Bank Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Credit Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and separate accounts reflecting such expenditures; (ii) retain, until at least one year after the Bank Association has received the audit report for, or covering, for the fiscal year in which the last withdrawal from the Loan Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iiiii) enable the BankAssociation’s representatives to examine such records; and (iiiiv) ensure that the relevant statements of expenditure such records and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, accounts are included in the annual audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this SectionSection and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 paragraphs 5 and 6 of Schedule 4 to this Agreement, Agreement the Borrower shall prepare and furnish to the Bank Association a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Association, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the LoanCredit, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank Association not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank Association not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower through SRA shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to all Parts of the Project. (b) The Borrower shallshall through SRA: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements Disbursements) or were made on the basis of statements of expenditure, the Borrower shallshall through SRA: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such reports and statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 3.05 of this Agreement, the Borrower shall shall, through SRA prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain maintain, as part of the MIS, a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. Section 4.02. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 3.03 of this Agreement, the Borrower shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR), which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and; (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report.; and (biv) The first FMR shall be furnished to the Bank not later than 45 days after presents projections, for a period until the end of the first calendar quarter after fiscal year following the Effective Datedate of the FMR, of physical progress, procurement activities, and shall cover the period from the incurrence sources and uses of funds in respect of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarterProject.

Financial Covenants. (a) The Borrower shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) audited), audited in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements reports referred to in Part A.5 of expenditureSchedule 1 to this Agreement (Report-based Disbursements), the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and such reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 of this Agreement, 3.11 the Borrower shall prepare and furnish to the Bank a financial monitoring reportFinancial Monitoring Report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Recipient, through the Palestinian Authority, shall establish and cause PMU to maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards a format acceptable to the BankAdministrator, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shall: Recipient, through the Palestinian Authority, shall cause PMU: (i) to have the records, accounts and financial statements referred to in paragraph (a) of this Section Section, and the records and accounts for the Special Account, for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the BankAdministrator, consistently applied, by independent auditors acceptable to the Bank; Administrator; (ii) furnish to the Bank Administrator, as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank), year: (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on such statements statements, records and accounts and report of such audit, by said auditors, in of such scope and in such detail satisfactory to as the BankAdministrator shall have reasonably requested; and and (iii) furnish to the Bank Administrator such other information concerning such said records and accounts, and the audit of such financial statements, and concerning said auditorsthereof, as the Bank may Administrator shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Grant Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: Recipient, through the Palestinian Authority, shall cause PMU to: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and separate accounts reflecting such expenditures; (ii) retain, until at least one (1) year after the Bank Administrator has received the audit report for, or covering, for the fiscal year in which the last withdrawal from the Loan Grant Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; ; (iiiii) enable the BankAdministrator’s representatives to examine such records; and and (iiiiv) ensure that the relevant statements of expenditure such records and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, accounts are included in the annual audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this SectionSection and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. (a) Without limitation upon the BorrowerRecipient’s progress reporting obligation obligations set out in Section 3.04 paragraph 5 (b) of Schedule 5 to this Agreement, the Borrower Recipient, through the Palestinian Authority, shall cause PMU to prepare and furnish to the Bank Administrator a financial monitoring reportFinancial Monitoring Report, in form and substance satisfactory to the Bank (the FMR)Administrator, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, Grant and explains variances between the actual and planned uses of such fundsProject implementation; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR Financial Monitoring Report shall be furnished to the Bank Administrator not later than 45 forty-five (45) days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR Financial Monitoring Report shall be furnished to the Bank Administrator not later than 45 forty-five (45) days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain in ADAP and AFAP, as part of their respective MIS, a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect reflect, as the case may be: (i) the operations, resources and expenditures related to Parts A, C, B.5 and D of the Project, in the case of ADAP; and (ii) the operations, resources and expenditures related to Parts B.1, B.2, B.3 and B.4 of the Project, in the case of AFAP. (b) The Borrower shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, as well as balance sheets, statements of income and expenses and related statements of AFAP for the same period, as audited by AFAP’s independent auditors, and (B) an opinion on such financial statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the The Borrower shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR), which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain maintain, and shall cause to be established and maintained, a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the BankAssociation, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) Association), audited, in accordance with consistently applied auditing standards acceptable to the BankAssociation, by independent auditors acceptable to the BankAssociation; (ii) furnish to the Bank Association as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the BankAssociation), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the BankAssociation), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the BankAssociation; and (iii) furnish to the Bank Association such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Credit Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the BankAssociation’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the BankAssociation), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 paragraph 7 of Schedule 4 to this Agreement, the Borrower shall prepare and furnish to the Bank Association a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Association, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the LoanCredit, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank Association not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank Association not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and shall cause LLDA to maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shallshall and shall cause LLDA to: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, expenditures are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 paragraph C(1) of Schedule 4 to this Agreement, the Borrower shall prepare and furnish to the Bank a financial monitoring reportFMR, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for Part A.2 of the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementationthe implementation of Part A.2 of the Project, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under Part A.2 of the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under Part A of the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall cause UNDP (pursuant to the UNDP Agreement) to establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards a format acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shallshall cause UNDP (pursuant to the UNDP Agreement) to: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six four (4) months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as ) so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shallshall cause UNDP (pursuant to the UNDP Agreement) to: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 3.07 of this Agreement, the Borrower shall cause UNDP (pursuant to the UNDP Agreement) to prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, Loan and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Recipient shall, and shall cause EPF to establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the BankAssociation, adequate to reflect the its operations, resources and expenditures related to the Project. (b) The Borrower shallRecipient shall and shall cause EPF to: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) Association), audited, in accordance with consistently applied auditing standards acceptable to the BankAssociation, by independent auditors acceptable to the BankAssociation; (ii) furnish to the Bank Association as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the BankAssociation), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the BankAssociation), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the BankAssociation; and (iii) furnish to the Bank Association such other information concerning such records and accountsrecords, accounts and the audit of such financial statements, and concerning said auditors, as the Bank Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Grant Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower Recipient shall: (i) retainensure that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures are retained until at least one (1) year after the Bank Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Grant Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the BankAssociation’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in any audit that the audit for each fiscal year (or other period agreed Association may have requested pursuant to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this AgreementThe Recipient shall, the Borrower and shall cause EPF to prepare and furnish to the Bank Association a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Association, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the LoanGrant, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank Association not later than 45 forty-five (45) days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank Association not later than 45 forty-five (45) days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain maintain, and shall cause to be established and maintained, a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the BankAssociation, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) Association), audited, in accordance with consistently applied auditing standards acceptable to the BankAssociation, by independent auditors acceptable to the BankAssociation; (ii) furnish to the Bank Association as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the BankAssociation), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the BankAssociation), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the BankAssociation; and (iii) furnish to the Bank Association such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Credit Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the BankAssociation’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the BankAssociation), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 paragraph 15 of Schedule 4 to this Agreement, the Borrower shall prepare and furnish to the Bank Association a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Association, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the LoanCredit, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank Association not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank Association not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Company covenants and agrees that so long as any shares of Series A Preferred Stock are outstanding: (i) The Company and its Subsidiaries shall establish and maintain not incur Indebtedness (excluding a financial management system acceptable refinancing of Indebtedness outstanding as of the Issue Date in an amount less than or equal to the Bank sum of (A) the amount of Indebtedness outstanding as of the date of such refinancing, plus (B) original issue discount in respect of any such permitted Indebtedness, plus (C) reasonable fees and expenses of the Company incurred in connection with any such permitted Indebtedness) if the Total Net Leverage, on a pro forma basis, after giving effect to each such incurrence of Indebtedness (but for the avoidance of doubt, excluding any incurrences of Indebtedness described in clauses (1) through (8) below) and the repayment and retirement of any Indebtedness, exceeds the following ratios for each of the applicable periods set forth in clauses (w) through (z): (w) 5.35:1.00 as of December 31, 2016 based on the consolidated audited financial statements of the Company for the Company’s fiscal year ending December 31, 2016 delivered to Investors pursuant to Section 3.2(a)(i), (x) 5.35:1.00 as of March 31, 2017, based on the consolidated audited financial statements of the Company for the Company’s fiscal year ending December 31, 2016 delivered to Investors pursuant to Section 3.2(a)(i) for purposes of determining Adjusted EBITDA, and based on the consolidated unaudited financial statements of the Company for the fiscal quarter ending March 31, 2017 delivered to Investors pursuant to Section 3.2(a)(ii) for purposes of determining Indebtedness and unrestricted cash, (y) 5.35:1.00 as of June 30, 2017, based on the consolidated unaudited financial statements of the Company for the fiscal quarter ending June 30, 2017 delivered to Investors pursuant to Section 3.2(a)(ii) and (z) 5.25:1.00 as of the end of each fiscal quarter of the Company thereafter based on, for any such fiscal quarter that is one of the first three quarters of the Company’s fiscal year, the consolidated unaudited financial statements of the Company for such fiscal quarter delivered to Investors pursuant to Section 3.2(a)(ii) and, for any such fiscal quarter that is the fourth quarter of the Company’s fiscal year, consolidated audited financial statements of the Company for the Company’s fiscal year ending on the last day of such quarter delivered to Investors pursuant to Section 3.2(a)(i); provided that if the Total Net Leverage exceeds the amount set forth above as of the end of a specified period above, the foregoing restriction on Indebtedness shall no longer apply if the Total Net Leverage does not exceed the amount set forth above for a subsequent period, as applicable; provided, further, that, notwithstanding the foregoing, the Company or any of its Subsidiaries may incur the following Indebtedness (in each case without compliance with the Total Net Leverage set forth in the PMUforegoing clauses (w), (x), (y), or (z)): (1) the refinancing of Indebtedness that does not increase the total amount of the Company’s Indebtedness on a consolidated basis, excluding any fees or original issue discount associated with such refinancing, (2) the incurrence of Indebtedness to fund then current working capital requirements of the Company and its Subsidiaries as determined in the good faith reasonable judgment of the Board; (3) without duplication of the foregoing clause (2); ordinary course draws under the existing revolving loans as of the Issue Date, including records letters of credit issued under the Series 2016 Revolving Credit Loans (as defined in the Debt Documents), provided that the Company may not increase the availability of credit under any such revolving loans, including the Series 2016 Revolving Credit Loans; (4) the incurrence of Indebtedness to complete construction projects then in progress not in excess of $25,000,000; (5) incurrence of Capital Leases incurred in the ordinary course of business not in excess of $25,000,000; (6) renewal of existing operating leases on market terms, regardless of whether operating leases become Capital Leases upon renewal; (7) Indebtedness with respect to letters of credit provided in the ordinary course of business, including, without limitation, each letter of credit issued to any Governmental Authority or other applicable department or agency of any Governmental Authority, at the request of the Company or any Subsidiary thereof; and accounts(8) Indebtedness constituting any loan or advance by the Company to any Subsidiary or by a Subsidiary to the Company or another Subsidiary. (ii) Commencing with the fiscal quarter ended December 31, 2017 and for every fiscal quarter thereafter (each such quarterly period, a “Test Period”), on or before the applicable Test Period Delivery Date, the Company shall deliver to the Investors a certificate in substantially the form attached as Exhibit B-1 hereto (each, the “2016-Based Test Period Certificate”) specifying for such Test Period (a) the LTM Revenue determined as of the last date of such Test Period and whether it exceeds or is less than the Fiscal Year 2016 Revenue, (b) the LTM Adjusted EBITDA, and prepare whether it exceeds or is less than Fiscal Year 2016 Adjusted EBITDA, and (c) Total Net Leverage, as of the last day of the applicable Test Period, and whether it exceeds or is less than the Total Net Leverage Threshold. In the event that the 3.3(b) Financial Covenant Trigger occurs, the 2016-Based Test Period Certificate shall be revised to include any reasonable additional accounting and financial statements in accordance with consistently applied accounting standards acceptable information as from time to time reasonably requested by the Bank, adequate Requisite Series A Preferred Holders to reflect the operations, resources and expenditures related make any determination pursuant to the Projectclause (b) below. (b) The Borrower shall:Notwithstanding any other provisions of this Agreement, if, so long as any shares of Series A Preferred Stock are outstanding, for two consecutive Test Periods (the “2016-Based Financial Test,” and the failure to satisfy such test as of such date, the “3.3(b) Financial Covenant Trigger”): (i) have the financial statements referred to in paragraph (a) LTM Revenue determined as of this Section for the last day of each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank;such Test Period is less than Fiscal Year 2016 Revenue; and (ii) furnish to the Bank as soon as available, but in any case not later LTM Adjusted EBITDA is less than six months after the end of each such year (or such other period agreed to by the Bank), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the BankFiscal Year 2016 Adjusted EBITDA; and (iii) furnish Total Net Leverage exceeds the Total Net Leverage Threshold; then, subject to the Bank such other information concerning such records and accountslast sentence of Section 3.3(e) (collectively, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request.“2016 Investors’ Remedies”): (cA) For all expenditures with respect the Requisite Series A Preferred Holders may appoint, at the Company’s expense, by providing written notice to which withdrawals from the Loan Account were Report-based Disbursements or were made Company, one (1) Person selected by the Requisite Series A Preferred Holders to advise the Board on improving growth and profitability of the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts Company and other documents) evidencing such expendituresits Subsidiaries; (iiB) enable the Bank’s representatives Company shall not and shall not permit any of its Subsidiaries, directly or indirectly, without the prior written consent of the Requisite Series A Preferred Holders, enter into any instrument, document or agreement to examine such records; and (iii) ensure that the relevant statements effect any acquisition of expenditure and reports referred to in Part A.5 assets or securities of Schedule 1 to this Agreementany Person, as the case may beor establish any new universities, are included in the audit for each fiscal year (schools or other period agreed to by the Bank)institutions; provided, referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreementhowever, the Borrower shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR), which: (i) sets forth sources and uses Company may consummate any acquisition of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.assets or

Financial Covenants. (a) The Borrower shall establish and shall, through the Supreme Court, maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards a format acceptable to the Bank, adequate to reflect reflect, separately, the operations, resources and expenditures related to the Project. (b) The Borrower shall, through the Supreme Court: (i) have the records, accounts and financial statements referred to in paragraph (a) of this Section and the records and accounts for the Special Account for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank)year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on such statements statements, records and accounts and report of such audit, by said auditors, in of such scope and in such detail satisfactory to as the BankBank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statementsthereof, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of Financial Monitoring Reports or statements of expenditure, the Borrower shall, through the Supreme Court: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and separate accounts reflecting such expenditures; (ii) retain, until at least one year after the Bank has received the audit report for, or covering, for the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iiiii) enable the Bank’s representatives to examine such records; and (iiiiv) ensure that the relevant statements of expenditure such records and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, accounts are included in the annual audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this SectionSection and that the report of such audit contains a separate opinion by said auditors as to whether the Financial Monitoring Reports or statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 paragraph 9 of Schedule 5 to this Agreement, the Borrower shall shall, through the Supreme Court, prepare and furnish to the Bank a financial monitoring reportFinancial Monitoring Report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR Financial Monitoring Report shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR Financial Monitoring Report shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Borrower, through the Ministry of Labor, shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 3.11 of this Agreement, the Borrower shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain or cause to be established and maintained a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the BankAssociation, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the BankAssociation) audited, in accordance with consistently applied auditing standards acceptable to the BankAssociation, by independent auditors acceptable to the BankAssociation; (ii) furnish to the Bank Association as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the BankAssociation), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the BankAssociation), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the BankAssociation; and (iii) furnish to the Bank Association such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements Disbursements) or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the BankAssociation’s representatives to examine such records; and (iii) ensure that the relevant such reports and statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the BankAssociation), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 VI of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Bank Association a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Association, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the LoanCredit, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank Association not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank Association not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain maintain, or cause to be maintained, a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare prepare, or cause to be prepared, financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower through the Cadastre Agency and with the assistance of the PIU shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shallshall cause the Cadastre Agency and the PIU to: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 Part B of Schedule 5 to this Agreement, Agreement the Borrower shall cause the Cadastre Agency and the PIU to prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower BPE shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, in accordance with consistently applied accounting standards acceptable to the BankAssociation, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to the Project. (b) The Borrower BPE shall: (i) have the its financial statements referred to in paragraph (abalance sheets, statements of income and expenses and related statements) of this Section for each fiscal year (or other period agreed to by the BankAssociation) audited, in accordance with consistently applied auditing standards acceptable to the BankAssociation, by independent auditors acceptable to the BankAssociation; (ii) furnish to the Bank Association as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the BankAssociation), (A) certified copies of the financial statements referred to in paragraph (a) of this Section Section, for such year (or such other period agreed to by the BankAssociation), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the BankAssociation; and (iii) furnish to the Bank Association such other information concerning such records and accounts, accounts and the audit of such financial statements, and concerning said auditors, as the Bank Association may from time to time reasonably request. (ca) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year Without limitation upon BPE’s reporting obligations set out in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 Paragraph 2 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the Borrower BPE shall prepare and furnish to the Bank Association a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Association, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the LoanCredit, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank Association not later than 45 60 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank Association not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower CONAFOR shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to the Project. (b) The Borrower CONAFOR shall: (i) have the its financial statements referred to in paragraph (abalance sheets, statements of income and expenses and related statements) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section Section, for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, accounts and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. Section 4.02. (a) Without limitation upon the BorrowerXXXXXXX’s progress reporting obligation obligations set out in Section 3.04 2.06 of this Agreement, the Borrower CONAFOR shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Borrower, through the PMSU, shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower Borrower, through the PMSU, shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accountsrecords, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower Borrower, through the PMSU, shall: (i) retain, and ensure that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures are retained, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in any audit that the audit for each fiscal year (or other period agreed Bank may have requested pursuant to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out obligations specified in paragraphs 7 and 8 of Section 3.04 C of Schedule 5 to this Agreement, the Borrower Borrower, through the PMSU, shall prepare and furnish to the Bank a financial monitoring reportreport (FMR), in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at of the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 forty-five (45) days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 forty-five (45) days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower LEC shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the BankAssociation, consistently applied, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to Part A. of the Project. (b) The Borrower LEC shall: (i) have the its records, accounts and financial statements referred to in paragraph (abalance sheets, statements of income and expenses and related statements) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the BankAssociation, consistently applied, by independent auditors acceptable to the BankAssociation; (ii) furnish to the Bank Association as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank)year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section Section, for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on such statements and report of such audit, by said auditors, in of such scope and in such detail satisfactory to as the BankAssociation shall have reasonably requested; and (iii) furnish to the Bank Association such other information concerning such records records, accounts and accountsfinancial statements, and the audit of such financial statementsthereof, and concerning said auditors, as the Bank Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from Section 4.02. Without limitation upon the Loan Account were Report-based Disbursements or were made on the basis provisions of statements Section 4.01 of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as LEC shall carry out a time-bound action plan acceptable to the case may be, are included in Association for the audit for each fiscal year (or other period agreed to by strengthening of the Bank), financial management system referred to in paragraph (ba) of this Section. (a) Without limitation upon said Section 4.01 in order to enable LEC, not later than December 31, 2002, or such later date as the Borrower’s progress reporting obligation set out in Section 3.04 of this AgreementAssociation shall agree, the Borrower shall to prepare and furnish quarterly Project Management Reports, acceptable to the Bank a financial monitoring reportAssociation, in form and substance satisfactory to the Bank (the FMR), each of which: (i) (A) sets forth actual sources and uses applications of funds for Part A. of the Project, both cumulatively and for the period covered by said report, showing separately and projected sources and applications of funds provided for the Project for the six-month period following the period covered by the Loansaid report, and explains variances between (B) shows separately expenditures financed out of the actual proceeds of the Credit during the period covered by said report and planned uses expenditures proposed to be financed out of such fundsthe proceeds of the Credit during the six-month period following the period covered by said report; (ii) (A) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and cause NAFIN to maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shallshall cause NAFIN to: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shallshall cause NAFIN to: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such reports and statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 Sections 3.06 and 3.07 of this Agreement, the Borrower shall through CNA prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) : sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) ; describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) and sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter semester after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quartersemester; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quartersemester, and shall cover the period not covered by the previous FMR until the end of such calendar quartersemester.

Financial Covenants. (a) The Borrower shall establish and ensure that the Water Companies maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the its operations, resources and expenditures related to the Project. (b) The Borrower shall ensure that the Water Companies shall: (i) have the respective financial statements referred to in paragraph paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank), (A) certified copies of the respective financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accountsrecords, accounts and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retainensure that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures are retained until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in any audit that the audit for each fiscal year (or other period agreed Bank may have requested pursuant to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the The Borrower shall cause the Guilan Water Company to prepare and furnish submit to the Bank a financial monitoring reportsatisfactory and acceptable environmental impact assessment report regarding the proper collection treatment and disposal of sludge from the three wastewater treatment plants at Rasht, in form Anzali West and substance Anzali East, together with evidence, satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said reportfinancing of the facilities related to sludge collection, treatment and disposal. (b) The first FMR Borrower shall be ensure that the environmental impact assessment report and the evidence for financing the sludge facilities indicated in sub-section (a) above, is furnished to the Bank not by no later than 45 days after the end of the first calendar quarter after the Effective DateSeptember 30, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter2006.

Financial Covenants. (a) The Borrower Recipient, through the PMT, shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower Recipient, through the PMT, shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, starting with the fiscal year ending December 31, 2005, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan GEF Trust Fund Grant Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower Recipient, through the PMT, shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan GEF Trust Fund Grant Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the BorrowerRecipient’s progress reporting obligation obligations set out in Section 3.04 paragraph 4 of Schedule 3 to this Agreement, the Borrower Recipient, through the PMT, shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) : sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the LoanGEF Trust Fund Grant, and explains variances between the actual and planned uses of such funds; (ii) ; describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) and sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) Section 4.01. The Borrower shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the Bank, consistently applied, adequate to monitor and record the progress of Parts A and C of the Project and of each LGU Sub-project (including its cost and the benefits to be derived from it), and to reflect the operations and financial condition of the Borrower and to register separately the operations, resources and expenditures related to for and in connection with the carrying out of Parts A and C of the Project. (ba) The Borrower shall: (i) have the financial statements records referred to in paragraph (a) Section 4.01 of this Section Agreement, its accounts and financial statements (balance sheets, statements of income and expenses and related statements) and records and accounts for the Special Account for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank)year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section 4.01 above for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on such statements and a report of such audit by said auditors, in of such scope and in such detail satisfactory to as the BankBank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning such records said records, accounts and accountsfinancial statements, and the audit of such financial statements, thereof and concerning said auditors, as the Bank may from time to time reasonably request. (cb) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) maintain, in accordance with Section 4.01 of this Agreement, records and separate accounts reflecting such expenditures; (ii) retain, until at least one year after the Bank has received the audit report for, or covering, for the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures;; records; and (iiiii) enable the Bank’s representatives to examine such records; andsuch (iiiiv) ensure that the relevant statements of expenditure such records and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, accounts are included in the annual audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (ba) of this SectionSection and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. Section 4.03. The Borrower shall take such steps satisfactory to the Bank as shall be necessary to protect itself against risk of loss resulting from changes in the rates of exchange between the currencies (including the currency of the Guarantor) used in its operations. Section 4.04. The Borrower shall take all actions within its powers to distribute annual dividends on its shares only after adequate provisions have been made for, inter alia: (a) Without limitation upon taxes; (b) loan loss provisions; and (c) adjustments to its equity caused by within-year inflation. Section 4.05. The Borrower shall, by December 31, 2000, take all steps necessary to reduce the Borrower’s progress reporting obligation set out percentage of the arrears in Section 3.04 of this Agreementits retail loan portfolio to a level not exceeding the industry average for commercial banks in the Philippines and, thereafter, the Borrower shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR), which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses of maintain such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as arrears percentage at the end of the period covered by said reportsuch level. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Borrower, through the PA, shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower Borrower, through the PA, shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory acceptable to the Bank; and (iii) furnish to the Bank such other information concerning such records and accountsrecords, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower Borrower, through the PA, shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, made all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (( or other period agreed to by the Bank), ) referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out obligations specified in paragraph 13 (b) of Section 3.04 D of Schedule 5 to this Agreement, the Borrower Borrower, through the PA, shall prepare and furnish to the Bank a financial monitoring reportreport (FMR), in form and substance satisfactory acceptable to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at of the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.forty-five

Financial Covenants. (a) The Borrower Borrower, through the MOH and HIF, shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 3.03 of this Agreement, Agreement the Borrower through the MOH shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to the Project. (b) The Borrower shall: (i) have the its financial statements referred to in paragraph (abalance sheets, statements of income and expenses and related statements) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section Section, for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, accounts and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retainensure that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures are retained until at least one (1) year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in any audit that the audit for each fiscal year (or other period agreed Bank may have requested pursuant to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the Borrower shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR), which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower MDA shall establish maintain procedures and maintain a financial management system acceptable records adequate to monitor and record the Bank in progress of Parts B and C of the PMU, Project and of each Development Project (including records its cost and accounts, the benefits to be derived from it) and prepare financial statements to reflect in accordance with consistently applied maintained sound accounting standards acceptable to practices the Bank, adequate to reflect the operations, resources operations and expenditures related to the Projectfinancial condition of MDA. (b) The Borrower MDA shall: (i) have the its records, accounts and financial state- ments (balance sheets, statements referred to in paragraph (aof income and expenses and related statements) of this Section for each of its fiscal year (or other period agreed to by the Bank) years audited, in accordance with appro- priate auditing principles consistently applied auditing standards acceptable to the Bankapplied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case case, not later than twelve months after the end of its fiscal year ending December 31, 1991, and thereafter, not later than six months after the end of each such year (or such other period agreed to by the Bank), of its fiscal years: (A) certified certi- fied copies of the its financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on the report of such statements audit by said auditors, in auditors of such scope and in such detail satisfactory to as the BankBank shall have reasonably re- quested; and (iii) furnish to the Bank such other information concerning such records said records, accounts and accounts, and financial statements as well as the audit of such financial statements, and concerning said auditorsthereof, as the Bank may shall from time to time reasonably request. (c) For all expenditures Section 3.02. Except as the Bank shall otherwise agree, MDA shall open and thereafter maintain, in accordance with respect the provi- sions of Section 3.01 of this Agreement, a separate account on its books to which withdrawals it shall credit each payment of interest and repayment of principal under any Sub-loan. All amounts so credited shall be utilized by MDA, to the extent they are not yet required to meet MDA’s payment or repayment obligations to the Borrower under the Subsidiary Loan Agreement, exclusively to finance specific projects for the further development of the Borrower’s municipali- ties. Section 3.03. MDA shall take such steps satisfactory to the Bank as shall be necessary to protect itself against risk of loss resulting from changes in the Loan Account were Report-based Disbursements or were made rates of exchange between the various currencies (including the currency of the Borrower) used in its operations. (a) Except as the Bank shall otherwise agree, MDA shall earn an annual return on its lending operations of not less than 1.0% during each of its fiscal years ending December 31, 1993, December 31, 1994, December 31, 1995, December 31, 1996, December 31, 1997 and December 31, 1998 and 1.5% during each of its fiscal years thereafter. (b) Before June 30 in each of its fiscal years, MDA shall, on the basis of statements forecasts prepared by MDA and satisfactory to the Bank, review whether it would meet the requirements set forth in paragraph (a) in respect of expendituresuch year and the next following fiscal year and shall furnish to the Bank the results of such review upon its completion. (c) If any such review shows that MDA would not meet the requirements set forth in paragraph (a) for MDA’s fiscal years covered by such review, MDA shall promptly take all necessary measures (including, without limitation, adjustments of the Borrower shallstructure or levels of its interest rates and other financial charges) in order to meet such requirements. (d) For the purposes of this Section: (i) retain, until at least one year after the Bank has received the audit report for, or covering, The annual return on MDA’s lending shall be calculated by dividing MDA’s net operating income for the fiscal year in which question by one half of the last withdrawal from sum of the Loan Account was made, all records (contracts, orders, invoices, bills, receipts current net value of MDA’s assets at the beginning and other documents) evidencing such expenditures;at the end of that fiscal year. (ii) enable the Bank’s representatives to examine such records; andThe term "net operating income" means total operating revenues less total operating expenses. (iii) ensure that The term "total operating revenues" means reve- nues from all sources related to operations. (iv) The term "total operating expenses" means all expenses related to operations, including inter- est and other charges on debt, administration, adequate maintenance, taxes and payments in lieu of taxes, and provision for depreciation on a basis acceptable to the relevant statements Bank. (v) The term "current net value of expenditure and reports referred to in Part A.5 MDA’s assets" means the gross value of Schedule 1 to this AgreementMDA’s assets less the amount of accumulated reserves allocated for loan losses, as the case may be, are included valued from time to time in the audit for each fiscal year (or other period agreed accordance with sound and consistently main- tained methods of valuation satisfactory to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the Borrower shall prepare and furnish to Except as the Bank a financial monitoring reportshall otherwise agree, in form and substance satisfactory MDA shall produce, for each of its following fiscal years funds from internal sources equivalent to not less than the Bank (the FMR), which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end following percent- age of the period covered total principal amount of all loans made by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of MDA during such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.fiscal year:

Financial Covenants. (a) The Borrower shall establish maintain, and shall cause each Project Province to maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and to prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shall, and also cause each Project Province to: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall, and also cause each Project Province to: (i) retainensure that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures are retained until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) and ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in any audit that the audit for each fiscal year (or other period agreed Bank may have requested pursuant to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the The Borrower shall prepare and furnish to the Bank a consolidated financial monitoring reportreport (integrating the information provided in the reports submitted by the Project Provinces, pursuant the provisions of Article III to the Project Agreement), in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) which sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR such financial monitoring report shall be furnished to the Bank not later than 45 forty-five (45) days after the end of the first calendar quarter semester after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quartersemester; thereafter, each FMR financial monitoring report shall be furnished to the Bank not later than 45 forty-five (45) days after each subsequent calendar quartersemester, and shall cover the period not covered by the previous FMR until the end of such calendar quartersemester.

Financial Covenants. (a) The Borrower shall establish cause Zhejiang and maintain a IMNLYWPC, to maintain, or cause to be maintained, financial management system acceptable to the Bank in the PMUsystems, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect their operations and financial conditions and to register separately the operations, resources and expenditures related to its Respective Part of the Project. (b) The Borrower shallshall cause Zhejiang and IMNLYWPC respectively, to: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not no later than six (6) months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accountsrecords, accounts and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditureexpenditures, the Borrower shall: (i) retainensure that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures are retained until at least one (1) year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, expenditures are included in any audit that the audit for each fiscal year (or other period agreed Bank may have requested pursuant to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the Borrower shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR), which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Borrower, through PEU, shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower Borrower, through PEU, shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), commencing with the fiscal year in which the first withdrawal under the Loan was made, audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements Disbursements) or were made on the basis of statements of expenditure, the Borrower Borrower, through PEU, shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such reports and statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 paragraph 2 of Schedule 5 to this Agreement, the Borrower Borrower, through PEU, shall prepare prepare, or cause to be prepared, and furnish to the Bank a financial monitoring reportreport (FMR), in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter semester after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quartersemester; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quartersemester, and shall cover the period not covered by the previous FMR until the end of such calendar quartersemester.

Financial Covenants. (a) The Borrower Borrower, through MOJ, shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower Borrower, through MOJ, shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower Borrower, though MOJ, shall: (i) retain, until at least one (1) year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 Part B of Schedule 5 to this Agreement, the Borrower Borrower, through MOJ, shall prepare and furnish to the Bank a financial monitoring reportFinancial Monitoring Report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.forty-five

Financial Covenants. (a) The Borrower ZPEPC shall establish and maintain a financial management system acceptable to the Bank in the PMU, including records and accounts, and prepare financial statements accounts adequate to reflect in accordance with consistently applied sound accounting standards acceptable to the Bank, adequate to reflect the operations, resources practices its operations and expenditures related to the Projectfinancial condition. (b) The Borrower ZPEPC shall: (i) have the its records, accounts and financial statements referred to in paragraph (abalance sheets, statements of income and expenses and related statements) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with appropriate auditing principles consistently applied auditing standards acceptable to the Bankapplied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank Bank, as soon as available, available but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), year, (A) certified copies of the its financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, audited and (B) an opinion on the report of such statements audit by said auditors, in of such scope and in such detail satisfactory to as the BankBank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning such records said records, accounts and accounts, and financial statements as well as the audit of such financial statements, and concerning said auditors, thereof as the Bank may shall from time to time reasonably request. (ca) For all expenditures with respect Except as the Bank shall otherwise agree, ZPEPC shall produce for each of its fiscal years after its fiscal year ending on December 31, 1999, funds from internal sources equivalent to which withdrawals from not less than 30% of the Loan Account were Report-based Disbursements annual average of ZPEPC’s capital expenditures, incurred, or were made on the basis of statements of expenditureexpected to be incurred, for that year, the Borrower shall: (i) retain, until at least one previous year after and the Bank has received the audit report for, or covering, the next following fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the Borrower shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR), which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said reportyear. (b) The first FMR Before April 30 in each of its fiscal years, commencing in 2000, ZPEPC shall, on the basis of forecasts prepared by ZPEPC and satisfactory to the Bank, review whether it would meet the requirements set forth in paragraph (a) in respect of such year and the next following fiscal year and shall be furnished furnish to the Bank the results of such review upon its completion. (c) If any such review shows that ZPEPC would not later than 45 days after meet the end requirements set forth in paragraph (a) for ZPEPC’s fiscal years covered by such review, ZPEPC shall promptly take all necessary measures (including, without limitation, adjustments of the first calendar quarter after structure or levels of its rates) in order to meet such requirements. (d) For the Effective Date, and shall cover the period from the incurrence purposes of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.this Section:

Financial Covenants. (a) The Borrower shall establish and cause Hubei Province to maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shallshall cause Hubei Province to: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accountsrecords, accounts and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retainensure that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures are retained until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in any audit that the audit for each fiscal year (or other period agreed Bank may have requested pursuant to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the Borrower shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR), which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Recipient shall establish and maintain a financial management system acceptable to the Bank in the PMUwithin MMA, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower Recipient, through MMA, shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan GEF Trust Fund Grant Account were Report-based Disbursements or were made on the basis of statements of expenditureexpenditure the Recipient, the Borrower through MMA, shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan GEF Trust Fund Grant Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and such reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the Borrower shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR), which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and shall: (i) maintain a financial management system acceptable or cause to the Bank in the PMU, including be maintained records and accounts, and prepare financial statements accounts adequate to reflect in accordance with consistently applied sound accounting standards acceptable to the Bank, adequate to reflect practices the operations, resources and expenditures related in respect of the Project of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof and (ii) cause APAPO and the Participating Transport Companies to maintain records and accounts adequate to reflect in accordance with sound accounting practices: (A) their operations and financial conditions; and (B) the operations, resources and expenditures in respect of the Project. (b) The Borrower shallshall and shall cause APAPO and the Participating Transport Companies to: (i) have the financial statements records and accounts referred to in paragraph (a) of this Section including those for the Special Account for each fiscal year (or other period agreed to by the Bank) audited, in accordance with appropriate auditing principles consistently applied auditing standards acceptable to the Bankapplied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), year: (A) certified copies of APAPO’s and the Participating Transport Companies’ financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, and ; and (B) an opinion on the report of such statements audit by said auditors, in of such scope and in such detail satisfactory to as the BankBank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning such said records and accounts, accounts and the audit of such financial statements, and concerning said auditors, thereof as the Bank may shall from time to time reasonably request. (c) Without limitation upon the provisions of paragraph (b) above, the Borrower shall cause APAPO and each of the Participating Transport Companies to: (i) furnish to the Bank on a quarterly basis until June 30, 1998, its income statement and balance sheets, prepared on the basis of its and the Borrower’s accounting standards and policies; (ii) ensure the preparation of the annual audit referred to in paragraph (b) (ii) (B) above in accordance with standards acceptable to the Bank; and (iii) furnish to the Bank starting by October 1, 1997 quarterly statements with respect to the accounts referred to in Section 4.01(a) (ii) (B). (d) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Bank has received the audit report for, or covering, for the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iiiii) enable the Bank’s representatives to examine such records; and (iiiiv) ensure that the relevant statements of expenditure such records and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, accounts are included in the annual audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon Section and that the Borrower’s progress reporting obligation set out in Section 3.04 report of this Agreement, the Borrower shall prepare and furnish to the Bank such audit contains a financial monitoring report, in form and substance satisfactory to the Bank (the FMR), which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered separate opinion by said reportauditors as to whether the statements of expenditure submitted during such fiscal year, showing separately funds provided by together with the Loanprocedures and internal controls involved in their preparation, and explains variances between can be relied upon to support the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said reportrelated withdrawals. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall shall, through MOE establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shall, through MOE: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period proposed by the Borrower and agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period proposed by the Borrower and agreed to by the Bank), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period proposed by the Borrower and agreed to by the Bank), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall, through MOE: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such reports and statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s MOE progress reporting obligation obligations set out in Section 3.04 of Schedule 5 to this Agreement, the Borrower shall shall, through MOE prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) : sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) ; describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) and sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 forty five (45) days after the end of the first six (6) calendar quarter months after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 forty five (45) days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Borrower, through the Project Implementation Entities, shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank Bank, through DNIT, as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 paragraph 6 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 3.06 (c) of this Agreement, the Borrower Borrower, through DNIT, shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR), which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately separately, in the case of items for Part B of the Project and of civil works covered by the Borrower’s budget line reserved for external financing (as indicated in Section 4.04 (b) of this Agreement), funds provided by under the LoanLoan and explains, again in the case of said Part B and explains said civil works, variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall shall: (i) cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafterand (ii) include the list of all contracts for works to be carried out under the First Phase of the Program. Thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter. Section 4.03. Project expenditures, if resulting from contracts procured in accordance with the Law 8666 Procedures, will be covered initially by the Borrower’s own resources (other than those accounted under the budget lines mentioned in Section 4.04 below), and reimbursed by the Bank in accordance to the percentages mentioned in Schedule 1. Section 4.04. Project expenditures, if resulting from contracts procured other than in accordance with the Law 8666 Procedures, will be covered: (a) in part by the Borrower’s budget line reserved for domestic counterpart financing, and reimbursed by the Bank out of the Loan proceeds; and (b) the remainder by the Borrower’s budget line reserved for external financing, and financed by the Bank out of the Loan proceeds. The part being covered by the Borrower’s external financing budget line will be equal to 10% of said expenditures in the case of civil works, and 100% of said expenditures in the case of goods, non-consultants’ services, consultants’ services and training.

Financial Covenants. (a) The Borrower through the MSIF shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the BankAssociation, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shallshall cause the MSIF to: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) Association), audited, in accordance with consistently applied auditing standards acceptable to the BankAssociation, by independent auditors acceptable to the BankAssociation; (ii) furnish to the Bank Association as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), Association): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the BankAssociation), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the BankAssociation; and (iii) furnish to the Bank Association such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Credit Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower through the MSIF shall: (i) retain, until at least one year after the Bank Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the BankAssociation’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the BankAssociation), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 of Schedule 4 to this Agreement, the Borrower through the MSIF shall prepare and furnish to the Bank Association a financial monitoring reportFinancial Monitoring Report for such period, in form and substance satisfactory to the Bank (the FMR)Association, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, Credit and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR Financial Monitoring Report shall be furnished to the Bank Association not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR Financial Monitoring Report shall be furnished to the Bank Association not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Recipient shall establish maintain and cause ANPN to maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower Recipient shall: (i) have, and cause the ANPN to have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan GEF Trust Fund Grant Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower Recipient shall, and cause the ANPN to: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan GEF Trust Fund Grant Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the BorrowerRecipient’s progress reporting obligation obligations set out in Section 3.04 paragraph 8(b) of Schedule 4 to this Agreement, the Borrower shall Recipient shall, and cause the ANPN to, prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) : sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the LoanGEF Trust Fund Grant, and explains variances between the actual and planned uses of such funds; (ii) ; describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) and sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quartersubsequent, and shall cover the period not covered by the previous FMR until the end of such calendar quartersuch.

Financial Covenants. (a) The Borrower Madhya Pradesh and MPSPAI shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards a format acceptable to the BankAssociation, adequate to reflect in accordance with sound financial management and accounting practices the operations, resources and expenditures related to in respect of the Project, of the departments or agencies of Madhya Pradesh or MPSPAI responsible for carrying out the Project, or any part thereof. (b) The Borrower Madhya Pradesh and MPSPAI shall: (i) have the records, accounts and financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with appropriate auditing principles consistently applied auditing standards acceptable to the Bankapplied, by independent auditors acceptable to the BankAssociation; (ii) furnish to the Bank Association and as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank)year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such fiscal year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on such statements financial statements, records and accounts of such audit by said auditors, in of such scope and in such detail satisfactory to as the BankAssociation shall have reasonably requested; and (iii) furnish to the Bank Association and such other information concerning such records said records, accounts and accounts, and financial statements as well as the audit of such financial statementsthereof, and concerning said such auditors, as the Bank may Association shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. Section 4.02. (a) Without limitation upon the Borrower’s progress reporting obligation set out in provisions of Section 3.04 3.01 of this Agreement, the Borrower Madhya Pradesh and MPSPAI shall prepare and furnish carry out a time-bound action plan acceptable to the Bank a Association for the strengthening of the financial monitoring reportmanagement system in order to enable each of Madhya Pradesh and MPSPAI, in form and substance satisfactory not later than March 31, 2002, or such later date as the Association shall agree, to prepare quarterly Project Management Reports, acceptable to the Bank (the FMR)Association, each of which: (i) (A) sets forth actual sources and uses application of funds for the Project, both cumulatively and for the period covered by said report, showing separately and projected sources and applications of funds provided by for the Loan, and explains variances between Project for the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for six-month period following the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower NTA shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the BankAssociation, consistently applied, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to Part B of the Project. (b) The Borrower NTA shall: (i) have the its records, accounts and financial statements referred to in paragraph (abalance sheets, statements of income and expenses and related statements) of this Section for each fiscal year (or other period agreed to by the Bank) Fiscal Year audited, in accordance with consistently applied auditing standards acceptable to the BankAssociation, consistently applied, by independent auditors acceptable to the BankAssociation; (ii) furnish to the Bank Association as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), year: (A) certified copies of the financial statements referred to in paragraph (a) of this Section Section, for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements and report of such audit, by said auditors, in of such scope and in such detail satisfactory to as the BankAssociation shall have reasonably requested; and (iii) furnish to the Bank Association such other information concerning such records records, accounts and accountsfinancial statements, and the audit of such financial statementsthereof, and concerning said auditors, as the Bank Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. Section 4.02. (a) Without limitation upon the Borrower’s progress reporting obligation set out in provisions of Section 3.04 4.01 of this Agreement, the Borrower NTA shall prepare and furnish carry out a time-bound action plan acceptable to the Bank a Association for the strengthening of the financial monitoring reportmanagement system referred to in paragraph (a) of said Section 4.01 in order to enable NTA not later than April 30, in form and substance satisfactory 2003, or such later date as the Association shall agree, to prepare trimesterly Project Management Reports, acceptable to the Bank (the FMR)Association, each of which: (i) (A) sets forth actual sources and uses applications of funds for the Project, both cumulatively and for the period covered by said report, showing and projected sources and applications of funds for the Project for the eight-month period following the period covered by said report; and (B) shows separately funds provided expenditures financed out of the proceeds of the Credit during the period covered by said report and expenditures proposed to be financed out of the Loan, and explains variances between proceeds of the actual and planned uses of such fundsCredit during the eight-month period following the period covered by said report; (ii) (A) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, ; and (B) explains variances between the actual and planned Project implementationpreviously forecast implementation targets; and (iii) sets forth the status of procurement under the ProjectProject and expenditures under contracts financed out of the proceeds of the Credit, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Karnataka shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards a format acceptable to the Bank, adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures related to the ProjectProject of the departments or agencies of Karnataka responsible for carrying out the Project or any part thereof. (b) The Borrower Karnataka shall: (i) have the records, accounts and financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) Fiscal Year audited, in accordance with appropriate auditing principles, consistently applied auditing standards acceptable to the Bankapplied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank)Fiscal Year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), Fiscal Year as so audited, and (B) an opinion on such statements financial statements, records and accounts and report of such audit, by said auditors, in of such scope and in such detail satisfactory to as the BankBank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning such records records, accounts and accountsfinancial statements, and the audit of such financial statementsthereof, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. Section 3.02. (a) Without limitation upon the Borrower’s progress reporting obligation set out in provisions of Section 3.04 3.01 of this Agreement, the Borrower Karnataka shall prepare and furnish carry out a time-bound action plan acceptable to the Bank a for the strengthening of the financial monitoring reportmanagement system referred to in paragraph (a) of said Section 3.01 in order to enable Karnataka, in form and substance satisfactory not later than October 1, 2002 or such later date as the Bank shall agree, to prepare quarterly Project Management Reports, acceptable to the Bank (the FMR)Bank, each of which: (i) (A) sets forth actual sources and uses applications of funds for the Project, both cumulatively and for the period covered by said report, showing separately and projected sources and applications of funds provided for the Project for the six-month period following the period covered by the Loansaid report, and explains variances between (B) shows separately expenditures financed out of the actual proceeds of the Loan during the period covered by said report and planned uses expenditures proposed to be financed out of such fundsthe proceeds of the Loan during the six-month period following the period covered by said report; (ii) (A) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and (B) explains variances between the actual and planned Project implementationpreviously forecast implementation targets; and (iii) sets forth the status of procurement under the ProjectProject and expenditures under contracts financed out of the proceeds of the Loan, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Borrower, through DNP, shall establish and maintain within the PCU a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower Borrower, through DNP, shall: (i) have the financial statements referred to in paragraph (a) of this Section for each of the Borrower’s fiscal year years audited (or other period agreed to by the Bank) audited), in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), ) as so audited, and ; and (B) an opinion on such statements statements, by said auditors, auditors in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditureexpenditure (including statements of transfer as cited in paragraph 4 (e) of Schedule 1 to this Agreement), the Borrower Borrower, through DNP, shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to expenditures (including statements of transfer as cited in Part A.5 paragraph 4 (e) of Schedule 1 to this Agreement, as the case may be, ) are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this SectionSection and that the report of such audit contains a separate opinion by said auditors as to whether: (I) the statements of expenditure and/or statements of transfers; and (II) the documents and other evidence referred to in paragraphs 3 (c) and 3 (e) of Schedule 1 to this Agreement submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 3.06 of this Agreement, the Borrower Borrower, through DNP, shall prepare and furnish to the Bank a financial monitoring reportreport (FMR), in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished by the Borrower, through DNP, to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower FID shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the BankAssociation, consistently applied, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to the Project. (b) The Borrower FID shall: (i) have the its records, accounts and financial statements referred to in paragraph (abalance sheets, statements of income and expenses and related statements) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the BankAssociation, consistently applied, by independent auditors acceptable to the BankAssociation; (ii) furnish to the Bank Association as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section Section, for such year (or such other period agreed to by the Bank), as so audited, and and (B) an opinion on such statements and report of such audit, by said auditors, in of such scope and in such detail satisfactory as the Association shall have reasonably requested, including, as part of the information to the Bankbe provided in each such report, a management letter covering FID’s internal controls; and (iii) furnish to the Bank Association such other information concerning such records records, accounts and accountsfinancial statements, and the audit of such financial statementsthereof, and concerning said auditors, as the Bank Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. Section 4.02. (a) Without limitation upon the Borrower’s progress reporting obligation set out in provisions of Section 3.04 4.01 of this Agreement, the Borrower FID shall prepare and furnish carry out a time-bound action plan acceptable to the Bank a Association for the strengthening of its financial monitoring reportmanagement system for the Project in order to enable FID, in form and substance satisfactory not later than February 28, 2002, or such later date as the Association shall agree, to prepare quarterly Project management reports, acceptable to the Bank (the FMR)Association, each of which: (i) (A) sets forth actual sources and uses applications of funds for the Project, both cumulatively and for the period covered by said report, showing separately and projected sources and applications of funds provided for the Project for the six-month period following the period covered by the Loansaid report, and explains variances between (B) shows separately expenditures financed out of the actual proceeds of the Credit during the period covered by said report and planned uses expenditures proposed to be financed out of such fundsthe proceeds of the Credit during the six-month period following the period covered by said report; (ii) (A) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Borrower, acting through MAFRD and ANSVSA, shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project.; and (b) The Borrower Borrower, acting through MAFRD and ANSVSA, shall: (i) : have the financial statements referred to in paragraph (a) of this Section and the records and accounts for the Special Accounts for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) ; furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank)year, (A) certified copies of the respective financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on such statements by said auditors, in of such scope and detail satisfactory to as the BankBank shall have reasonably requested; and (iii) and furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower through MAFRD and ANSVSA shall: : maintain or cause to be maintained, in accordance with paragraph (ia) of this Section, records and separate accounts reflecting such expenditures; retain, until at least one year after the Bank has received the audit report for, or covering, for the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) ; enable the Bank’s representatives to examine such recordsexpenditures; and (iii) and ensure that the relevant statements of expenditure such records and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, accounts are included in the annual audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this SectionSection and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditures submitted during the fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon the support the related withdrawals. (a) Without limitation upon the The Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the Borrower acting through MAFRD, shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) : sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) ; describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) and sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 forty-five (45) days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 forty-five (45) days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project, except for Part E. 2. of the Project. (b) The Borrower shall: (i) have the financial statements referred to in paragraph (a) of this Section for each of the Borrower’s fiscal year years audited (or other period agreed to by the Bank) audited), in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), ) as so audited, ; and (B) an opinion on such statements statements, by said auditors, auditors in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, expenditures are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this SectionSection and in 4.03 (a) (i). (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 3.09 of this Agreement, the Borrower shall shall, except with respect to Parts B.2 and E.2 of the Project, prepare and furnish to the Bank a financial monitoring reportreport (FMR), in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished by the Borrower to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter. (a) The Borrower shall, in the event that any portion of Part

Financial Covenants. (a) The Borrower Borrower, through the PCU, shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower Borrower, through the PCU, shall: (i) have the financial statements referred to in paragraph (a) of this Section Section, including for each fiscal year Fiscal Year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, Bank by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditorsstatements, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower Borrower, through the PCU, shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year Fiscal Year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (Fiscal Year or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 Part C of Schedule 5 to this Agreement, the Borrower Borrower, through the PCU, shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.forty-five

Financial Covenants. (a) The Borrower LVK shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the Bank, consistently applied, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to the Project. (b) The Borrower LVK shall: (i) have its records, accounts, including the Special Account, and financial statements referred to in paragraph (abalance sheets, statements of income and expenses and flow of fund statements) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with appropriate auditing principles consistently applied auditing standards acceptable to the Bankapplied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank Bank, as soon as available, available but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank)year, (A) certified by the Director of LVK copies of the its financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on the report of such statements audit by said auditors, in of such scope and in such detail satisfactory to as the BankBank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning such records said records, accounts and accounts, and financial statements as well as the audit of such financial statements, and concerning said auditors, thereof as the Bank may shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in provisions of Section 3.04 3.01 of this Agreement, the Borrower LVK shall prepare and furnish carry out a time-bound action plan acceptable to the Bank a for the strengthening of its financial monitoring reportmanagement system for the Project in order to enable LVK, in form and substance satisfactory not later than July 31, 2002, or such later date as the Bank shall agree, to prepare quarterly Project management reports, acceptable to the Bank (the FMR)Bank, each of which: (i) (A) sets forth actual sources and uses applications of funds for the Project, both cumulatively and for the period covered by said report, showing separately and projected sources and applications of funds provided for the Project for the six-month period following the period covered by the Loansaid report, and explains variances between (B) shows separately expenditures financed out of the actual proceeds of the Loan during the period covered by said report and planned uses expenditures proposed to be financed out of such fundsthe proceeds of the Loan during the six-month period following the period covered by said report; (ii) (A) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and (B) explains variances between the actual and planned Project implementationpreviously forecast implementation targets; and (iii) sets forth the status of procurement under the ProjectProject and expenditures under contracts financed out of the proceeds of the Loan, as at the end of the period covered by said report. (b) The first FMR Upon the completion of the action plan referred to in paragraph (a) of this Section, LVK shall be furnished prepare, in accordance with guidelines acceptable to the Bank, and furnish to the Bank not later than 45 days after the end of the first each calendar quarter after a Project Management Report for such period. (a) Except as the Effective DateBank shall otherwise agree, LVK shall take all appropriate action to ensure that, for each of LVK’s fiscal years, following LVK’s fiscal year ending on December 31, 0000, XXX’s projected operating revenues are sufficient to meet the LVK’s projected expenses for that fiscal year. (b) By or before October 31 of each year during Project implementation, LVK shall on the basis of forecasts prepared by LVK and satisfactory to the Bank, review whether LVK would be able to meet the requirements set forth in paragraph (a) in respect of such year and the next following fiscal year, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished furnish to the Bank a copy of such review upon its completion. (c) If any such review shows that LVK would not later meet the requirements set forth in paragraph (a) for LVK’s fiscal years covered by such review, LVK and Lviv shall promptly take all necessary measures (including, without limitation, adjustments of the structure or level of tariff rates) in order to meet such requirements. (d) For the purposes of this Section: (i) The term “projected operating revenues” means the sum of revenues from all sources related to operations, consumer deposits and consumer contributions in aid of construction less allowance for uncollectable revenues. (ii) The term “projected expenses” means all expenses related to operations, including administration, energy, wages, adequate provision for maintenance and taxes and payments in lieu of taxes, interest payable on all debt related to LVK’s operations, debt services requirements in excess of provision for depreciation, all cash dividends and other cash distributions of surplus, increase in working capital other than 45 days after each subsequent calendar quartercash, and shall cover the period not covered by the previous FMR until the end of such calendar quarterother cash outflows other than capital expenditures.

Financial Covenants. (a) The Borrower shall establish and Participating States shall: (i) maintain a financial management system system, including records and accounts, and prepare financial statements, in accordance with consistently applied accounting standards acceptable to the Bank in and the PMUAssociation, adequate to reflect their respective operations and financial condition, and to register separately their respective operations, resources and expenditures related to the Project; (ii) cause the respective SRRDAs to maintain a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the BankBank and the Association, adequate to reflect their respective operations and financial condition, and to register separately the operations, resources and expenditures related to Parts A.1, A.2 and C.2 of the Project. (b) The Borrower Participating States shall, and shall cause SRRDAs to: (i) have the respective financial statements referred to in paragraph paragraph (a) of this Section for each fiscal year Fiscal Year (or other period agreed to by the Bank) Bank and the Association), audited, in accordance with consistently applied auditing standards acceptable to the BankBank and the Association, by independent auditors acceptable to the BankBank and the Association; (ii) furnish to the Bank and the Association as soon as available, but in any case not later than six (6) months after the end of each such year Fiscal Year (or such other period agreed to by the BankBank and the Association), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year Fiscal Year (or such other period agreed to by the BankBank and the Association), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the BankBank and the Association; and (iii) furnish to the Bank and the Association such other information concerning such records and records, accounts, and the audit of such financial statements, and concerning said auditors, as the Bank and the Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. Section 3.02. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the Borrower Participating States shall cause SRRDAs to prepare and furnish to the Bank and the Association a financial monitoring report, in form and substance satisfactory to the Bank (and the FMR)Association, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the LoanLoan and Credit, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and cause Ningbo to maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shallshall cause Ningbo to: (i) have the records, accounts and financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accountsrecords, accounts and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retainensure that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures are retained until at least one (1) year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in any audit that the audit for each fiscal year (or other period agreed Bank may have requested pursuant to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the Borrower shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR), which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Rajasthan shall, and shall establish and cause RCPE to, maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards a format acceptable to the BankAdministrator, adequate to reflect in accordance with sound financial management and accounting practices the operations, resources and expenditures related to the ProjectProject of the departments or agencies of Rajasthan responsible for carrying out the Project or any part thereof and of RCPE. (b) The Borrower Rajasthan shall, and shall cause RCPE to: (i) have the records, accounts and financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) Fiscal Year audited, in accordance with appropriate auditing principles consistently applied auditing standards acceptable to the Bankapplied, by independent auditors acceptable to the BankAdministrator; (ii) furnish to the Bank Administrator as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank)Fiscal Year, (A) certified copies of the financial statements referred to in paragraph paragraph (a) of this Section for such year (or such other period agreed to by the Bank), Fiscal Year as so audited, and (B) an opinion on such statements financial statements, records and accounts and a report of such audit, by said auditors, in of such scope and in such detail satisfactory to as the BankAdministrator shall have reasonably requested; and (iii) furnish to the Bank Administrator such other information concerning such records records, accounts and accountsfinancial statements, and the audit of such financial statementsthereof, and concerning said auditors, as the Bank Administrator may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. Section 3.02. (a) Without limitation upon the Borrower’s progress reporting obligation set out in provisions of Section 3.04 3.01 of this Agreement, the Borrower Rajasthan shall, and shall prepare and furnish cause RCPE to, carry out a time-bound action plan acceptable to the Bank a Administrator for the strengthening of the financial monitoring reportmanagement system referred to in paragraph (a) of said Section 3.01 in order to enable RCPE, in form and substance satisfactory not later than˛July 15, 2000, or such later date as the Administrator shall agree, to prepare quarterly Project Management Reports, acceptable to the Bank (the FMR)Administrator, each of which: (i) (A) sets forth actual sources and uses applications of funds for the Project, both cumulatively and for the period covered by said report, showing and projected sources and applications of funds for the Project for the six-month period following the period covered by said report; and (B) shows separately funds provided expenditures financed out of the proceeds of the Interim Fund Credit during the period covered by said report and expenditures proposed to be financed out of the Loan, and explains variances between proceeds of the actual and planned uses of such fundsInterim Fund Credit during the six-month period following the period covered by said report; (ii) (A) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and (B) explains variances between the actual and planned Project implementationpreviously forecast implementation targets; and (iii) sets forth the status of procurement under the ProjectProject and expenditures under contracts financed out of the proceeds of the Interim Fund Credit, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain maintain, through MAFWE, a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards a format acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower Borrower, through MAFWE, shall: (i) have the records, accounts and financial statements referred to in paragraph (a) of this Section and the records and accounts for the Project and Special Account for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank)year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on such statements statements, records and accounts and report of such audit, by said auditors, in of such scope and in such detail satisfactory to as the BankBank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statementsthereof, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower Borrower, through MAFWE, shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and separate accounts reflecting such expenditures; (ii) retain, until at least one year after the Bank has received the audit report for, or covering, for the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iiiii) enable the Bank’s representatives to examine such records; and (iiiiv) ensure that the relevant statements of expenditure such records and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, accounts are included in the annual audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this SectionSection and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 paragraph 1 (b) of Schedule 5 to this Agreement, the Borrower shall prepare prepare, through MAFWE, and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, Loan and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 forty five (45) days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower NHAI shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the Bank, consistently applied, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to the Project. (b) The Borrower NHAI shall: (i) have the its records, accounts and financial statements referred to in paragraph (abalance sheets, statements of income and expenses and related statements) of this Section for each fiscal year (or other period agreed to by the Bank) Fiscal Year audited, in accordance with consistently applied auditing standards acceptable to the Bank, consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), Fiscal Year: (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), Fiscal Year as so audited, and (B) an opinion on such statements financial statements, records and accounts and report of such audit, by said auditors, in of such scope and in such detail satisfactory to as the BankBank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning such records records, accounts and accountsfinancial statements, and the audit of such financial statementsthereof, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. Section 4.02. (a) Without limitation upon the Borrower’s progress reporting obligation set out in provisions of Section 3.04 4.01 of this Agreement, the Borrower NHAI shall prepare and furnish carry out a time-bound action plan acceptable to the Bank a for the strengthening of the financial monitoring reportmanagement system referred to in paragraph (a) of said Section 4.01 in order to enable NHAI, in form and substance satisfactory not later than January 1, 2003 or such later date as the Bank shall agree, to prepare quarterly Project Management Reports, acceptable to the Bank (the FMR)Bank, each of which: (i) (A) sets forth actual sources and uses applications of funds for the Project, both cumulatively and for the period covered by said report, showing separately and projected sources and applications of funds provided for the Project for the six-month period following the period covered by the Loansaid report, and explains variances between (B) shows separately expenditures financed out of the actual proceeds of the Loan during the period covered by said report and planned uses expenditures proposed to be financed out of such fundsthe proceeds of the Loan during the six-month period following the period covered by said report; (ii) (A) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and (B) explains variances between the actual and planned Project implementationpreviously forecast implementation targets; and (iii) sets forth the status of procurement under the ProjectProject and expenditures under contracts financed out of the proceeds of the Loan, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Borrower, through the TCDD, shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to the Project. (b) The Borrower Borrower, through the TCDD, shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory acceptable to the Bank; and (iii) furnish to the Bank such other information concerning such records and accountsrecords, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower Borrower, through the TCDD, shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, made all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), ) referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out obligations specified in paragraph 5 of Section 3.04 C of Schedule 5 to this Agreement, the Borrower Borrower, through the TCDD, shall prepare and furnish to the Bank a financial monitoring reportreport (FMR), in form and substance satisfactory acceptable to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at of the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 forty-five (45) days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 forty-five (45) days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter. Section 4.03. The Borrower shall cause the TCDD to have an enterprise resource planning program installed and functional by December 31, 2007. Section 4.04. The Borrower shall cause the TCDD to appoint a consultant firm to carry out a detailed assessment of internal controls of the TCDD covering its business systems, including the regional offices, by October 31, 2005.

Financial Covenants. (a) The Borrower shall cause FHIS to establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the BankAssociation, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shallshall cause FHIS to: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) Association), audited, in accordance with consistently applied auditing standards acceptable to the BankAssociation, by independent auditors acceptable to the BankAssociation; (ii) furnish to the Bank Association as soon as available, but in any case not later than six four months after the end of each such year (or such other period agreed to by the Bank), Association): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the BankAssociation), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the BankAssociation; and (iii) furnish to the Bank Association such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Credit Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shallshall cause FHIS to: (i) retain, until at least one year after the Bank Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the BankAssociation’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the BankAssociation), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 3.07 of this Agreement, the Borrower shall prepare and furnish to the Bank Association a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Association, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the LoanCredit, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank Association not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank Association not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain within the PCU a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards a format acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shall: (i) have the records, accounts and financial statements referred to in paragraph (a) of this Section and the records and accounts for the Special Account for each fiscal year (or other period agreed to by of the Bank) Borrower’s FYs audited, in accordance with consistently applied auditing standards acceptable to the Bank, consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six four (4) months after the end of each such year (or such other period agreed to by the Bank), FY: (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements financial statements, records and accounts and the report of such audit, by said auditors, in of such scope and in such detail satisfactory to as the BankBank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statementsthereof, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and separate accounts reflecting such expenditures; (ii) retain, until at least one year after the Bank has received the audit report for, or covering, for the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iiiii) enable the Bank’s representatives to examine such records; and (iiiiv) ensure that such records and accounts are included in the relevant annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure and or the reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Sectionrelated withdrawals. (a) Without limitation upon the Borrower’s, CVP’s, IDU’s and STT-FONDATT’s progress reporting obligation obligations set out in Section 3.04 3.07 of this Agreement, the Borrower shall prepare and furnish to the Bank and to DNP a financial monitoring reportreport (FMR), in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementationimplementation ; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain through the MOA a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the BankAssociation, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shallshall through the MOA: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) Association), audited, in accordance with consistently applied auditing standards acceptable to the BankAssociation, by independent auditors acceptable to the BankAssociation; (ii) furnish to the Bank Association as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), Association): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the BankAssociation), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the BankAssociation; and (iii) furnish to the Bank Association such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Credit Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the BankAssociation’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the BankAssociation), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 7 of Schedule 4 to this Agreement, the Borrower shall prepare and furnish to the Bank Association a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Association, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the LoanCredit, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower MMCT shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the Bank, consistently adequate to reflect in accordance with sound accounting practices its operations and financial condition and to register separately the operations, resources and expenditures related to the Project. (b) The Borrower MMCT shall: (i) have the its records, accounts and financial statements referred to in paragraph (abalance sheets, statements of income and expenses and related statements) of this Section for each fiscal year (or other period agreed to by year, including those for the Bank) audited, Special Account audited in accordance with consistently applied auditing standards acceptable to the BankBank consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank), year: (A) certified copies of the its financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, and ; and (B) an opinion on such statements and report of such audit by said auditors, in auditors of such scope and in such detail satisfactory to as the BankBank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning such records said records, accounts and accounts, and financial statements as well as the audit of such financial statements, and concerning said auditorsthereof, as the Bank may shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. Section 4.02. (a) Without limitation upon the Borrower’s progress reporting obligation set out in provisions of Section 3.04 4.01 of this Agreement, the Borrower MMCT shall prepare and furnish carry out a time-bound action plan acceptable to the Bank a for the strengthening of its financial monitoring reportsystem in order to enable MMCT, in form and substance satisfactory not later than December 31, 2002, or such later date as the Bank shall agree, to prepare quarterly Project Management Reports, acceptable to the Bank (the FMR), whichBank. Each such report shall: (i) sets set forth actual sources and uses application of funds for the Project, both cumulatively and for the period covered by said report, showing separately and projected sources and application of funds provided for the Project for the six-month period following the period covered by the Loansaid report, and explains variances between show separately expenditures proposed to be financed out of the actual and planned uses proceeds of such fundsthe GEF Trust Fund Grant during the six-month period following the period covered by said report; (ii) describes describe physical progress in the implementation of the Project implementation, both cumulatively and for the period covered by said report, and explains explain variances between the actual and planned Project implementationpreviously forecast implementation targets; and (iii) sets set forth the status of procurement under of the ProjectProject and expenditures under contracts financed out of the proceeds of the GEF Trust Fund Grant, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall cause IDENE to establish and maintain maintain, as part of the MIS, a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shallshall cause IDENE to: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. Section 4.02. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 3.03 of this Agreement, the Borrower shall cause IDENE to prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR), which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Recipient shall establish and maintain or cause to be maintained a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the its operations, resources and expenditures related to the Project. (b) The Borrower Recipient shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accountsrecords, accounts and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan GEF Trust Fund Grant Account were Report-based Disbursements or were made on the basis of statements of expenditureexpenditures, the Borrower Recipient shall: (i) retainensure that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures are retained until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan GEF Trust Fund Grant Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in any audit that the audit for each fiscal year (or other period agreed Bank may have requested pursuant to by the Bank), referred to in paragraph (b) of this Section. Section 4.02. (a) Without limitation upon the BorrowerRecipient’s progress reporting obligation obligations set out in Section 3.04 III of this Schedule 4 to the Development Credit Agreement, the Borrower Recipient shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the LoanGEF Trust Fund Grant, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementationimplementation ; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to the Project. (b) The Borrower shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after ensure (as the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, case may be) that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expendituresexpenditures are retained until at least one year after the end of the fiscal year in which the last withdrawal from the Loan Account was made; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, (as the case may be, ) that such statements of expenditure are included in any audit that the audit for each fiscal year (or other period agreed Bank may have requested pursuant to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 3.10 of this Agreement, the Borrower shall shall, through MSPBS, prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Guarantor shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the Bank, consistently applied, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to Part B of the Project. (b) The Borrower Guarantor shall: (i) have the its records, accounts and financial statements referred to in paragraph (abalance sheets, statements of income and expenses and related statements) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank)year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section Section, for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on such statements and report of such audit, by said auditors, in of such scope and in such detail satisfactory to as the BankBank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning such records records, accounts and accountsfinancial statements, and the audit of such financial statementsthereof, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For Section 4.02. The Guarantor shall at all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, times take all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the Borrower shall prepare and furnish to the Bank a financial monitoring report, in form and substance adequate actions satisfactory to the Bank (Bank, including maintaining the FMR)Foreign Exchange Risk Coverage Arrangement, which: (i) sets forth sources and uses to permit the Borrower to protect itself against risk of funds for loss resulting from changes in the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances rates of exchange between the actual and planned uses of such funds; currencies (iiincluding the Dinar) describes physical progress used in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement its operations under the Project. Section 4.03. The Guarantor agrees, as at long as it exercises control over the end setting of interest rates charged by the period covered by said report. (b) The first FMR shall be furnished Borrower, to establish rates which would allow the Bank not later than 45 days after the end Borrower, under conditions of the first calendar quarter after the Effective Dateefficient operation, to meet its financial obligations and shall cover the period from the incurrence of the first expenditure covenants under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarterLoan Agreement.

Financial Covenants. (a) The Borrower Borrower, through MAVDT, shall establish and cause the Agent (pursuant to the provisions of the Agency Agreement) to: (i) at all the times, maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, ; and (ii) prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shallBorrower, through MAVDT, shall cause the Agent to: (i) have the financial statements referred to in paragraph (a) of this Section for each of the Borrower’s fiscal year years audited (or other period agreed to by the Bank) audited), in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), ) as so audited, ; and (B) an opinion on such statements statements, by said auditors, auditors in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements disbursements) or were made on the basis of statements of expenditure, the Borrower shallBorrower, through MAVDT, shall cause the Agent to: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such reports and statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, expenditures are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 3.09 of this Agreement, the Borrower Borrower, through MAVDT, with the assistance of the Agent, shall prepare and furnish to the Bank a financial monitoring reportreport (FMR), in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished by the Borrower, through MAVDT, to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower ESE shall establish and maintain a financial management system acceptable to the Bank in the PMU, including records and accounts, and prepare financial statements accounts adequate to reflect in accordance with consistently applied sound accounting standards acceptable to the Bank, adequate to reflect the operations, resources practices its operations and expenditures related to the Project.financial condition; and (b) The Borrower ESE shall: (i) have the its records, accounts and financial statements referred to in paragraph (abalance sheets, statements of income and expenses and related statements) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with appropriate auditing principles consistently applied auditing standards acceptable to the Bankapplied, by independent auditors acceptable to the BankAssociation; (ii) furnish to the Bank Association as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), year: (A) certified copies of the its financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on the report of such statements audit by said auditors, in of such scope and in such detail satisfactory to as the BankAssociation shall have reasonably requested; and (iii) furnish to the Bank Association such other information concerning such records said records, accounts and accounts, and financial statements as well as the audit of such financial statements, and concerning said auditorsthereof, as the Bank may Association shall from time to time reasonably request. (ca) For all expenditures with respect Except as the Association shall otherwise agree, ESE shall maintain, for each of its fiscal years after its fiscal year ending on June 30, 1996, a ratio of total operating expenses to which withdrawals from the Loan Account were Report-based Disbursements or were made total operating revenues not higher than 1 (one); (b) Before May 31, in each of its fiscal years, ESE shall, on the basis of statements forecasts prepared by ESE and satisfactory to the Association, review whether it would meet the requirements set forth in paragraph (a) in respect of expendituresuch year and the next following fiscal year, and shall furnish to the Borrower shall:Association the results of such review upon its completion; (c) If any such review shows that ESE would not meet the requirements set forth in paragraph (a) for ESE’s fiscal years covered by such review, ESE shall promptly take all necessary measures (including, without limitation, adjustments of the structure or levels of its prices) in order to meet such requirements; and (d) For the purposes of this Section; (i) retainThe term "total operating expenses" means all expenses related to operations, until including administration, adequate maintenance, taxes and payments in lieu of taxes, and provision for depreciation on a straight-line basis at least one year after a rate of not less than 5% per annum of the Bank has received the audit report foraverage current gross value of ESE’s fixed assets in operation, or coveringother basis acceptable to the Association, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts but excluding interest and other documents) evidencing such expenditurescharges on debt; (ii) enable the Bank’s representatives The term "total operating revenues" means revenues from all sources related to examine such recordsopera- tions; and (iii) ensure that The average current gross value of ESE’s fixed assets in operation shall be calculated as one half of the relevant statements sum of expenditure the gross value of ESE’s fixed assets in operation at the beginning and reports referred to in Part A.5 at the end of Schedule 1 to this Agreementthe fiscal year, as valued from time to time in accordance with sound and consistently maintained methods of valuation satisfactory to the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this SectionAssociation. (a) Without limitation upon Except as the Borrower’s progress reporting obligation set out in Section 3.04 of this AgreementAssociation shall otherwise agree, ESE shall not incur any debt, if after the Borrower shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR), which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses incurrence of such fundsdebt the ratio of debt to equity shall be greater than 2 (two); (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end For purposes of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.this Section:

Financial Covenants. (a) The Borrower shall shall: (i) establish and maintain a in MoH for Part C of the Project; and (ii) cause IBGE to establish and maintain in respect of Part A of the Project, financial management system acceptable to the Bank in the PMUsystems, including records and accounts, and prepare financial statements (of the respective agencies) in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to their respective parts of the Project. (b) The Borrower shallshall through MoH, and cause IBGE to: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements Disbursements) or were made on the basis of statements of expenditure, the Borrower shallshall through MoH, and cause IBGE to: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such reports and statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 of this Agreement, the Borrower shall shall, through MoH in respect of Part C of the Project and cause IBGE in respect of Part A of the Project, to prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) : sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) ; describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) and sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR FMRs shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and cause FER to maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the Bank, consistently applied, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shallshall cause FER to: (i) have the its records, accounts and financial statements referred to in paragraph (abalance sheet, statements of sources and uses of funds, and related statements) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank)year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on such statements statements, records and accounts, and report of such audit by said auditors, in auditors of such scope and in such detail satisfactory to as the BankBank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statementsthereof, and concerning said auditors, as the Bank may shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shallshall cause the FER to: (i) retainmaintain, until at least one year after the Bank has received the audit report forin accordance with paragraph (a) of this Section, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, records and separate accounts reflecting such expenditures; (ii) ensure that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures;expenditures are retained until at least one year after the Bank has received the audit report for the fiscal year in which the last withdrawal from the Loan Account was made; and records. (iiiii) enable the Bank’s representatives to examine such (d) The Borrower shall cause FER to: (i) have the records and accounts referred to in paragraph (c) (i) of this Section and those for the Special Account for each fiscal year audited, in accordance with auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such recordsyear the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested, including a separate opinion by said auditors on the project management reports (PMRs) submitted during such fiscal year, and as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals; and (iii) ensure that furnish to the relevant statements of expenditure Bank such other information concerning such records and reports referred to in Part A.5 of Schedule 1 to this Agreementaccounts, and the audit thereof as the case may beBank shall from time to time reasonably request. Section 4.02. The Borrower shall cause FER to prepare, are included in the audit for each fiscal year (or other period agreed accordance with guidelines acceptable to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the Borrower shall prepare and furnish to the Bank not later than forty five (45) days after the end of each calendar quarter, a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)PMR for such period, which: (a) (i) sets forth actual sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing and projected sources and applications of funds for the Project for the six-month period following the period covered by said report; and (ii) shows separately funds provided expenditures financed out of the proceeds of the Loan during the period covered by said report and expenditures proposed to be financed out of the Loan, and explains variances between proceeds of the actual and planned uses of such fundsLoan during the six-month period following the period covered by said report; (iib) (i) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, ; and (ii) explains variances between the actual and planned Project implementationpreviously forecast implementation targets; and (iiic) sets forth the status of procurement under the ProjectProject and expenditures under contracts financed out of the proceeds of the Loan, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Borrower, through Transantiago-SE, shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 3.03 of this Agreement, the Borrower Borrower, through Transantiago-SE, shall prepare prepare, and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter semester after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quartersemester; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quartersemester, and shall cover the period not covered by the previous FMR until the end of such calendar quartersemester.

Financial Covenants. (a) The Borrower Recipient shall establish and cause Ningbo to maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shall: (i) Recipient shall cause Ningbo to: have the records, accounts and financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) ; furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) and furnish to the Bank such other information concerning such records and accountsrecords, accounts and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan GEF Trust Fund Grant Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower Recipient shall: (i) retainensure that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures are retained until at least one (1) year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan GEF Trust Fund Grant Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) ; enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the Borrower shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR), which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower CESAN shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to the Project. (b) The Borrower CESAN shall: (i) have the its financial statements referred to in paragraph (abalance sheets, statements of income and expenses and related statements) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (ca) For all expenditures with respect Except as the Bank shall otherwise agree, CESAN shall, during the carrying out of the Project, substantially achieve, in a manner acceptable to which withdrawals the Bank, the targets for CESAN’s working ratio set forth in the letter, dated April 30, 2004, from the Loan Account were Report-based Disbursements or were made Project Steering Committee to the Bank (Ofício No. 010/2004), provided, however, that in no case CESAN’s total operating expenses for each of its fiscal years during the carrying out of the Project shall exceed the equivalent of 85% of its total operating revenues for such fiscal year. (b) Before October 31 in each of its fiscal years, CESAN shall, on the basis of statements forecasts prepared by CESAN and satisfactory to the Bank, review whether it would meet the requirements set forth in paragraph (a) above in respect of expendituresuch year and the next following fiscal year and shall furnish to the Bank the results of such review upon its completion. (c) If any such review shows that CESAN would not meet the requirements set forth in paragraph (a) above for CESAN’s fiscal years covered by such review, CESAN shall promptly take all necessary measures (including, inter alia, adjustments of the Borrower shallstructure or levels of its tariffs) in order to meet such requirements. (d) For purposes of this Section: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal The term "total operating revenues" means revenues from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures;sources related to operations. (ii) enable the Bank’s representatives The term "total operating expenses" means all expenses related to examine such records; and operations (iii) ensure that the relevant statements despesas de exploração), including administration, adequate maintenance, taxes and payments in lieu of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included taxes incurred in the audit generation of total operating revenues, and provision for each fiscal year bad debts (or other period agreed to by the Bankprovisão para devedores duvidosos) and amortization of capitalized operating costs (amortizações de despesas), referred to in paragraph (b) of this Sectionbut excluding depreciation, and interest and other charges on debt. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the Borrower shall prepare and furnish to Except as the Bank a financial monitoring reportshall otherwise agree, in form and substance satisfactory to CESAN shall not, during the Bank (the FMR), which: (i) sets forth sources and uses carrying out of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end incur any debt unless a reasonable forecast of the period covered by said reportrevenues and expenditures of CESAN shows that the estimated net revenues of CESAN for each fiscal year during the term of the debt to be incurred shall be at least 1.5 times the estimated debt service requirements of CESAN in such year on all debt of CESAN including the debt to be incurred. (b) The first FMR shall be furnished to For the Bank not later than 45 days after the end purposes of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.this Section:

Financial Covenants. (a) The Borrower shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to the Project. (b) The Borrower shall: (i) have the its financial statements referred to in paragraph (abalance sheets, statements of income and expenses and related statements) of this Section for each fiscal year (year, or other period agreed to by the Bank) , audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, and ; (B) except as the Bank shall otherwise agree, an unqualified audit opinion on such statements by said auditors, in scope and detail auditors satisfactory to the Bank; and (C) certifications by auditors and the Borrower’s management on the continued compliance with the criteria set forth in Section 4.03 of this Agreement; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 paragraph 2 (b) of Schedule 5 to this Agreement, Agreement the Borrower shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter. Section 4.03. Except as the Bank shall otherwise agree, the Borrower shall, during the implementation of the Project, take such steps satisfactory to the Bank as shall be necessary to maintain the following indicators of sound financial performance: (a) minimum risk-weighted capital (as defined by IFRS and NBU) adequacy ratio of at least 10%; (b) single-insider lending exposure not exceeding 5% of the Borrower’s IFRS based regulatory capital; aggregate insider lending exposure not exceeding 30% of the Borrower’s IFRS based regulatory capital; single exposure per single borrower not exceeding 25% of the Borrower’s IFRS based regulatory capital; total large exposures not exceeding 8 times the Borrower’s IFRS based regulatory capital; total foreign currency position not exceeding 35% (including maximum 30% long open currency position and 5% short open currency position); liquid assets1 not less than 25% of the total assets; (c) continues to operate on a profitable basis; and (d) is in compliance with applicable banking regulations and prudential regulations of the Guarantor as duly certified by the Borrower every six months.

Financial Covenants. (a) The Borrower shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to the Project. (b) The Borrower shall: (i) have the its financial statements referred to in paragraph (abalance sheets, statements of income and expenses and related statements) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower Borrower, through FHC, shall: (i) retain, until at least one (1) year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 paragraph 10(b) of Schedule 5 to this Agreement, the Borrower through FHC, shall prepare and furnish to the Bank a financial monitoring reportreport (FMR), in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) : sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) ; describes physical progress in the Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) and sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 forty-five (45) days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 forty-five (45) days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Hokimiyat of Tashkent shall establish and maintain a financial management system acceptable to the Bank in the PMU, including records and accounts, and prepare financial statements accounts adequate to reflect in accordance with consistently applied sound accounting standards acceptable practices its operations and financial condition and to the Bank, adequate to reflect register separately the operations, resources and expenditures related to the Project. (b) The Borrower Hokimiyat of Tashkent shall: (i) have the its records, accounts and financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with appropriate auditing principles consistently applied auditing standards acceptable to the Bankapplied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank)year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section above for such year (or such other period agreed to by the Bank), as so audited, audited and (B) an opinion on the report of such statements audit by said auditors, in auditors of such scope and in such detail satisfactory to as the BankBank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning such records said records, accounts and accounts, and financial statements as well as the audit of such financial statements, and concerning said auditorsthereof, as the Bank may shall from time to time reasonably request. (ca) For all Spetstrans shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition and to register separately the operations, resources and expenditures with respect related to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower Project. (b) Spetstrans shall: (i) retainhave its records, until at least one year after the Bank has received the audit report foraccounts and financial statements (balance sheets, or covering, the statements of income and expenses and related statements) for each fiscal year audited, in which accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expendituresBank; (ii) enable furnish to the Bank’s representatives Bank as soon as available, but in any case not later than six (6) months after the end of each such year, (A) certified copies of the financial statements referred to examine in paragraph (a) above for such recordsyear as so audited and (B) the report of such audit by said auditors of such scope and in such detail as the Bank shall have reasonably requested; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the Borrower shall prepare and furnish to the Bank a such other information concerning said records, accounts and financial monitoring reportstatements as well as the audit thereof, in form and substance satisfactory to as the Bank (the FMR), which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said reportshall from time to time reasonably request. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower CESAN shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to the Project. (b) The Borrower CESAN shall: (i) have the its financial statements referred to in paragraph (abalance sheets, statements of income and expenses and related statements) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (ca) For all expenditures with respect Except as the Bank shall otherwise agree, CESAN shall, during the carrying out of the Project, substantially achieve, in a manner acceptable to which withdrawals the Bank, the targets for CESAN's working ratio set forth in the letter, dated April 30, 2004, from the Loan Account were Report-based Disbursements or were made Project Steering Committee to the Bank (Ofício No. 010/2004), provided, however, that in no case CESAN's total operating expenses for each of its fiscal years during the carrying out of the Project shall exceed the equivalent of 85% of its total operating revenues for such fiscal year. (b) Before October 31 in each of its fiscal years, CESAN shall, on the basis of statements forecasts prepared by CESAN and satisfactory to the Bank, review whether it would meet the requirements set forth in paragraph (a) above in respect of expendituresuch year and the next following fiscal year and shall furnish to the Bank the results of such review upon its completion. (c) If any such review shows that CESAN would not meet the requirements set forth in paragraph (a) above for CESAN's fiscal years covered by such review, CESAN shall promptly take all necessary measures (including, inter alia, adjustments of the Borrower shallstructure or levels of its tariffs) in order to meet such requirements. (d) For purposes of this Section: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal The term "total operating revenues" means revenues from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures;sources related to operations. (ii) enable the Bank’s representatives The term "total operating expenses" means all expenses related to examine such records; and operations (iii) ensure that the relevant statements despesas de exploração), including administration, adequate maintenance, taxes and payments in lieu of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included taxes incurred in the audit generation of total operating revenues, and provision for each fiscal year bad debts (or other period agreed to by the Bankprovisão para devedores duvidosos) and amortization of capitalized operating costs (amortizações de despesas), referred to in paragraph (b) of this Sectionbut excluding depreciation, and interest and other charges on debt. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the Borrower shall prepare and furnish to Except as the Bank a financial monitoring reportshall otherwise agree, in form and substance satisfactory to CESAN shall not, during the Bank (the FMR), which: (i) sets forth sources and uses carrying out of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end incur any debt unless a reasonable forecast of the period covered by said reportrevenues and expenditures of CESAN shows that the estimated net revenues of CESAN for each fiscal year during the term of the debt to be incurred shall be at least 1.5 times the estimated debt service requirements of CESAN in such year on all debt of CESAN including the debt to be incurred. (b) The first FMR shall be furnished to For the Bank not later than 45 days after the end purposes of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.this Section:

Financial Covenants. (a) The Borrower shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the BankAssociation, adequate to reflect the operations, resources and expenditures related to the ProjectEducation NTP and to the Program. (b) The Borrower shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the BankAssociation) audited, in accordance with consistently applied auditing standards acceptable to the BankAssociation, by independent auditors acceptable to the BankAssociation; (ii) furnish to the Bank Association as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the BankAssociation), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the BankAssociation), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the BankAssociation; and (iii) furnish to the Bank Association such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Credit Account were Report-based Disbursements or were made on the basis of statements reports referred to in Part II.2 of expenditureSchedule 1 to this Agreement (Report-based Disbursements), the Borrower shall: (i) retain, until at least one year after the Bank Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the BankAssociation’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and such reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the BankAssociation), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 paragraph 9 of Schedule 3 to this Agreement, the Borrower shall prepare and furnish to the Bank Association a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Association, which: (i) sets forth the sources and uses of funds for each Selected Sub- component of the Project, both cumulatively and for the period covered by said reportEducation NTP, showing separately the actual and planned uses of funds, disaggregated by province; (ii) physical progress in the implementation of each Selected Sub- component, showing the actual and planned implementation, disaggregated by province and by district; and (iii) the sources and uses of funds provided by for Part B of the LoanProgram, and explains explaining variances between the actual and planned uses of such funds; (ii) describes physical , and describing the progress in Project implementation, both cumulatively the implementation of said Part B and for explaining the period covered by said report, and explains variances between the planned and actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank Association not later than 45 days after the end of the first calendar quarter after the Effective DateFiscal Year 2005, and shall cover the period from the incurrence of the first expenditure under the Project Program through the end of such first calendar quarterFiscal Year 2005; thereafter, each FMR shall be furnished to the Bank Association not later than 45 forty-five (45) days after each subsequent calendar quartersemester, and shall cover the period not covered by the previous FMR until the end of such calendar quartersemester.

Financial Covenants. (a) The Borrower shall establish and maintain maintain, or cause to be maintained, a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare prepare, or cause to be prepared, financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower Borrower, through the Federal Registration Service and with the assistance of the PIU, shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shallshall cause the Federal Registration Service and the PIU to: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 Part B of Schedule 5 to this Agreement, Agreement the Borrower shall cause the Federal Registration Service and the PIU to prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementationimplementation ; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Borrower, through MOH shall, and shall establish and cause FISDL to, maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shallshall cause FISDL to: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six four months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements Disbursements) or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such reports and statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 3.06 of this Agreement, the Borrower shall cause FISDL to prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) : sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) ; describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) and sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter four month period after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarterfour month period; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarterfour month period, and shall cover the period not covered by the previous FMR until the end of such calendar quarterfour month period.

Financial Covenants. (a) The Borrower shall establish and cause Chongqing to maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shallshall cause Chongqing to: (i) have the records, accounts and financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accountsrecords, accounts and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retainensure that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures are retained until at least one (1) year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in any audit that the audit for each fiscal year (or other period agreed Bank may have requested pursuant to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the Borrower shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR), which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Ahwaz Water Company shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to its Parts of the Project. (b) The Borrower Ahwaz Water Company shall: (i) have the financial statements referred to in paragraph (a) of this Section (balance sheets, statements of income and expenses and related statements), as well as its own financial statements, for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank), (A) certified copies of the financial statements referred to in paragraph (a) of this Section Section, for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, accounts and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the Borrower The Ahwaz Water Company shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for its Parts of the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementationthe implementation of its Parts of the Project, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under its Parts of the Project, as at the end of the period covered by said report. (b) The first FMR Financial Monitoring Report shall be furnished to the Bank not later than 45 forty five (45) days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under its Parts of the Project through the end of such first calendar quarter; thereafter, each FMR Financial Monitoring Report shall be furnished to the Bank not later than 45 forty five (45) days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter. (a) The Ahwaz Water Company shall, not later than the Effective Date until completion of the Project, open, and thereafter maintain, in Rial a Project account in the name of the Ahwaz Water Company. The Ahwaz Project Account shall be used exclusively by the Ahwaz Water Company to meet the expenditures of Parts A.1, A.2, B.1, C.1 and D.2(a) of the Project not financed from proceeds of the Loan. (b) The Ahwaz Water Company shall, not later than the Effective Date, pay into the Ahwaz Project Account an initial deposit equivalent to $500,000 representing the first six (6) months of the Ahwaz Water Company’s contribution to the costs of Parts A.1, A.2, B.1, C.1 and D.2(a) of the Project; and thereafter deposit into the Ahwaz Project Account, not later than March 21 of the calendar year until completion of the Project, the amount of the Ahwaz Water Company’s annual contribution to the said costs for such calendar year, as determined by agreement between the Ahwaz Water Company and the Bank. (c) The Ahwaz Water Company shall ensure that all amounts deposited into the Ahwaz Project Account, in accordance with the provisions of this Section, shall be used exclusively to finance the Ahwaz Water Company’s counterpart contribution to the expenditures of Parts A.1, A.2, B.1, C.1 and D.2(a) of the Project not otherwise financed out of the proceeds of the Loan. (a) Except as the Bank shall otherwise agree, the Ahwaz Water Company shall maintain, for each of its fiscal years after its fiscal year ending on March ,2005, a ratio of total operating expenses, excluding depreciation and financial charges, to total operating revenues, acceptable to the Bank, so as to enable the Ahwaz Water Company to achieve, by March 21, 2009, a ratio of total operating expenses, excluding depreciation and financial charges, to total operating revenues not higher than 0.75. (b) Before March 21 in each of its fiscal years, the Ahwaz Water Company shall, on the basis of forecasts prepared by Ahwaz Water Company and satisfactory to the Bank, review whether it would meet the requirements set forth in paragraph (a) above in respect of such year and the next following fiscal year, and shall furnish to the Bank the results of such review upon its completion. (c) If any such review shows that the Ahwaz Water Company would not meet the requirements set forth in paragraph (a) above for the Ahwaz Water Company's fiscal years covered by such review, the Ahwaz Water Company shall promptly take all necessary measures (including, without limitation, adjustments of the structure or levels of its rates) in order to meet such requirements. (d) For the purposes of this Section: (i) The term "total operating expenses" means all expenses related to operations, including administration, adequate maintenance, taxes and payments in lieu of taxes, and provision for depreciation of the average current gross value of the Ahwaz Water Company’s fixed assets in operation, or other basis acceptable to the Bank, but excluding financial charges. (ii) The term "total operating revenues" means revenues from all sources related to operations. (iii) The average current gross value of the Ahwaz Water Company ’s fixed assets in operation shall be calculated as one half of the sum of the gross value of the Ahwaz Water Company ’s fixed assets in operation at the beginning and at the end of the fiscal year, as valued from time to time in accordance with sound and consistently maintained methods of valuation satisfactory to the Bank. Section 4.05. The Ahwaz Water Company shall: (a) reduce its accounts receivable for water and wastewater sales so that, commencing on March 21, 2009, such accounts receivable shall not exceed the sum of the amounts billed by the Ahwaz Water Company during the four (4) months immediately preceding the date on which such calculation is made; and (b) reduce the level of its unaccounted-for water so that, commencing on March 21, 2009, such level shall not exceed 27% of the water supplied by the Ahwaz Water Company.

Financial Covenants. (a) The Borrower shall establish and cause Hunan to maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shall: (i) shall cause Hunan to: have the records, accounts and financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) ; furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) and furnish to the Bank such other information concerning such records and accountsrecords, accounts and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retainensure that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures are retained until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) ; enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the Borrower shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR), which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower EDM shall establish and maintain a financial management system acceptable to the Bank in the PMU, including records and accountsaccounts adequate to reflect, and prepare financial statements in accordance with consistently applied sound accounting standards acceptable to the Bankpractices, adequate to reflect the operations, resources its operations and expenditures related to the Projectfinancial condition. (b) The Borrower EDM shall, starting in fiscal year 1992: (i) have the its records, accounts and financial statements referred to in paragraph (abalance sheets, statements of income and expenses and related statements) of this Section and Special Account A for each fiscal year (or other period agreed to by the Bank) audited, in accordance with appropriate auditing principles consistently applied auditing standards acceptable to the Bankapplied, by independent auditors acceptable to the BankAssociation; (ii) furnish to the Bank Association as soon as available, but in any case not later than six nine months after the end of each such year (or such other period agreed to by the Bank), year: (A) certified copies of the its financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on the report of such statements audit by said auditors, in of such scope and in such detail satisfactory to as the BankAssociation shall have reasonably requested; and (iii) furnish to the Bank Association such other information concerning such records said records, accounts and accounts, and financial statements as well as the audit of such financial statements, and concerning said auditorsthereof, as the Bank may Association shall from time to time reasonably request. (a) Except as the Association shall otherwise agree, EDM shall produce: (i) for its fiscal year 1989, funds from internal sources equivalent to not less than twenty percent (20%) of EDM’s capital expenditures incurred for that year; and (ii) for the fiscal years 1990 and thereafter, funds from internal sources equivalent to not less than thirty percent (30%) of the annual average of EDM’s capital expenditures incurred, or expected to be incurred, for that year and the next two following fiscal years. (b) Before September 30 in each of its fiscal years, EDM shall, on the basis of forecasts prepared by EDM and satisfactory to the Association, review whether it would meet the requirements set forth in paragraph (a) in respect of such year and the next following fiscal year, and shall furnish to the Association a copy of such review upon its completion. (c) If any such review shows that EDM would not meet the requirements set forth in paragraph (a) for EDM’s fiscal years covered by such review, EDM shall promptly take all necessary measures (including, but not limited to, adjustments of the structure or levels of its rates) in order to meet such requirements. (d) For the purposes of this Section: (i) The term "funds from internal sources" means the difference between: (A) the sum of revenues from all sources related to operations, consumer deposits and consumer contributions in aid of construction, net nonoperating income and any reduction in working capital other than cash; and (B) the sum of all expenses related to operations, including administration, adequate maintenance and taxes and payments in lieu of taxes (excluding provision for depreciation and other non-cash operating charges), debt service requirements, all cash dividends and other cash distributions of surplus, increase in working capital other than cash and cash outflows other than capital expenditures. (ii) The term "net non-operating income" means the difference between: (A) revenues from all sources other than those related to operations; and (B) expenses, including taxes and payments in lieu of taxes, incurred in the generation of revenues in (A) above. (iii) The term ’working capital other than cash" means the difference between current assets excluding cash and current liabilities at the end of each fiscal year. (iv) The term "current assets excluding cash’ means all assets other than cash which could, in the ordinary course of business, be converted into cash within twelve months, including accounts receivable, marketable securities, inventories and pre-paid expenses properly chargeable to operating expenses within the next fiscal year. (v) The term "current liabilities" means all liabilities which will become due and payable or could, under circumstances then existing, be called for payment within twelve months, including accounts payable, customer advances, debt service requirements, taxes and payments in lieu of taxes, and dividends. (vi) The term "debt service requirements’ means the aggregate amount of repayments (including sinking fund payments, if any) of, and interest and other charges on, debt. (vii) The term ’capital expenditures’ means all expenditures with respect incurred on account of fixed assets, including interest charged to which withdrawals from construction, related to operations. (viii) Whenever, for the Loan Account were Report-based Disbursements or were purposes of this Section, it shall be necessary to value, in terms of the currency of the Borrower, debt payable in another currency, such valuation shall be made on the basis of statements the prevailing lawful rate of expenditureexchange at which such other currency is, at the Borrower shall: (i) retaintime of such valuation, until at least one year after obtainable for the Bank has received the audit report forpurposes of servicing such debt, or coveringor, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed absence of such rate, on the basis of a rate of exchange acceptable to by the Bank), referred to in paragraph (b) of this SectionAssociation. (a) Without limitation upon Except as the Borrower’s progress reporting obligation set out in Section 3.04 Association shall otherwise agree, EDM shall not incur any debt, unless the net revenues of this Agreement, EDM for the Borrower shall prepare and furnish fiscal year immediately preceding the date of such incurrence or for a later twelve-month period ended prior to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR), which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses date of such funds; (ii) describes physical progress in Project implementationincurrence, both cumulatively and whichever is the greater, shall be at least 1.5 times the estimated maximum debt service requirements of EDM for any succeeding fiscal year on all debt of EDM, including the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said reportdebt to be incurred. (b) The first FMR shall be furnished to For the Bank not later than 45 days after the end purposes of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.this Section:

Financial Covenants. (a) The Borrower shall establish and cause NAFIN to maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shallshall cause NAFIN to: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shallshall cause NAFIN to: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such reports and statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 Sections 3.06 and 3.07 of this Agreement, the Borrower shall through CNA prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter semester after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quartersemester; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quartersemester, and shall cover the period not covered by the previous FMR until the end of such calendar quartersemester.

Financial Covenants. (a) The Borrower Recipient shall establish and maintain or cause to be maintained a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower Recipient shall: (i) have the financial statements referred to in sub-paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards standards, acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank), : (A) certified copies of the financial statements referred to in sub-paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, accounts and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time shall have reasonably requestrequested. (c) For all expenditures with respect to which withdrawals from the Loan GEF Trust Fund Grant Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower Recipient shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan GEF Trust Fund Grant Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, expenditures are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 of paragraph 8 Schedule 4 to this Agreement, the Borrower Recipient shall prepare and furnish to the Bank a consolidated financial monitoring reportreport (integrating the information provided in the reports submitted by Tianjin and the Project Cites), in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) which sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the LoanGEF Trust Fund Grant, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR such financial monitoring report shall be furnished to the Bank not later than 45 forty-five (45) days after the end of the first calendar quarter semester after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quartersemester; thereafter, each FMR financial monitoring report shall be furnished to the Bank not later than 45 forty-five (45) days after each subsequent calendar quartersemester, and shall cover the period not covered by the previous FMR until the end of such calendar quartersemester.

Financial Covenants. (a) The Borrower shall establish and cause Sichuan to maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shallshall cause Sichuan to: (i) have the records, accounts and financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accountsrecords, accounts and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retainensure that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures are retained until at least one (1) year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in any audit that the audit for each fiscal year (or other period agreed Bank may have requested pursuant to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the Borrower shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR), which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Borrower, through CNA, shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower Borrower, through CNA, shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements Disbursements) or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such reports and statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 3.07 of this Agreement, the Borrower Borrower, through CNA, shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter semester after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quartersemester; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quartersemester, and shall cover the period not covered by the previous FMR until the end of such calendar quartersemester.

Financial Covenants. (a) The Borrower shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the Bank, consistently applied, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shall: (i) have the records, accounts and financial statements referred to in paragraph (a) of this Section and the records and accounts for the Special Account for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), year: (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements statements, records and accounts and report of such audit, by said auditors, in of such scope and in such detail satisfactory as the Bank shall have reasonably requested, including as part of the information to be provided in each such report, a management letter concerning the BankBorrower’s internal controls and a special report on compliance with the procurement provisions set forth in Schedule 4 to this Agreement; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statementsthereof, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of Project Management Reports or statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and separate accounts reflecting such expenditures; (ii) retain, until at least one year after the Bank has received the audit report for, or covering, for the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iiiii) enable the Bank’s representatives to examine such records; and (iiiiv) ensure that the relevant statements of expenditure such records and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, accounts are included in the annual audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this SectionSection and that the report of such audit contains a separate opinion by said auditors as to whether the Project Management Reports or statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. Section 4.02. (a) Without limitation upon the Borrower’s progress reporting obligation set out in provisions of Section 3.04 4.01 of this Agreement, the Borrower shall prepare and furnish carry out a time-bound action plan acceptable to the Bank a for the strengthening of the financial monitoring reportmanagement system referred to in paragraph (a) of said Section 4.01 in order to enable the Borrower, in form and substance satisfactory not later than three months after the Effective Date, or such later date as the Bank shall agree, to prepare quarterly Project management reports, acceptable to the Bank (the FMR)Bank, each of which: (i) (A) sets forth actual sources and uses applications of funds for the Project, both cumulatively and for the period covered by said report, showing and projected sources and applications of funds for the Project for the six-month period following the period covered by said report; and (B) shows separately funds provided expenditures financed out of the proceeds of the Loan during the period covered by said report and expenditures proposed to be financed out of the Loan, and explains variances between proceeds of the actual and planned uses of such fundsLoan during the six-month period following the period covered by said report; (ii) (A) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, ; and (B) explains variances between the actual and planned Project implementationpreviously forecast implementation targets; and (iii) sets forth the status of procurement under the ProjectProject and expenditures under contracts financed out of the proceeds of the Loan, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and shall: (i) through DOH, maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project; and (ii) cause PHIC to maintain a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to Part A of the Project. (b) The Borrower shall: (i) (A) through DOH have the its financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; and (B) cause PHIC to have its financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year (or other period agreed to by the Bank), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements Disbursements) or were made on the basis of statements of expenditure, the Borrower shall, through DOH: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such reports and statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 paragraph 9 of Schedule 5 to this Agreement, the Borrower shall shall, through DOH, prepare and furnish to the Bank a financial monitoring reportFinancial Monitoring Report, in form and substance satisfactory to the Bank (the FMR), which: (i) : sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) ; describes physical progress in Project implementationimplementation of the Project, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) and sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR Financial Management Report shall be furnished to the Bank not later than 45 forty-five (45) days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 forty-five (45) days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Republika Srpska shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, in accordance with consistently applied accounting standards a format acceptable to the Bank, Association adequate to reflect the operations, resources and expenditures related to in connection with the carrying out of Part B of the Project. (b) The Borrower Republika Srpska shall: (i) have the its records, accounts and financial statements referred to in paragraph (abalance sheets, statements of income and expenses and related statements) of this Section and the records and accounts for the Special Accounts for each fiscal year (or other period agreed to by the Bank) audited, in accordance with appropriate auditing principles consistently applied auditing standards acceptable to the Bankapplied, by independent auditors acceptable to the BankAssociation; (ii) furnish to the Bank Association, as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank), year: (A) certified copies of the financial statements referred to in paragraph (a) of this Section above for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on the report of such statements audit by said auditors, in of such scope and in such detail satisfactory to as the BankAssociation shall have reasonably requested; and (iii) furnish to the Bank Association such other information concerning such said records and accounts, accounts and financial statements as well as the audit of such financial statements, and concerning said auditorsthereof, as the Bank may Association shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. Section 3.02. (a) Without limitation upon the Borrower’s progress reporting obligation set out in provisions of Section 3.04 3.01 of this Agreement, the Borrower Republika Srpska shall prepare and furnish carry out a time-bound action plan acceptable to the Bank a Association for the strengthening of the financial monitoring reportmanagement system referred to in paragraph (a) of said Section 3.01 in order to, in form and substance satisfactory not later than February 15, 2001, or such later date as the Association shall agree, prepare quarterly Project management reports, acceptable to the Bank (the FMR)Association, each of which: (i) (A) sets forth actual sources and uses applications of funds for the Project, both cumulatively and for the period covered by said report, showing separately and projected sources and applications of funds provided for Part B of the Project for the six-month period following the period covered by the Loansaid report, and explains variances between (B) shows separately expenditures financed out of the actual proceeds of the Credit during the period covered by said report and planned uses expenditures proposed to be financed out of such fundsthe proceeds of the Credit during the six-month period following the period covered by said report; (ii) (A) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and (B) explains variances between the actual and planned Project implementationpreviously forecast implementation targets; and (iii) sets forth the status of procurement under Part B of the ProjectProject and expenditures under contracts financed out of the proceeds of the Credit, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain maintain, through MAFWE, a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards a format acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower Borrower, through MAFWE, shall: (i) have the records, accounts and financial statements referred to in paragraph (a) of this Section and the records and accounts for the Project and Special Account for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank)year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on such statements statements, records and accounts and report of such audit, by said auditors, in of such scope and in such detail satisfactory to as the BankBank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statementsthereof, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower Borrower, through MAFWE, shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and separate accounts reflecting such expenditures; (ii) retain, until at least one year after the Bank has received the audit report for, or covering, for the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iiiii) enable the Bank’s representatives to examine such records; and (iiiiv) ensure that the relevant statements of expenditure such records and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, accounts are included in the annual audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this SectionSection and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 paragraph 1 (b) of Schedule 5 to this Agreement, the Borrower shall prepare prepare, through MAFWE, and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) : sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, Loan and explains variances between the actual and planned uses of such funds; (ii) ; describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) and sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 forty five (45) days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower CONAFOR shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to the Project. (b) The Borrower CONAFOR shall: (i) have the its financial statements referred to in paragraph (abalance sheets, statements of income and expenses and related statements) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section Section, for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, accounts and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. Section 4.02. (a) Without limitation upon the BorrowerCONAFOR’s progress reporting obligation obligations set out in Section 3.04 2.06 of this Agreement, the Borrower CONAFOR shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower NEA shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the BankAssociation, consistently applied, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to Part C of the Project. (b) The Borrower NEA shall: (i) have the its records, accounts and financial statements referred to in paragraph (abalance sheets, statements of income and expenses and related statements) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the BankAssociation, consistently applied, by independent auditors acceptable to the BankAssociation; (ii) furnish to the Bank Association as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank)year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section Section, for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on such statements and report of such audit, by said auditors, in of such scope and in such detail satisfactory to as the BankAssociation shall have reasonably requested; and (iii) furnish to the Bank Association such other information concerning such records records, accounts and accountsfinancial statements, and the audit of such financial statementsthereof, and concerning said auditors, as the Bank Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from , including, without limitation of the Loan Account were Report-based Disbursements or were made on the basis of foregoing, audited Project accounts and financial statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year as soon as available, but not later than six (or other period agreed to by 6) months after the Bank), referred to in paragraph (b) end of this Sectionsuch year. (a) Without limitation upon the BorrowerNEA’s progress reporting obligation obligations set out in Section 3.04 paragraph 3 of Schedule 2 to this Agreement, the Borrower NEA shall prepare and furnish to the Bank Association a financial monitoring reportFinancial Monitoring Report (FMR), in form and substance satisfactory to the Bank (the FMR)Association, which: (i) sets forth sources and uses of funds for Part C of the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the LoanFinancing, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under Part C of the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank Association not later than 45 days after the end of the first calendar quarter Fiscal Year trimester after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarterFiscal Year trimester; thereafter, each FMR shall be furnished to the Bank Association not later than 45 forty five (45) days after each subsequent calendar quarterFiscal Year trimester, and shall cover such Fiscal Year trimester. (a) Except as the period Association shall otherwise agree, NEA shall not covered by incur any debt unless the previous FMR until net revenues of NEA for the end fiscal year immediately preceding the date of such calendar quarterincurrence, shall be at least 1.2 times the estimated maximum debt service requirements of NEA for any succeeding fiscal year on all debt of NEA including the debt to be incurred. (b) For the purposes of this Section:

Financial Covenants. (a) The Borrower Borrower, through SEP, shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to Parts A, B and C of the Project. (b) The Borrower Borrower, through SEP, shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements Disbursements) or were made on the basis of statements of expenditure, the Borrower Borrower, through SEP, shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such reports and statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 3.07 of this Agreement, the Borrower Borrower, through SEP, shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) which sets forth sources and uses of funds for Parts A, B and C of the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter semester after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quartersemester; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quartersemester, and shall cover the period not covered by the previous FMR until the end of such calendar quartersemester.

Financial Covenants. (a) The Borrower shall establish and maintain maintain, or cause to be maintained, a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare prepare, or cause to be prepared, financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower Borrower, through the Federal Registration Service and with the assistance of the PIU, shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shallshall cause the Federal Registration Service and the PIU to: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 Part B of Schedule 5 to this Agreement, Agreement the Borrower shall cause the Federal Registration Service and the PIU to prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) ; describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementationimplementation ; and (iii) and sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Borrower, through the PCU, shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower Borrower, through the PCU, shall: (i) have the financial statements referred to in paragraph (a) of this Section Section, including for each fiscal year Fiscal Year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, Bank by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditorsstatements, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower Borrower, through the PCU, shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year Fiscal Year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (Fiscal Year or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 Part C of Schedule 5 to this Agreement, the Borrower Borrower, through the PCU, shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 forty-five (45) days after the end of the first calendar quarter semester after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quartersemester; thereafter, each FMR shall be furnished to the Bank not later than 45 forty-five (45) days after each subsequent calendar quartersemester, and shall cover the period not covered by the previous FMR until the end of such calendar quartersemester.

Financial Covenants. (a) The Borrower shall establish and cause NAFIN: (i) to maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, ; and (ii) to prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the its operations, resources and expenditures related to the Project. (b) The Borrower shall: (i) shall cause NAFIN: to have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) ; to furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) and to furnish to the Bank such other information concerning such records and accountsrecords, accounts and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shallshall cause NAFIN to: (i) retainensure that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures are retained until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) ; enable the Bank’s representatives to examine such records; and (iii) and ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in any audit that the audit for each fiscal year (or other period agreed Bank may have requested pursuant to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in Section 3.04 of this Agreement, the Borrower shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR), which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and shall, as part of the MIS, maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Bank), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 A.4 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. Section 4.02. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 3.05 (b) of this Agreement, the Borrower shall prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR), which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by the Loan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower shall Recipient shall, no later than September 1, 2005, establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the BankAssociation, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower Recipient shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) Association), audited, in accordance with consistently applied auditing standards acceptable to the BankAssociation, by independent auditors acceptable to the BankAssociation; (ii) furnish to the Bank Association as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the BankAssociation), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the BankAssociation), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the BankAssociation; and (iii) furnish to the Bank Association such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Grant Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower Recipient shall: (i) retain, until at least one year after the Bank Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Grant Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the BankAssociation’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the BankAssociation), referred to in paragraph (b) of this Section. (a) Without limitation upon the BorrowerRecipient’s progress reporting obligation obligations set out in Section 3.04 paragraph C of Schedule 4 to this Agreement, the Borrower Recipient shall prepare and furnish to the Bank Association a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Association, which: (i) : sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the LoanGrant, and explains variances between the actual and planned uses of such funds; (ii) ; describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) and sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank Association not later than 45 forty-five (45) days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank Association not later than 45 forty-five (45) days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.

Financial Covenants. (a) The Borrower TUBITAK/UME shall establish and maintain a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare financial statements statements, in accordance with consistently applied accounting standards a format acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to and in connection with the carrying out of Part B of the Project. (b) The Borrower TUBITAK/UME shall: (i) have the financial statements records and accounts referred to in paragraph (a) of this Section and the records and accounts for the Special Account for each fiscal year (or other period agreed to by the Bank) audited, in accordance with appropriate auditing principles consistently applied auditing standards acceptable to the Bankapplied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank Bank, as soon as available, but in any case not later than six (6) months after the end of each such year (or year, the report of such other period agreed to by the Bank), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, and (B) an opinion on such statements audit by said auditors, in of such scope and in such detail satisfactory to as the BankBank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning such said records and accounts, accounts and financial statements as well as the audit of such financial statements, and concerning said auditorsthereof, as the Bank may shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation set out in provisions of Section 3.04 4.01 of this Agreement, the Borrower TUBITAK/UME shall prepare and furnish carry out a time-bound action plan acceptable to the Bank a for the strengthening of the financial monitoring reportmanagement system referred to in paragraph (a) of said Section 4.01 in order to enable TUBITAK/UME, in form and substance satisfactory not later than September 30, 1999, or such later date as the Bank shall agree, to prepare quarterly Project Management Reports, acceptable to the Bank (the FMR)Bank, each of which: (i) (A) sets forth actual sources and uses applications of funds for Part B of the Project, both cumulatively and for the period covered by said report, showing separately and projected sources and applications of funds provided for Part B of the Project for the six-month period following the period covered by the Loansaid report, and explains variances between (B) shows separately expenditures financed out of the actual proceeds of the Loan during the period covered by said report and planned uses expenditures proposed to be financed out of such fundsthe proceeds of the Loan during the six-month period following the period covered by said report; (ii) (A) describes physical progress in Part B of the Project implementation, both cumulatively and for the period covered by said report, and (B) explains variances between the actual and planned Project implementationpreviously forecast implementation targets; and (iii) sets forth the status of procurement under Part B of the ProjectProject and expenditures under contracts financed out of the proceeds of the Loan, as at the end of the period covered by said report. (b) The first FMR Upon the completion of the action plan referred to in paragraph (a) of this Section, TUBITAK/UME shall be furnished prepare, in accordance with guidelines acceptable to the Bank, and furnish to the Bank not later than 45 forty-five (45) days after the end of the first each calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the a Project through the end of Management Report for such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarterperiod.

Financial Covenants. (a) The Borrower shall establish and maintain maintain, or cause to be maintained, a financial management system acceptable to the Bank in the PMUsystem, including records and accounts, and prepare prepare, or cause to be prepared, financial statements in accordance with consistently applied accounting standards acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower through the Cadastre Agency and with the assistance of the PIU shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Bank) ), audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or such other period agreed to by the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were Report-based Disbursements or were made on the basis of statements of expenditure, the Borrower shallshall cause the Cadastre Agency and the PIU to: (i) retain, until at least one year after the Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Bank’s representatives to examine such records; and (iii) ensure that the relevant such statements of expenditure and reports referred to in Part A.5 of Schedule 1 to this Agreement, as the case may be, are included in the audit for each fiscal year (or other period agreed to by the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligation obligations set out in Section 3.04 Part B of Schedule 5 to this Agreement, Agreement the Borrower shall cause the Cadastre Agency and the PIU to prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank (the FMR)Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided by under the Loan, and explains variances between the actual and planned uses of such funds; (ii) ; describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) and sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR until the end of such calendar quarter.