Common use of Financial Covenants Clause in Contracts

Financial Covenants. (a) The Borrower shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Association, 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 Association) audited, in accordance with consistently applied auditing standards acceptable to the Association, by independent auditors acceptable to the Association; (ii) furnish to the 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 Association), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Association; and (iii) furnish to the Association such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain or maintain, and shall cause to be established and maintained maintained, a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Association, 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 Association) ), audited, in accordance with consistently applied auditing standards acceptable to the Association, by independent auditors acceptable to the Association; (ii) furnish to the 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 Association), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Association; and (iii) furnish to the Association such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI paragraph 7 of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower Borrower, through the Ministry of Labor, shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 AssociationBank) audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI 3.11 of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain or maintain, and shall cause to be established and maintained maintained, a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Association, 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 Association) ), audited, in accordance with consistently applied auditing standards acceptable to the Association, by independent auditors acceptable to the Association; (ii) furnish to the 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 Association), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Association; and (iii) furnish to the Association such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI paragraph 15 of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and shall, through the Supreme Court, maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards a format acceptable to the AssociationBank, 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 Association) audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, consistently applied, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association)year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), 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 AssociationBank shall have reasonably requested; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statementsthereof, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) Financial Monitoring Reports or on the basis of 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 Association Bank has received the audit report for, or covering, for the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iiiii) enable the AssociationBank’s representatives to examine such records; and (iiiiv) ensure that such reports records and statements of expenditure accounts are included in the annual audit for each fiscal year (or other period agreed to by the Association), 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 obligations set out in Section VI paragraph 9 of Schedule 4 5 to this Agreement, the Borrower shall shall, through the Supreme Court, prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring reportFinancial Monitoring Report, in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain or cause to be established and maintained a financial management systemsystem 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 AssociationBank, 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 AssociationBank) audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 AssociationBank), (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 AssociationBank), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit 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 Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and 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 AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations obligation set out in Section VI 3.04 of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank (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 under by the CreditLoan, 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 Association 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 Association 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 through SRA shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shallshall through SRA: (i) retain, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI 3.05 of Schedule 4 to this Agreement, the Borrower shall shall, through SRA prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain or cause to be established and maintained maintain, as part of the MIS, a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 AssociationBank) audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), 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 AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit 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 Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and 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 AssociationBank), referred to in paragraph (b) of this Section. Section 4.02. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI 3.03 of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank (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 under by the CreditLoan, 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 Association 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarterProject.

Financial Covenants. (a) The Borrower shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards a format acceptable to the Association, 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 Association) audited, in accordance with consistently applied auditing standards acceptable to the Association, consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the 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 Association)year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), 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 AssociationAssociation shall have reasonably requested; and (iii) furnish to the Association such other information concerning such records and accounts, and the audit of such financial statementsthereof, and concerning said auditors, as the Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or 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 Association has received the audit report for, or covering, for the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iiiii) enable the Association’s representatives to examine such records; and (iiiiv) ensure that such reports records and statements of expenditure accounts are included in the annual audit for each fiscal year (or other period agreed to by the Association), 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 obligations set out in Section VI paragraphs 5 and 6 of Schedule 4 to this Agreement, Agreement the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and shall cause LLDA to maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 AssociationBank), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure expenditures are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI paragraph C(1) of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring reportFMR, in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 Association) auditedBank), audited in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure), the Borrower shall: (i) retain, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 to this Agreement, 3.11 the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring reportFinancial Monitoring Report, in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower Recipient, through the Palestinian Authority, shall establish and cause PMU to maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards a format acceptable to the AssociationAdministrator, 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 Association) audited, in accordance with consistently applied auditing standards acceptable to the AssociationAdministrator, consistently applied, by independent auditors acceptable to the Association; Administrator; (ii) furnish to the Association 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 Association), year: (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), 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 AssociationAdministrator shall have reasonably requested; and and (iii) furnish to the Association Administrator such other information concerning such said records and accounts, and the audit of such financial statements, and concerning said auditorsthereof, as the Association may Administrator shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Grant Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or 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 Association Administrator has received the audit report for, or covering, for the fiscal year in which the last withdrawal from the Credit Grant Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; ; (iiiii) enable the AssociationAdministrator’s representatives to examine such records; and and (iiiiv) ensure that such reports records and statements of expenditure accounts are included in the annual audit for each fiscal year (or other period agreed to by the Association), 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 obligations set out in Section VI paragraph 5 (b) of Schedule 4 5 to this Agreement, the Borrower Recipient, through the Palestinian Authority, shall cause PMU to prepare and furnish or cause to be prepared and furnished to the Association Administrator a financial monitoring reportFinancial Monitoring Report, in form and substance satisfactory to the AssociationAdministrator, 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 under the Credit, 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 Association 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 Association Administrator not later than 45 forty-five (45) days after each subsequent calendar quarter, and shall cover 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 not incur Indebtedness (excluding a refinancing of Indebtedness outstanding as of the Issue Date in an amount less than or equal to the 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 maintain 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 cause any of its Subsidiaries may incur the following Indebtedness (in each case without compliance with the Total Net Leverage set forth in the foregoing 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 be established fund then current working capital requirements of the Company and maintained a financial management systemits 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 Association, 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 Association) audited, in accordance with consistently applied auditing standards acceptable to the Association, by independent auditors acceptable to the Association;such Test Period is less than Fiscal Year 2016 Revenue; and (ii) furnish to the Association 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 Association), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationFiscal Year 2016 Adjusted EBITDA; and (iii) furnish Total Net Leverage exceeds the Total Net Leverage Threshold; then, subject to the Association 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 Association 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 Credit Account 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 reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts Company and other documents) evidencing such expendituresits Subsidiaries; (iiB) enable the Association’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 such reports and statements effect any acquisition of expenditure are included in the audit for each fiscal year (assets or securities of any Person, or establish any new universities, schools or other period agreed to by the Association)institutions; provided, referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 to this Agreementhowever, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the Association, 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 under the 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.assets or

Financial Covenants. (a) The Borrower Recipient shall, and shall cause EPF to establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the Association, 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 Association) ), audited, in accordance with consistently applied auditing standards acceptable to the Association, by independent auditors acceptable to the Association; (ii) furnish to the 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 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 Association), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Association; and (iii) furnish to the Association such other information concerning such records and accountsrecords, accounts and the audit of such financial statements, and concerning said auditors, as the Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Grant Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or 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 Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Grant Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in any audit that the audit for each fiscal year (or other period agreed Association may have requested pursuant to by the Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 The Recipient shall, and shall cause EPF to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the CreditGrant, 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 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 Association not later than 45 forty-five (45) days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain or cause to be established in ADAP and maintained AFAP, as part of their respective MIS, a financial management system, including records and accounts, and prepare financial statements statements, in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 AssociationBank) audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 AssociationBank), (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 AssociationBank), 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 AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and the relevant statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 to this Agreement, the The Borrower shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank (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 under by the CreditLoan, 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 Association 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 Association 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 or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards a format acceptable to the AssociationBank, 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 AssociationBank) audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), as Bank) so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or 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 Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI 3.07 of Schedule 4 to this Agreement, the Borrower shall cause UNDP (pursuant to the UNDP Agreement) to prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, 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 under the Credit, 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 Association 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 Association Bank not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower Borrower, through the PMSU, shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 AssociationBank) audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), 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 AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accountsrecords, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower Borrower, through the PMSU, shall: : retain, and ensure that all records (icontracts, orders, invoices, bills, receipts and other documents) retainevidencing such expenditures are retained, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) ; enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain or cause to be established and maintained maintain, through MAFWE, a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards a format acceptable to the AssociationBank, 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 Association) audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, consistently applied, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association)year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), 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 AssociationBank shall have reasonably requested; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statementsthereof, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or 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 Association Bank has received the audit report for, or covering, for the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iiiii) enable the AssociationBank’s representatives to examine such records; and (iiiiv) ensure that such reports records and statements of expenditure accounts are included in the annual audit for each fiscal year (or other period agreed to by the Association), 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 obligations set out in Section VI paragraph 1 (b) of Schedule 4 5 to this Agreement, the Borrower shall prepare prepare, through MAFWE, and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, 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 under the Credit, 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 Association 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 Association Bank not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain or cause to be established and maintained maintain, through the PMU, a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shall, through the PMU: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shallshall through the PMU: (i) retain, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI paragraph (c) of Part C of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished furnish, through the PMU, to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 days after each subsequent calendar quartersemester, and shall cover such calendar quartersemester.

Financial Covenants. (a) The Borrower shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements accounts adequate to reflect in accordance with consistently applied sound accounting standards acceptable to the Association, adequate to reflect practices the operations, resources and expenditures related to in respect of the ProjectProject of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. (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 Association) audited, in accordance with consistently applied auditing standards acceptable to the Association, by independent auditors acceptable to the Association; (ii) furnish to the 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 Association), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Association; and (iii) furnish to the Association such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with sound accounting practices, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Association Bank has received the audit report for, or covering, for the fiscal year in which the last withdrawal from the Credit Loan Account or payment out of the Special Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures;; and (iiiii) enable the AssociationBank’s representatives to examine such records. (c) The Borrower shall: (i) have the records and accounts referred to in para- graph (a) of this Section including those for the Special Account for each fiscal year audited, in accordance with appropriate 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 year, 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 furnish to the Bank such reports other information concern- ing said records and statements of expenditure are included in accounts and the audit for each fiscal year (or other period agreed thereof as the Bank shall from time to by the Association), referred to in paragraph (b) of this Sectiontime reasonably request. (a) Without limitation upon The Borrower and the Bank shall, from time to time, at the request of either party, exchange views with regard to the Borrower’s progress reporting obligations set out gas and electricity pricing policies and its plans in Section VI of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the 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 respect of the period covered by said reportoverall development of the energy sector. (b) The first FMR shall be furnished Borrower agrees, as long as it exercises control over the setting of prices of energy companies, including Moldenergo and Moldovagas, to establish prices for gas, heat and electricity sold by such companies which would allow Moldenergo and Moldovagas to comply with the 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarterFinancial Action Plan.

Financial Covenants. (a) The Borrower shall establish maintain, and maintain or cause the MUB to be established and maintained maintain, a financial management system, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the Association, adequate to reflect the its operations, resources and expenditures related to the Project. (b) The Borrower shall: (i) , and shall cause the MUB 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 Association) audited, in accordance with consistently applied auditing standards acceptable to the Association, by independent auditors acceptable to the Association; (ii) ; furnish to the 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 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 Association), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Association; and (iii) and furnish to the Association such other information concerning such records and accountsrecords, accounts and the audit of such financial statements, and concerning said auditors, as the Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall, and shall cause the MUB 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 Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) ; enable the Association’s representatives to examine such records; and (iii) and ensure that such reports and statements of expenditure are included in any audit that the audit for each fiscal year (or other period agreed Association may have requested pursuant to by the Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 to this Agreement, the Borrower shall, and shall cause the MUB to, prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring reportFinancial Monitoring Report, in form and substance satisfactory to the 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 under the 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 Association not later than 45 forty five (45) days after the end of the first calendar quarter fiscal year 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 fiscal quarter; thereafter, each FMR shall be furnished to the Association not later than 45 days six (6) months after each subsequent calendar quarterhalf-year period, and shall cover such calendar quarterhalf-year period.

Financial Covenants. (a) The Borrower TNUDF shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements statements, in accordance with consistently applied accounting standards acceptable to the AssociationBank, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to Part B.1 of the Project. (b) The Borrower TNUDF shall: (iA) have the its financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the AssociationBank) audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (iiB) furnish to the Association 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 AssociationBank), (A1) certified copies of the financial statements referred to in paragraph (ai) of this Section Section, for such year (or such other period agreed to by the AssociationBank), as so audited, and (B2) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iiiC) furnish to the Association Bank such other information concerning such records and accounts, accounts and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. Section 4.02. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 to this Agreement, the Borrower TNUDF shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall cause PEC to establish not later than the Effective Date and thereafter maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the Association, adequate to reflect the its operations, resources and expenditures related to the Project. (b) The Borrower shallshall cause PEC to: (i) have the its financial statements and that referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Association) ), audited, in accordance with consistently applied auditing standards acceptable to the Association, by independent auditors acceptable to the Association; (ii) furnish to the 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 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 Association), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Association; and (iii) furnish to the Association such other information concerning such records and accountsrecords, accounts and the audit of such financial statements, and concerning said auditors, as the Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or 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 Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in any audit that the audit for each fiscal year (or other period agreed Association may have requested pursuant to by the Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 2 to this the Project Agreement, the Borrower shall cause PEC to prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the 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 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 Association not later than 45 forty five (45) days after each subsequent calendar quarter, and shall cover such calendar quarter. Section 4.03. The Borrower shall take all measures necessary on its part to ensure that PEC’s accounts receivable from the Borrower’s departments, public and semi-public enterprises and cooperatives shall not, except as the Association shall otherwise agree, exceed the equivalent of three months of PEC’s annual average electricity sales revenues.

Financial Covenants. (a) The Borrower CFM shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements statements, in accordance with consistently applied accounting standards acceptable to the Association, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to the Project. (b) The Borrower CFM 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 Fiscal Year (or other period agreed to by the Association) ), audited, in accordance with consistently applied auditing standards acceptable to the Association, by independent auditors acceptable to the Association; (ii) furnish to the 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 Association), (A) certified audited 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 Association), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Association; and (iii) furnish to the Association such other information concerning such records and accounts, accounts and the audit of such financial statements, and concerning said auditors, as the Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the BorrowerCFM’s progress reporting obligations set out in Section VI of Schedule 4 to this the Development Credit Agreement, the Borrower CFM shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the 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 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 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 cause CONACYT, through the PCU, to maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shallshall cause CONACYT 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 Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI 3.07 of Schedule 4 to this Agreement, the Borrower shall cause CONACYT, through the PCU, to prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 days after each subsequent calendar quartersemester, and shall cover such calendar quartersemester.

Financial Covenants. (a) The Borrower shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 AssociationBank) audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one (1) year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI paragraph 2(b) of Schedule 4 5 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring reportreport (FMR), in form and substance satisfactory to the AssociationBank , 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 under the CreditLoan, 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) 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 Association 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.forty-five

Financial Covenants. (a) The Borrower Shkoder shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements accounts adequate to reflect in accordance with consistently applied sound accounting standards acceptable to the Association, adequate to reflect the operations, resources practices its operations and expenditures related to the Projectfinancial condition. (b) The Borrower Shkoder 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 Association) audited, in accordance with appropriate auditing principles consistently applied auditing standards acceptable to the Associationapplied, by independent auditors acceptable to the Association; (ii) furnish to the 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 Association), year: (A) certified copies of the its financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), 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 AssociationAssociation shall have reasonably requested; and (iii) furnish to the 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 Association may shall from time to time reasonably request. (ca) For all Except as the Association shall otherwise agree, Shkoder shall produce, for each of its fiscal years after its fiscal year ending on December 31, 1995, funds from internal sources equivalent to not less than an amount equal to the local costs of Shkoder’s capital expenditures with respect estimated in advance at a level satisfactory to which withdrawals from the Credit Account were made Association. (b) Before September 30 in each of its fiscal years, Shkoder shall, on the basis of reports referred forecasts prepared by Shkoder and satisfactory to the Association, review whether it would meet the requirements set forth in Part A.5 paragraph (a) in respect of Schedule 1 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 Shkoder would not meet the requirements set forth in paragraph (a) for Shkoder’s fiscal years covered by such review, Shkoder shall promptly take all necessary measures (including, without limitation, reduction of power losses, and reduction of accounts receivables) in order to meet such requirements. (d) For the purposes of this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shallSection: (i) retainThe term "funds from internal sources" means the difference between: (A) the sum of revenues from all sources related to operations, until at least one year after consumer deposits and consumer contributions in aid of construction, net non-operating income and any reduction in working capital other than cash; and (B) the Association has received the audit report forsum of all expenses related to operations, or coveringincluding administration, the fiscal year adequate maintenance and taxes and payments in which the last withdrawal from the Credit Account was madelieu of taxes (excluding provision for depreciation and other non-cash operating charges), debt service requirements, all records (contracts, orders, invoices, bills, receipts cash dividends and other documents) evidencing such cash distributions of surplus, increase in working capital other than cash and other cash outflows other than capital expenditures;. (ii) enable The term "net non-operating income" means the Association’s representatives difference between: (A) revenues from all sources other than those related to examine such recordsoperations; and (iiiB) ensure that such reports expenses, including taxes and statements payments in lieu of expenditure are included taxes, incurred in the audit for each fiscal year generation of revenues in (or other period agreed to by the Association), referred to in paragraph (bA) of this Sectionabove. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the 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 term "working capital other than cash" means the status of procurement under the Project, as difference between current assets excluding cash and current liabilities at the end of the period covered by said reporteach fiscal year. (biv) The first FMR shall term "current assets excluding cash" means all assets other than cash which could in the ordinary course of business be furnished converted into cash within twelve months, including accounts receivable, marketable securities, inventories and pre-paid expenses properly chargeable to operating expenses within the Association not later than 45 days after the end 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 the first calendar quarter after the Effective Datetaxes, and shall cover dividends. (vi) The term "debt service requirements" means the period from the incurrence aggregate amount of the first expenditure under the Project through the end of such first calendar quarter; thereafterrepayments (including sinking fund payments, each FMR shall be furnished to the Association not later than 45 days after each subsequent calendar quarterif any) of, and shall cover such calendar quarterinterest and other charges on, debt.

Financial Covenants. (a) The Borrower Borrower, acting through MOH, shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards a format acceptable to the AssociationBank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower Borrower, acting through MOH, 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 Association) audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, consistently applied, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association)year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), 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 AssociationBank shall have reasonably requested; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statementsthereof, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower Borrower, acting through MOH, 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 Association Bank has received the audit report for, or covering, for the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such ; records; and (iii) enable the Bank’s representatives to examine such (iv) ensure that such reports records and statements of expenditure accounts are included in the annual audit for each fiscal year (or other period agreed to by the Association), 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. Section 4.02. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI provisions of Schedule 4 to Section 4.01 of this Agreement, the Borrower Borrower, acting through MOH, shall prepare and furnish or cause to be prepared and furnished carry out a time-bound action plan acceptable to the Association a Bank 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 May 31, 2000, or such later date as the Bank shall agree, to prepare quarterly Project management reports, acceptable to the AssociationBank, 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 under for the CreditProject for the six-month period following the period covered by said 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower Rajasthan shall, and shall establish and cause RCPE to, maintain or cause to be established and maintained a financial management systemFinancial Management System, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards a format acceptable to the Association, 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 Association) Fiscal Year audited, in accordance with appropriate auditing principles, consistently applied auditing standards acceptable to the Associationapplied, by independent auditors acceptable to the Association; (ii) furnish to the 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 Association), Fiscal Year: (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), 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 AssociationAssociation shall have reasonably requested; and (iii) furnish to the 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 Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. Section 3.02. (a) Without limitation upon the Borrower’s progress reporting obligations set out in provisions of Section VI 3.01 of Schedule 4 to this Agreement, the Borrower Rajasthan shall, and shall prepare and furnish or cause to be prepared and furnished RCPE to, carry out a time-bound action plan acceptable to the Association a financial monitoring reportfor the strengthening of the Financial Management System referred to in paragraph (a) of said Section 3.01 in order to enable RCPE, in form and substance satisfactory not later than October 1, 2002, or such later date as the Association shall agree, to prepare quarterly Project Management Reports, acceptable to the 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 six-month period following the period covered by said report; and (B) shows separately funds provided under expenditures financed out of the Credit, proceeds of the Credit during the period covered by said report and explains variances between expenditures proposed to be financed out of the actual and planned uses proceeds of such fundsthe 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 Credit, 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, Rajasthan shall be furnished cause RCPE to prepare, in accordance with the guidelines acceptable to the Association, and furnish to the Association not later than 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarterperiod.

Financial Covenants. (a) The Borrower shall establish and cause NAFIN: (i) to maintain or cause to be established and maintained a financial management system, including records and accounts, ; and (ii) to prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 AssociationBank) audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the Association; (ii) Bank; to furnish to the Association 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 Association), 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 AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) and to furnish to the Association Bank such other information concerning such records and accountsrecords, accounts and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or 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 Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) ; enable the AssociationBank’s representatives to examine such records; and (iii) and ensure that such reports and 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 Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain maintain, or cause to be established and maintained maintained, a financial management system, including records and accounts, and prepare prepare, or cause to be prepared, financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shallshall cause BEA to: (i) have the records, accounts and financial statements referred to in paragraph (a) balance sheets, statements of this Section income and expenses of funds and related statements), including those for the Special Account, for each fiscal year (or other period agreed to by the Association) audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association)year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shallshall cause BEA 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 year after the Association Bank has received the audit report for, or covering, for the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iiiii) enable the AssociationBank’s representatives to examine such records; and (iiiiv) ensure that such reports records and statements of expenditure accounts are included in the audit for each fiscal year (or other period agreed to by the Association)year, 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 obligations set out in Section VI B of Schedule 4 5 to this Agreement, the Borrower shall cause BEA to prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring reportreport (Financial Monitoring Report, or FMR), in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 forty-five (45) days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall, and shall establish and cause: (i) NBKR to maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Association, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to the whole Project; and (ii) SSC to prepare financial statements in accordance with consistently applied accounting standards acceptable to the Association, adequate to reflect its operations and financial condition. (b) The Borrower shall: (i) , and shall cause NBKR to: have the respective financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Association) audited, in accordance with consistently applied auditing standards acceptable to the Association, by independent auditors acceptable to the Association; (ii) ; furnish to the 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 Association), ): (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 Association), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Association; and (iii) and furnish to the Association such other information concerning such records records, accounts and accountsthe audit of such financial statements, and concerning said auditors, as the Association may from time to time reasonably request. The Borrower shall, and shall cause SSC to: have the respective financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Association) audited, in accordance with consistently applied auditing standards acceptable to the Association, by independent auditors acceptable to the Association; furnish to the 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 Association), (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 Association), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Association; and furnish to the Association such other information concerning such records, accounts and the audit of such financial statements, and concerning said auditors, as the Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 Fiscal Year (or such other period agreed to by between the Association) Borrower and the Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association Bank as soon as available, but in any case not later than six (6) months after the end of each such year Year (or such other period agreed to by between the Association), Borrower and the Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year Year (or such other period agreed to by between the AssociationBorrower and the Bank), as so audited, and ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one (1) year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year Fiscal Year (or such other period agreed to by between the AssociationBorrower and the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI paragraph 8 of Schedule 4 5 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 forty five (45) days after each subsequent calendar quartersemester, and shall cover such calendar quartersemester. (a) Except as the Bank shall otherwise agree, the Borrower shall, for each of its Fiscal Years throughout the duration of the Project, meet a self financing ratio of its average yearly investment program equivalent to at least 15%, or any other percentage agreed between the Borrower and the Bank, such ratio to be calculated on the basis of a methodology agreed between the Borrower and the Bank. (b) In the event that the Borrower does not meet the self financing ratio of its average yearly investment program equivalent to at least 15%, or any other percentage agreed between the Borrower and the Bank pursuant to the preceding sub-paragraph (a), the Borrower, after consultation with the Bank, shall take all necessary measures agreed upon with the Guarantor to meet said ratio. Section 4.04. The Borrower shall: (a) prior to the commissioning of Sub-projects under Part A of the Project, put in place appropriate devices and take adequate measures to enable the recording and analysis, at the levels of, respectively, production, abstraction and distribution, of the volumes of water produced or abstracted from trunk mains and subsequently sold to standpipes operators or distribution systems at the village (“douar”) level; and (b) undertake all necessary measures to: (i) not later than June 30, 2008, upgrade its billing and collection system so as to ensure proper billing, collection and management of accounts receivable in relation to each Sub-project completed under Part A of the Project; and (ii) not later than December 31, 2008, extend, upon the initiation of each Sub-project carried out under Part A of the Project, its cost accounting system to encompass cost accounting reporting pertaining to the management and operation of each said Sub-project.

Financial Covenants. (a) The Borrower Borrower, through the PA, shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 AssociationBank) audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), 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 AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory acceptable to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accountsrecords, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower Borrower, through the PA, shall: (i) retain, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, made all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (( or other period agreed to by the Association), Bank) referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out specified in paragraph 13 (b) of Section VI D of Schedule 4 5 to this Agreement, the Borrower Borrower, through the PA, shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring reportreport (FMR), in form and substance satisfactory acceptable to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.forty-five

Financial Covenants. (a) The Borrower Borrower, through MOJ, shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower Borrower, though MOJ, shall: (i) retain, until at least one (1) year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI Part B of Schedule 4 5 to this Agreement, the Borrower Borrower, through MOJ, shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring reportFinancial Monitoring Report, in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.forty-five

Financial Covenants. (a) The Borrower ZPEPC shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements accounts adequate to reflect in accordance with consistently applied sound accounting standards acceptable to the Association, 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 Association) audited, in accordance with appropriate auditing principles consistently applied auditing standards acceptable to the Associationapplied, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), year, (A) certified copies of the its financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), 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 AssociationBank shall have reasonably requested; and (iii) furnish to the Association 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 Association may Bank 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 Credit Account were made on the basis annual average of reports referred ZPEPC’s capital expenditures, incurred, or expected to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditurebe incurred, for that year, the Borrower shall: (i) retain, until at least one previous year after and the Association has received the audit report for, or covering, the next following fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the 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 reportyear. (b) The first FMR shall be furnished 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 Association 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.this Section:

Financial Covenants. (a) The Borrower Guarantor shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 Association) audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, consistently applied, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association)year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section Section, for such year (or other period agreed to by the Association), 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 AssociationBank shall have reasonably requested; and (iii) furnish to the Association 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 Association 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 Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, times take all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance adequate actions satisfactory to the AssociationBank, which: (i) sets forth sources and uses including maintaining the Foreign Exchange Risk Coverage Arrangement, 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 under the Credit, 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 Association 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarterLoan Agreement.

Financial Covenants. (a) The Borrower shall establish and maintain or cause to be established and maintained maintain, as part of the MIS in CAR, a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 AssociationBank) audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), 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 AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit 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 Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and 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 AssociationBank), referred to in paragraph (b) of this Section. Section 4.02. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI 3.03 of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank (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 under by the CreditLoan, 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower Recipient, through the PMT, shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements statements, in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 Association) Bank), audited, starting with the fiscal year ending December 31, 2005, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit GEF Trust Fund Grant Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower Recipient, through the PMT, shall: (i) retain, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit GEF Trust Fund Grant Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the BorrowerRecipient’s progress reporting obligations set out in Section VI paragraph 4 of Schedule 4 3 to this Agreement, the Borrower Recipient, through the PMT, shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, 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 under the CreditGEF 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 Association 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 Association Bank not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower Borrower, through the PCU, shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Association, 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 for each fiscal year (or other period agreed to by the Association) ), audited, in accordance with consistently applied auditing standards acceptable to the Association, by independent auditors acceptable to the Association; (ii) furnish to the 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 Association), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Association; and (iii) furnish to the Association such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower Borrower, through the PCU, shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI paragraph 1 of Schedule 4 to this Agreement, the Borrower Borrower, through the PCU, shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the 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 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 Association not later than 45 forty-five (45) days after each subsequent calendar quarter, and shall cover such calendar quarter. Section 4.03. The Borrower shall, not later than two months after the date of effectiveness, employ the independent auditors referred to in Section 4.01 above.

Financial Covenants. (a) The Borrower shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 Fiscal Year (or such other period agreed to by between the Association) Borrower and the Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association Bank as soon as available, but in any case not later than six (6) months after the end of each such year Year (or such other period agreed to by between the Association), Borrower and the Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year Year (or such other period agreed to by between the AssociationBorrower and the Bank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one (1) year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year Fiscal Year (or such other period agreed to by between the AssociationBorrower and the Bank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI paragraph 8 of Schedule 4 5 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 forty five (45) days after each subsequent calendar quartersemester, and shall cover such calendar quartersemester. (a) Except as the Bank shall otherwise agree, the Borrower shall, for each of its Fiscal Years throughout the duration of the Project, meet a self financing ratio of its average yearly investment program equivalent to at least 15%, or any other percentage agreed between the Borrower and the Bank, such ratio to be calculated on the basis of a methodology agreed between the Borrower and the Bank. (b) In the event that the Borrower does not meet the self financing ratio of its average yearly investment program equivalent to at least 15%, or any other percentage agreed between the Borrower and the Bank pursuant to the preceding sub-paragraph (a), the Borrower, after consultation with the Bank, shall take all necessary measures agreed upon with the Guarantor to meet said ratio. Section 4.04. The Borrower shall: prior to the commissioning of Sub-projects under Part A of the Project, put in place appropriate devices and take adequate measures to enable the recording and analysis, at the levels of, respectively, production, abstraction and distribution, of the volumes of water produced or abstracted from trunk mains and subsequently sold to standpipes operators or distribution systems at the village (“douar”) level; and undertake all necessary measures to: (i) not later than June 30, 2008, upgrade its billing and collection system so as to ensure proper billing, collection and management of accounts receivable in relation to each Sub-project completed under Part A of the Project; and (ii) not later than December 31, 2008, extend, upon the initiation of each Sub-project carried out under Part A of the Project, its cost accounting system to encompass cost accounting reporting pertaining to the management and operation of each said Sub-project.

Financial Covenants. (a) The Borrower EP(S) shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements accounts adequate to reflect in accordance with consistently applied sound accounting standards acceptable to the Association, adequate to reflect the operations, resources practices its operations and expenditures related to the Projectfinancial condition. (b) The Borrower EP(S) 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 fiscal year (or other period agreed to by the Association) audited, in accordance with appropriate auditing principles consistently applied applied, by a competent and experienced independent auditing standards organization acceptable to the Association, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association Bank as soon as available, but in any case not later than six five months after the end of each such year (or such other period agreed to by the Association), year: (A) certified copies of the its financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), 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 AssociationBank shall have reasonably requested; and (iii) furnish to the Association 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 Association may Bank shall from time to time reasonably request. (ca) For all Except as the Bank shall otherwise agree, EP(S) shall produce, for each of its fiscal years after its fiscal year ending on December 31, 1991, funds from internal sources equivalent to not less than 35% of the annual average of EP(S)’s capital expenditures with respect incurred, or expected to which withdrawals from be incurred, for that year and the Credit Account were made 1992 and 1993 fiscal years. (b) Before October 31 in each of its fiscal years, EP(S) shall, on the basis of reports referred forecasts prepared by EP(S) and satisfactory to the Bank, review whether it would meet the requirements set forth in Part A.5 paragraph (a) in respect of Schedule 1 such year and the next following fiscal year and shall furnish to the Bank a copy of such review upon its completion. (c) If any such review shows that EP(S) would not meet the requirements set forth in paragraph (a) for EP(S)’s fiscal years covered by such review, EP(S) shall promptly take all necessary measures (including, without limitation, adjustments of the structure or levels of its rates) in order to meet such require- ments. (d) For the purposes of this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shallSection: (i) retainThe term "funds from internal sources" means the difference between: (A) the sum of revenues from all sources related to operations, until at least one year after consumer deposits and consumer contributions in aid of construction, net non-operating income and any reduction in working capital other than cash; and (B) the Association has received the audit report forsum of all expenses related to opera- tions, or coveringincluding administration, the fiscal year adequate maintenance and taxes and payments in which the last withdrawal from the Credit Account was madelieu of taxes (excluding provision for deprecia- tion and other non-cash operating charges), debt service requirements, all records (contracts, orders, invoices, bills, receipts cash dividends and other documents) evidencing such cash distributions of surplus, increase in working capital other than cash and other cash outflows other than capital expenditures;. (ii) enable The term "net non-operating income" means the Association’s representatives difference between: (A) revenues from all sources other than those related to examine such recordsoperations; and (iiiB) ensure that such reports expenses, including taxes and statements payments in lieu of expenditure are included taxes, incurred in the audit for each fiscal year generation of revenues in (or other period agreed to by the Association), referred to in paragraph (bA) of this Sectionabove. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the 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 term "working capital other than cash" means the status of procurement under the Project, as difference between current assets excluding cash and current liabilities at the end of the period covered by said reporteach fiscal year. (biv) The first FMR shall term "current assets excluding cash" means all assets other than cash which could in the ordinary course of business be furnished converted into cash within twelve months, including accounts receivable, marketable securities, inventories and pre-paid expenses properly chargeable to operating expenses within the Association not later than 45 days after the end next fiscal year. (v) The term "current liabilities" means all liabili- ties 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 require- ments, taxes and payments in lieu of the first calendar quarter after the Effective Datetaxes, and shall cover dividends. (vi) The term "debt service requirements" means the period from the incurrence aggregate amount of the first expenditure under the Project through the end of such first calendar quarter; thereafterrepayments (including sinking fund payments, each FMR shall be furnished to the Association not later than 45 days after each subsequent calendar quarterif any) of, and shall cover such calendar quarterinterest and other charges on, debt.

Financial Covenants. (a) The Borrower Maharashtra shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements statements, in accordance with consistently applied accounting standards acceptable to the AssociationBank, and in accordance with all the provisions of the Financial Management Manual, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower Maharashtra shall: (i) have the financial statements referred to in paragraph (a) of this Section for each fiscal year Fiscal Year (or other period agreed to by the Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association Bank 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 AssociationBank), (A) certified copies of the respective financial statements referred to in paragraph (a) of this Section for such year Fiscal Year (or such other period agreed to by the AssociationBank), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accountsrecords, accounts and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit 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 on the basis of statements of expenditure, the Borrower Maharashtra shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, ensure that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expendituresexpenditures 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; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and or statements of expenditure are included in the any audit for each fiscal year (or other period agreed Maharashtra may undertake pursuant to by the Association), referred to in paragraph (b) of this Section. Section 3.02. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 to this Agreement, the Borrower Maharashtra shall prepare and furnish or cause to be prepared and furnished to the Association a Bank separate financial monitoring reportreports, (each such a Financial Monitoring Report), in form and substance satisfactory to the AssociationBank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by the said report, showing separately funds provided under the CreditLoan, 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, 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall cause Guangdong to establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and to prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The the Borrower shallshall cause Guangdong 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 Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 AssociationBank), (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 AssociationBank), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shallshall cause Guangdong 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 Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and 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 Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower Borrower, through the MOE, shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower Borrower, through the MOE, 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 Association) Bank), audited, commencing with the accounts for the year ending December 31, 2006, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish furnish, and shall ensure that the MOE and the PCU each furnishes, to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower Borrower, through the MOE, shall: (i) retain, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI Part C of Schedule 4 5 to this Agreement, the Borrower Borrower, through the MOE, shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter. Section 4.03. Subject to the provisions of sub-paragraph 4 (b) of Part B of Schedule 1 and paragraph 3 of Annex A to Schedule 1 of this Agreement, the Borrower, through the MOE, shall, and shall cause the Project Beneficiaries to, follow the financial management and internal control policies and procedures set forth in the FM Manual for purposes of the Project.

Financial Covenants. (a) The Borrower shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Association, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shall: (i) have the financial statements (including the records and accounts of the Special Account) referred to in paragraph (a) of this Section for each fiscal year Fiscal Year (or other period agreed to by the Association) audited, in accordance with consistently applied auditing standards acceptable to the Association, by independent auditors acceptable to the Association; (ii) furnish to the 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 Association), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), ) as so audited, and (B) an opinion on such statements by said auditors, auditors in scope and detail satisfactory to the Association; and (iii) furnish to the Association such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account Financing Accounts were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year Fiscal Year in which the last withdrawal from the Credit Account Financing Accounts was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year Fiscal Year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in paragraph 8 of Section VI I of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring reportFinancial Monitoring Report, in form and substance satisfactory to the 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 under the CreditFinancing, 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain maintain, or cause to be established and maintained a financial management systemmaintained, including records and accounts, and prepare financial statements accounts adequate to reflect in accordance with consistently applied sound accounting standards acceptable to the Association, adequate to reflect practices the operations, resources and expenditures related to in respect of the ProjectProject of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. (b) The Borrower shall: (i) have the financial statements records and accounts referred to in paragraph (a) of this Section Section, including those for the Special Account, for each fiscal year (or other period agreed to by the Association) audited, in accordance with appropriate auditing principles consistently applied auditing standards acceptable to the Associationapplied, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), 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 AssociationBank shall have reasonably requested; and (iii) furnish to the Association 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 Association may Bank shall from time to time reasonably request. (c) Without any limitation to the provisions of paragraph (b) of this Section, the Borrower shall: (i) have the records and accounts referred to in paragraph (a) of this Section audited in accordance with said paragraph (b), every four months during the first twelve months after the Effective Date and every six (6) months during the second twelve months after the Effective Date; and (ii) furnish to the Bank, not later than two (2) months after the end of each audit period referred to in (i) of this paragraph (c), a certified copy of the report of any such audit. (d) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or 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 Association Bank has received the audit report for, or covering, for the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iiiii) enable the AssociationBank’s representatives to examine such records; and; (iiiiv) ensure that such reports records and statements of expenditure accounts are included in the audits referred to in paragraphs (b) and (c) of this Section and that the report of any such audit for each contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year (or such other period agreed to by the Association), referred to in paragraph (bc) of this Section), 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 obligations set out in Section VI of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower Borrower, through MGAP, shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower Borrower, through MGAP, 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 Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of the reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditureexpenditure (as the case may be), the Borrower shall: (i) retain, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI Sections 3.06 and 3.07 of Schedule 4 to this Agreement, the Borrower Borrower, through MGAP, shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring reportreport (FMR), in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 days after each subsequent calendar quartersemester, and shall cover such calendar quartersemester.

Financial Covenants. (a) The Borrower shall establish maintain, and shall cause each Project Province to maintain or cause to be established and maintained a financial management system, including records and accounts, and to prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 AssociationBank) audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or 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 Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and 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 Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 to this Agreement, the The Borrower shall prepare and furnish or cause to be prepared and furnished to the Association 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 AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 forty-five (45) days after each subsequent calendar quartersemester, and shall cover such calendar quartersemester.

Financial Covenants. (a) The Borrower shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory acceptable to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI paragraph 7 of Schedule 4 5 to this Agreement, Agreement the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory acceptable to the AssociationBank, 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 under the Credit, and explains variances between the actual and planned uses of such fundsLoan; (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 Association 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 Association Bank not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter. (a) Except as the Bank shall otherwise agree, the Borrower shall not incur any debt unless a reasonable forecast of the revenues and expenditures of the Borrower shows that the estimated net revenues of the Borrower for each fiscal year during the term of the debt to be incurred shall be at least 1.2 times the estimated debt service requirements of the Borrower in such year on all debt of the Borrower including the debt to be incurred. (b) For the purposes of this Section:

Financial Covenants. (a) The Borrower shall establish and cause MIGA to maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Association, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shallshall cause MIGA 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 Association) ), audited, in accordance with consistently applied auditing standards acceptable to the Association, by independent auditors acceptable to the Association; (ii) furnish to the 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 Association), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Association; and (iii) furnish to the Association such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 to this Agreement3, the Borrower shall cause MIGA to prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring reportFinancial Monitoring Report, in form and substance satisfactory to the 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 under the Credit, and explains variances between the actual and planned uses of such funds;; and (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 Association not later than 45 days after the end of the first second calendar quarter after the Effective Date, and shall cover the period from the incurrence first draw down of the first expenditure under the Project Credit through the end of such first second calendar quarter; thereafter, each FMR Financial Monitoring Report shall be furnished to the Association not later than 45 days after each subsequent calendar quartersix months, and shall cover such calendar quarterperiod.

Financial Covenants. (a) The Borrower Each Trade and Development Bank and Zoos Bank shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements statements, in accordance with consistently applied accounting standards acceptable to the Association, adequate to reflect reflect: (i) its operations; (ii) the progress of its respective activities under Parts A and B.1, and Parts A and B.2 of the Project, respectively, and of each Sub-project (including the costs and benefits to be derived from it); and (iii) its financial condition, and to register separately the operations, resources and expenditures related to its respective activities under the ProjectProject and, each Sub-project. (b) The Borrower Each Trade and Development Bank and Zoos Bank 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 Association) ), audited, in accordance with consistently applied auditing standards acceptable to the Association, by independent auditors acceptable to the Association; (ii) furnish to the 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 Association), ): (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 Association), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Association; and (iii) and furnish to the Association such other information concerning such records and accounts, accounts and the audit of such financial statements, and concerning said auditors, as the Association may from time to time reasonably request. (c) For all expenditures with respect Section 3.02. Each Trade and Development Bank and Zoos Bank shall take such steps, satisfactory to which withdrawals from the Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives , as shall be necessary to examine such records; and (iii) ensure that such reports and statements protect itself against risk of expenditure are included loss resulting from changes in the audit for each fiscal year rates of exchange between the various currencies (or other period agreed to by including the Association), referred to Togrog) used in paragraph (b) of this Sectionits operations. (a) Without limitation upon Section 3.03. Each Trade and Development Bank and Zoos Bank shall throughout the Borrower’s progress reporting obligations set out implementation of the Project, comply with the BOM prudential regulations and, if applicable, implement its respective Plan of Actions in Section VI of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form manner and substance satisfactory to the 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 under the 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, adequate to reflect the operations, resources and expenditures related to Parts B, 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 Borrower’s Special Account for each fiscal year (or other period agreed to by the Association) audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 AssociationBank), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), 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 AssociationBank shall have reasonably requested; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statementsthereof, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditureexpenditure for Parts B, C, D and E of the Project, 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 Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iiiii) enable the AssociationBank’s representatives to examine such records; and (iiiiv) ensure that such reports records and statements of expenditure accounts are included in the annual audit for each fiscal year (or other period agreed to by the Association), 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 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 obligations set out in Section VI paragraph 5 of Schedule 4 5 to this AgreementParts D, E and F of Schedule 5 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, which: (i) sets forth sources and uses of funds for Parts B, C, D and E of the Project, both cumulatively and for the period covered by said report, showing separately funds provided under the CreditLoan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementationimplementation of Parts B, C, D and E 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 Parts B, C, D and E 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 Association 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 Parts B, C, D and E of the Project through the end of such first calendar quartersemester; thereafter, each FMR Financial Monitoring Report shall be furnished to the Association Bank not later than 45 days after each subsequent calendar quartersemester, and shall cover such calendar quartersemester.

Financial Covenants. (a) The Borrower shall establish and maintain maintain, or cause to be established and maintained maintained, a financial management system, including records and accounts, and prepare prepare, or cause to be prepared, financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or 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 Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI Part B of Schedule 4 5 to this Agreement, Agreement the Borrower shall cause the Federal Registration Service and the PIU to prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and cause Hubei Province to maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 AssociationBank), (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 AssociationBank), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accountsrecords, accounts and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or 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 Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and 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 Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower Recipient shall establish and maintain or cause to be established and maintained a financial management systemsystem within MMA, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit GEF Trust Fund Grant Account were Report-based Disbursements or were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditureexpenditure the Recipient, the Borrower through MMA, shall: (i) retain, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit GEF Trust Fund Grant Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and shall: (i) maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements accounts adequate to reflect in accordance with consistently applied sound accounting standards acceptable to the Association, 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 Association) audited, in accordance with appropriate auditing principles consistently applied auditing standards acceptable to the Associationapplied, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), 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 other period agreed to by the Association), 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 AssociationBank shall have reasonably requested; and (iii) furnish to the Association 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 Association may Bank 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 Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or 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 Association Bank has received the audit report for, or covering, for the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iiiii) enable the AssociationBank’s representatives to examine such records; and (iiiiv) ensure that such reports records and statements of expenditure accounts are included in the annual audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. (a) Without limitation upon Section and that the Borrower’s progress reporting obligations set out in Section VI report of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association such audit contains a financial monitoring report, in form and substance satisfactory to the Association, 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 under together with the Creditprocedures 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower Borrower, through MOH shall, and shall establish and cause FISDL to, maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI 3.06 of Schedule 4 to this Agreement, the Borrower shall cause FISDL to prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 days after each subsequent calendar quarterfour month period, and shall cover such calendar quarterfour month period.

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

Financial Covenants. (a) The Borrower shall shall, not later than December 31, 2004, establish and thereafter maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 AssociationBank), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one (1) year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI paragraph 2 of Schedule 4 5 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain maintain, or cause to be established and maintained maintained, a financial management system, including records and accounts, and prepare prepare, or cause to be prepared, financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or 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 Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI Part B of Schedule 4 5 to this Agreement, Agreement the Borrower shall cause the Federal Registration Service and the PIU to prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower NTA shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the Association, 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 Association) Fiscal Year audited, in accordance with consistently applied auditing standards acceptable to the Association, consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the 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 Association), year: (A) certified copies of the financial statements referred to in paragraph (a) of this Section Section, for such year (or other period agreed to by the Association), 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 AssociationAssociation shall have reasonably requested; and (iii) furnish to the 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 Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. Section 4.02. (a) Without limitation upon the Borrower’s progress reporting obligations set out in provisions of Section VI 4.01 of Schedule 4 to this Agreement, the Borrower NTA shall prepare and furnish or cause to be prepared and furnished carry out a time-bound action plan acceptable to the Association a 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 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 under expenditures financed out of the Credit, proceeds of the Credit during the period covered by said report and explains variances between expenditures proposed to be financed out of the actual and planned uses proceeds of such fundsthe Credit 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower Karnataka shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards a format acceptable to the AssociationBank, 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 Association) Fiscal Year audited, in accordance with appropriate auditing principles, consistently applied auditing standards acceptable to the Associationapplied, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association)Fiscal Year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), 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 AssociationBank shall have reasonably requested; and (iii) furnish to the Association 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 Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. Section 3.02. (a) Without limitation upon the Borrower’s progress reporting obligations set out in provisions of Section VI 3.01 of Schedule 4 to this Agreement, the Borrower Karnataka shall prepare and furnish or cause to be prepared and furnished carry out a time-bound action plan acceptable to the Association a Bank 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 AssociationBank, 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 under for the CreditProject for the six-month period following the period covered by said 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower Borrower, through the PCU, shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 AssociationBank) audited, in accordance with consistently applied auditing standards acceptable to the Association, Bank by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), as so audited, ; and (B) an opinion on such statements by said auditorsstatements, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower Borrower, through the PCU, shall: (i) retain, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year Fiscal Year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (Fiscal Year or other period agreed to by the Association)Bank, referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI Part C of Schedule 4 5 to this Agreement, the Borrower Borrower, through the PCU, shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 forty-five (45) days after each subsequent calendar quartersemester, and shall cover such calendar quartersemester.

Financial Covenants. (a) The Borrower shall establish and maintain or cause to be established and maintained through the MOA a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Association, 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 Association) ), audited, in accordance with consistently applied auditing standards acceptable to the Association, by independent auditors acceptable to the Association; (ii) furnish to the 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 Association), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Association; and (iii) furnish to the Association such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI 7 of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower MMCT shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 Association) audited, Special Account audited in accordance with consistently applied auditing standards acceptable to the AssociationBank consistently applied, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), year: (A) certified copies of the its financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), 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 AssociationBank shall have reasonably requested; and (iii) furnish to the Association 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 Association may Bank shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. Section 4.02. (a) Without limitation upon the Borrower’s progress reporting obligations set out in provisions of Section VI 4.01 of Schedule 4 to this Agreement, the Borrower MMCT shall prepare and furnish or cause to be prepared and furnished carry out a time-bound action plan acceptable to the Association a Bank 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 Association, 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 under for the CreditProject for the six-month period following the period covered by said 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower Borrower, through SEP, shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower Borrower, through SEP, shall: (i) retain, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI 3.07 of Schedule 4 to this Agreement, the Borrower Borrower, through SEP, shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 days after each subsequent calendar quartersemester, and shall cover such calendar quartersemester.

Financial Covenants. (a) The Borrower shall shall, through MOE establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 AssociationBank) audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 AssociationBank), (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 AssociationBank), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall, through MOE: (i) retain, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s MOE progress reporting obligations set out in Section VI of Schedule 4 5 to this Agreement, the Borrower shall shall, through MOE prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 forty five (45) days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower FID shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the Association, 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 Association) audited, in accordance with consistently applied auditing standards acceptable to the Association, consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the 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 Association), year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section Section, for such year (or other period agreed to by the Association), 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 Associationbe provided in each such report, a management letter covering FID’s internal controls; and (iii) furnish to the 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 Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. Section 4.02. (a) Without limitation upon the Borrower’s progress reporting obligations set out in provisions of Section VI 4.01 of Schedule 4 to this Agreement, the Borrower FID shall prepare and furnish or cause to be prepared and furnished carry out a time-bound action plan acceptable to the Association a 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 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 under for the CreditProject for the six-month period following the period covered by said 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower Borrower, acting through MAFRD and ANSVSA, shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements statements, in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 Association) audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the Association; (ii) Bank; furnish to the Association 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 Association)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 AssociationBank), as so audited, and (B) an opinion on such statements by said auditors, in of such scope and detail satisfactory to as the AssociationBank shall have reasonably requested; and (iii) and furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or 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 Association Bank has received the audit report for, or covering, for the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) ; enable the AssociationBank’s representatives to examine such recordsexpenditures; and (iii) and ensure that such reports records and statements of expenditure accounts are included in the annual audit for each fiscal year (or other period agreed to by the Association), 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 obligations set out in Section VI of Schedule 4 to this Agreement, the Borrower acting through MAFRD, shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 forty-five (45) days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 Association) auditedBank), in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), Bank) as so audited, ; and (B) an opinion on such statements statements, by said auditors, auditors in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure expenditures are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this SectionSection and in 4.03 (a) (i). (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI 3.09 of Schedule 4 to this Agreement, the Borrower shall shall, except with respect to Parts B.2 and E.2 of the Project, prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring reportreport (FMR), in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter. (a) The Borrower shall, in the event that any portion of Part

Financial Covenants. (a) The Borrower Recipient shall establish and maintain or cause to be established and maintained ensure that the Republic of Serbia maintains a financial management system, including records and accounts, and prepare prepares financial statements statements, all in accordance with consistently applied accounting standards acceptable to the AssociationBank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower Recipient shall ensure that the Republic of Serbia 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 Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association Bank as soon as available, but in any case not later than six five (5) months after the end of each such year (or such other period agreed to by the Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit GEF Trust Fund Grant Account were made on the basis of reports referred to in paragraph 5 of Part A.5 A of Schedule 1 to this Agreement (Report-based Disbursements) ), or on the basis of statements of expenditure, the Borrower Recipient shall ensure that the Republic of Serbia shall: (i) retain, retain until at least one (1) year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit GEF Trust Fund Grant Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. Section 4.02. (a) Without limitation upon the Borrower’s progress reporting obligations set out forth in Section VI paragraph 2 of Schedule 4 3 to this Agreement, the Borrower Recipient shall prepare ensure that the Republic of Serbia prepares and furnish or cause to be prepared and furnished furnishes to the Association Bank a financial monitoring reportreport (Financial Monitoring Report), in form and substance satisfactory to the AssociationBank, 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 under the CreditGEF Trust Fund Grant, and explains explaining variances between the actual and planned uses of such funds; (ii) sets forth the Special account for the Project, showing the period opening balance, movements during the period and the period closing balance; (iii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains the variances between the actual and planned Project implementation; and (iiiiv) 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall Recipient shall, no later than September 1, 2005, establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Association, 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 Association) ), audited, in accordance with consistently applied auditing standards acceptable to the Association, by independent auditors acceptable to the Association; (ii) furnish to the 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 Association), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Association; and (iii) furnish to the Association such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Grant Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower Recipient shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Grant Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the BorrowerRecipient’s progress reporting obligations set out in Section VI paragraph C of Schedule 4 to this Agreement, the Borrower Recipient shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the CreditGrant, 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 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 Association not later than 45 forty-five (45) days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower MWCI shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements statements, in accordance with consistently applied accounting standards acceptable to the AssociationBank, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to the Project. (b) The Borrower MWCI 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 Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), 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 AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, accounts and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. Section 4.02. (a) Without limitation upon the BorrowerMWCI’s progress reporting obligations set out in Section VI paragraph 7 of Schedule 4 2 to this Agreement, the Borrower MWCI shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and ensure that the Water Companies maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 AssociationBank), (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 AssociationBank), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accountsrecords, accounts and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or 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 Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and 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 Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 to this Agreement, the The Borrower shall cause the Guilan Water Company to prepare and furnish or cause to be prepared and furnished submit to the Association 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 AssociationBank, 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 under the 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 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 Association not Bank 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter2006.

Financial Covenants. (a) The Borrower Borrower, through the MOE, shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower Borrower, through the MOE, 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 Association) Bank), audited, commencing with the accounts for the year ending December 31, 2006, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish furnish, and shall ensure that the MOE and the PCU each furnishes, to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower Borrower, through the MOE, shall: (i) retain, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI Part C of Schedule 4 5 to this Agreement, the Borrower Borrower, through the MOE, shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter. Section 4.03. Subject to the provisions of sub-paragraph 4 (b) of Part B of Schedule 1 and paragraph 3 of Annex A to Schedule 1 of this Agreement, the Borrower, through the MOE, shall, and shall cause the Project Beneficiaries to, follow the financial management and internal control policies and procedures set forth in the FM Manual for purposes of the Project.

Financial Covenants. (a) The Borrower Zhejiang and IMNLYWPC shall establish and each maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements statements, in accordance with consistently applied accounting standards acceptable to the AssociationBank, adequate to reflect reflect: (i) in the case of Zhejiang, the operations, resources and expenditures related to its Respective Part of the Project; and (ii) in the case of IMNLYWPC, its operations and financial condition and to register separately the operations, resources and expenditures related to its Respective Part of the Project. (b) The Borrower Zhejiang and IMNLYWPC shall: (i) in the case of Zhejiang, have the its financial statements referred to in paragraph (a) of this Section Section; and in the case of IMNLYWPC, 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 Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) each furnish to the Association 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 Association), 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 AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) each furnish to the Association Bank such other information concerning such records and accounts, accounts and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the BorrowerZhejiang’s progress and IMNLYWPC’s reporting obligations set out in Section VI paragraph 7 of Schedule 4 2 to this Project Agreement, the Borrower Zhejiang and IMNLYWPC shall each prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring reportFinancial Monitoring Report, in form and substance satisfactory to the AssociationBank, which: (i) sets forth sources and uses of funds for its Respective Part of the Project, both cumulatively and for the period covered by said report, showing separately funds provided under the CreditLoan, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementationimplementation of its Respective Part of the Project, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementationimplementation of said Part of the Project; and (iii) sets forth the status of procurement under its Respective Part 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 Association Bank by each of Zhejiang and IMNLYPWC 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 its Respective Part of the Project through the end of such first calendar quartersemester; thereafter, each FMR shall Financial Monitoring Report be furnished to the Association Bank by Zhejiang and IMNLYPWC not later than 45 forty-five (45) days after each subsequent calendar quartersemester, and shall cover the period not covered by the previous Financial Monitoring Report until the end of such calendar quartersemester. (a) IMNLYWPC shall prepare, according to terms of reference satisfactory to the Bank, and, by June 30 of each year commencing on June 30, 2006, furnish to the Bank for review and comments, its rolling long-term financial plan (including projected income statements, sources and uses of funds and balance sheets covering a period of no less than five (5) years). (b) IMNLYWPC shall prepare, according to terms of reference satisfactory to the Bank, and, by June 30 of each year during Project implementation, commencing on June 30, 2006, furnish to the Bank for review and comments its projected funds flow statement for the coming year, indicating anticipated Project expenditures, sources of funding and indicating commitments of respective financiers to provide such funding. Section 4.04. IMNLYWPC shall enter into an independent power purchase agreement for the sale of its power to a participant of the Borrower’s electric market by no later than one (1) year after the entry into service of the wind farm plant to be built under Part A of the Project, under terms and conditions satisfactory to the Bank. Section 4.05. IMNLYWPC shall take all actions as shall be necessary to ensure that it receives at least $20,050,000 equivalent in additional paid-in equity capital, by no later than the date of entry into service of the wind farm plant to be built under Part A of the Project. (a) IMNLYWPC shall take all actions as shall be necessary to ensure that the aggregate annual dividends to be distributed to its shareholders in any fiscal year, shall not exceed the said fiscal year’s net earnings of IMNLYWPC during the implementation of its Respective Part of the Project; and (b) for the purposes of this Section:

Financial Covenants. (a) The Borrower shall establish and shall, through Hubei, cause Wuhan to maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the AssociationBank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shallshall cause Wuhan 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 Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 AssociationBank), (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 AssociationBank), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accountsrecords, accounts and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or 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 Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and 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 Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower Recipient shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Association, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to the Project. (b) The Borrower Recipient 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 Association) ), audited, in accordance with consistently applied auditing standards acceptable to the Association, by independent auditors acceptable to the Association; (ii) furnish to the 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 Association), ): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Association; and (iii) furnish to the Association such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Grant Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower Recipient shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Grant Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. Section 4.02. (a) Without limitation upon the BorrowerRecipient’s progress reporting obligations set out forth in Section VI 3.09 of Schedule 4 to this Agreement, the Borrower Recipient shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the CreditGrant, 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 (as described in the corresponding Annual Action Plan); 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain maintain, or cause to be established and maintained maintained, a financial management system, including records and accounts, and prepare prepare, or cause to be prepared, financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shallshall cause BEA to: (i) have the records, accounts and financial statements referred to in paragraph (a) balance sheets, statements of this Section income and expenses of funds and related statements), including those for the Special Account, for each fiscal year (or other period agreed to by the Association) audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association)year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shallshall cause BEA 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 year after the Association Bank has received the audit report for, or covering, for the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iiiii) enable the AssociationBank’s representatives to examine such records; and (iiiiv) ensure that such reports records and statements of expenditure accounts are included in the audit for each fiscal year (or other period agreed to by the Association)year, 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 obligations set out in Section VI B of Schedule 4 5 to this Agreement, the Borrower shall cause BEA to prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring reportreport (Financial Monitoring Report, or FMR), in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.forty-five

Financial Covenants. (a) The Borrower Borrower, through MoA, shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower Borrower, through MoA, 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 Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 AssociationBank), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower Borrower, through MoA, shall: (i) retain, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI paragraph 7 (b) of Part A of Schedule 4 5 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 forty-five (45) days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower MOB shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements statements, in accordance with consistently applied accounting standards acceptable to the AssociationBank, adequate to reflect and to register separately the operations, resources and expenditures related to Part A of the Project. (b) The Borrower MOB shall: (i) have facilitate the auditing of the financial statements referred to in paragraph (a) above and Section 4.01 of this Section the GEF Trust Fund Grant Agreement for each fiscal year Fiscal Year (or other period agreed to by the Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank,, by independent auditors acceptable to the Association;Bank; and (ii) furnish to the 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 Association), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Association; and (iii) furnish to the Association Bank such other information concerning such records and accounts, accounts and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit GEF Trust Fund Grant Account were made on the basis of the reports referred to in Part A.5 of Schedule 1 to this the GEF Trust Fund Grant Agreement (Report-based Disbursements) or on the basis of statements of expenditure, expenditure related to Part A of the Borrower Project ,MOB shall: (i) retain, until at least one (1) year after the Association Bank has received the audit report for, or covering, the fiscal year Fiscal Year in which the last withdrawal from the Credit GEF Trust Fund Grant Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure provide information so that such reports and statements of expenditure are may be included in the audit for each fiscal year Fiscal Year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the BorrowerMOB’s progress reporting obligations set out in paragraph 1 of Section VI C of Schedule 4 2 to this Agreement, the Borrower MOB shall prepare and furnish or cause to be prepared and furnished to the Association MOEW a financial monitoring report, in form and substance satisfactory to the AssociationBank, which: (i) sets forth sources and uses of funds for under Part A of the Project, both cumulatively and for the period covered by said report, showing separately funds provided under the CreditGEF Trust Fund Grant, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in Project implementationthe implementation of Part A of the Project, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementationimplementation of Part A of the Project; and (iii) sets forth the status of procurement under Part A of the Project, as at the end of the period covered by said report. (b) The first FMR for Part A of the Project shall be furnished to the Association MOEW with sufficient time to enable the MOEW to prepare and submit to the Bank the FMR for the Project not later than 45 forty-five (45) days after the end of the first calendar quarter after the Effective Date, and . The FMR for Part A of the Project 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 for Part A of the Project shall be furnished to the Association MOEW with sufficient time to enable the MOEW to prepare and submit to the Bank the FMR for the Project not later than 45 forty-five (45) days after each subsequent calendar quarter, and shall cover the period not covered by the previous FMR for Part A of the Project until the end of such calendar quarter.

Financial Covenants. (a) The Borrower Borrower, through DNP, shall establish and maintain or cause to be established and maintained within the PCU a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 Association) auditedBank), in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), Bank) as so audited, and ; and (B) an opinion on such statements statements, by said auditors, auditors in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to statements of expenditure (including statements of transfer as cited in Part A.5 paragraph 4 (e) of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditureAgreement), the Borrower Borrower, through DNP, shall: (i) retain, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure expenditures (including statements of transfer as cited in paragraph 4 (e) of Schedule 1 to this Agreement) are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), 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 obligations set out in Section VI 3.06 of Schedule 4 to this Agreement, the Borrower Borrower, through DNP, shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring reportreport (FMR), in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower LRL shall establish and cause PIU to maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 shallLRL shall cause PIU to: (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 Association) audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, consistently applied, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association)year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section Section, for such year (or other period agreed to by the Association), as so audited, and (B) an opinion on such statements and reports of such audit by said auditors, in auditors of such scope and in such detail satisfactory to as the AssociationBank shall have reasonably requested; and (iii) furnish to the Association 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 Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. Section 4.02. (a) Without limitation upon the Borrower’s progress reporting obligations set out in provisions of Section VI 4.01 of Schedule 4 to this Agreement, the Borrower LRL shall prepare and furnish or cause to be prepared and furnished carry out a time-bound action plan acceptable to the Association a Bank for the strengthening of the financial monitoring reportmanagement system referred to in paragraph (a) of said Section 4.01 in order to enable LRL, in form and substance satisfactory not later than June 30, 2001, or such later date as the Bank shall agree, to prepare quarterly Project Management Reports, acceptable to the AssociationBank, 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 under for the CreditProject for the six-month period following the period covered by said 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower PLN shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 PLN 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 Association) audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, consistently applied, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association)year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section Section, for such year (or other period agreed to by the Association), 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 AssociationBank shall have reasonably requested; and (iii) furnish to the Association 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 Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the BorrowerPLN’s progress reporting obligations set out in Section VI paragraph 8 of Schedule 4 2 to this Agreement, the Borrower PLN shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring reportFinancial Monitoring Report, in form and substance satisfactory to the AssociationBank, which: (i) : sets forth sources and uses of funds for Part A of the Project, both cumulatively and for the period covered by said report, showing separately funds provided under the CreditLoan, 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

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

Financial Covenants. (a) The Borrower shall cause the Eligible State (including CEAG, IVEG and SOP and the Participating Municipalities) to establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, adequate to reflect the operations, resources and expenditures related to the ProjectProject (regardless of whether said expenditures are financed with Loan proceeds or with any other sources of financing). (b) The Borrower shallshall cause the Eligible State (including CEAG, IVEG and SOP and the Participating Municipalities) 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 AssociationBank) audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association Borrower for the Borrower to submit 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 Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank (including an opinion on the evidence used to document the percentages referred to in paragraphs 2 (d), 2 (e), 2 (f), and 2 (g) of Part A of Schedule 1 to this Agreement); and (iii) furnish to the Association Borrower for the Borrower to submit to the Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of the reports referred to in Part A.5 A.4 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditureexpenditure as well as for all expenditures financed from sources other than Loan proceeds, the Borrower shall: (i) retain, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and reports, statements of expenditure and the evidence of expenditures financed from sources other than Loan proceeds are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (d) The Borrower shall 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 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 (including an opinion on the evidence used to document the percentages referred to in paragraphs 2 (d), 2 (e), 2 (f), and 2 (g) of Part A of Schedule 1 to this Agreement); and (e) The Borrower shall 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. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI Article III of Schedule 4 to this Agreement, the Borrower shall prepare or cause the Eligible State, to prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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, including progress in achievement of the output indicators set forth in Schedule 6 to this Agreement and the related disbursement eligibility calculation, 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 Association 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 Association Bank not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Association, 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 and the records and accounts for the Special Accounts for each fiscal year Fiscal Year (or other period agreed to by the Association) audited, in accordance with consistently applied auditing standards acceptable to the Association, by independent auditors acceptable to the Association; (ii) furnish to the 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 Association), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Association; and (iii) furnish to the Association such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of reports referred to in Part A.5 A.6 of Schedule 1 to this Agreement (Report-based Based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI C of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring reportan FMR, in form and substance satisfactory to the 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 under the 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 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 Association not later than 45 forty-five (45) days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower MDA shall establish maintain procedures and maintain or cause records adequate to monitor and record the progress of Parts B and C of the Project and of each Development Project (including its cost and the benefits to be established derived from it) and maintained a financial management system, including records and accounts, and prepare financial statements to reflect in accordance with consistently applied maintained sound accounting standards acceptable to practices the Association, 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 Association) years audited, in accordance with appro- priate auditing principles consistently applied auditing standards acceptable to the Associationapplied, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), 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 other period agreed to by the Association), 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 AssociationBank shall have reasonably re- quested; and (iii) furnish to the Association 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 Association may Bank 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 Credit Account 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 reports referred forecasts prepared by MDA and satisfactory to the Bank, review whether it would meet the requirements set forth in Part A.5 paragraph (a) in respect of Schedule 1 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 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 structure or levels of its interest rates and other financial charges) in order to meet such requirements. (d) For the purposes of this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shallSection: (i) retain, until at least one year after the Association 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 Credit 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 Association’s representatives to examine such records; andThe term "net operating income" means total operating revenues less total operating expenses. (iii) ensure that such reports 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 statements other charges on debt, administration, adequate maintenance, taxes and payments in lieu of expenditure are included taxes, and provision for depreciation on a basis acceptable to the Bank. (v) The term "current net value of MDA’s assets" means the gross value of MDA’s assets less the amount of accumulated reserves allocated for loan losses, as valued from time to time in accordance with sound and consistently main- tained methods of valuation satisfactory to the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this SectionBank. (a) Without limitation upon Except as the Borrower’s progress reporting obligations set out in Section VI Bank shall otherwise agree, MDA shall produce, for each of Schedule 4 its following fiscal years funds from internal sources equivalent to this Agreement, not less than the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the 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 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 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 MDA during such first calendar quarter; thereafter, each FMR shall be furnished to the Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.fiscal year:

Financial Covenants. (a) The Borrower Recipient shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 AssociationBank) audited, in accordance with consistently applied auditing standards standards, acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), 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 Association)Bank, as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, accounts and the audit of such financial statements, and concerning said auditors, as the Association may from time to time Bank shall have reasonably requestrequested. (c) For all expenditures with respect to which withdrawals from the Credit GEF Trust Fund Grant Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower Recipient shall: (i) retain, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit GEF Trust Fund Grant Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure expenditures are included in the audit for each fiscal year (or other period agreed to by the Association)Bank, referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of paragraph 8 Schedule 4 to this Agreement, the Borrower Recipient shall prepare and furnish or cause to be prepared and furnished to the Association 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 AssociationBank, 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 under the CreditGEF 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 Association 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 Association Bank not later than 45 forty-five (45) days after each subsequent calendar quartersemester, and shall cover such calendar quartersemester.

Financial Covenants. (a) The Borrower Recipient shall establish and cause Ningbo to maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements statements, all in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the Association; (ii) Bank; furnish to the Association 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 Association), 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 AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) and furnish to the Association Bank such other information concerning such records and accountsrecords, accounts and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit GEF Trust Fund Grant Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or 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 Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit GEF Trust Fund Grant Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) ; enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 to this Agreement, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Association a financial monitoring report, in form and substance satisfactory to the 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 under the 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower Guilan Water Company shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements statements, in accordance with consistently applied accounting standards acceptable to the AssociationBank, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to Project activities in Parts A, B, C, D, and E of the Project. (b) The Borrower Guilan Water Company shall: (i) have the financial statements referred to in paragraph (a) of this Section as well as its own financial statements (balance sheets, statements of income and expenses and related statements), for each fiscal year (or other period agreed to by the Association) Bank), audited, in accordance with consistently applied auditing standards acceptable to the AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 AssociationBank), (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 AssociationBank), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, accounts and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower shall: (i) retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the Association’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI of Schedule 4 to this Agreement, the Borrower The Guilan Water Company shall prepare and furnish or cause to be prepared and furnished to the Association Bank a financial monitoring report, in form and substance satisfactory to the AssociationBank, which: (i) : sets forth sources and uses of funds for Project activities in Parts A, B, C, D, and E of the Project, both cumulatively and for the period covered by said report, showing separately funds provided under the CreditLoan, 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 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 Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.

Financial Covenants. (a) The Borrower Borrower, through PEU, shall establish and maintain or cause to be established and maintained a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the AssociationBank, 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 Association) 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 AssociationBank, by independent auditors acceptable to the AssociationBank; (ii) furnish to the Association 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 Association), Bank): (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the AssociationBank), as so audited, ; and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the AssociationBank; and (iii) furnish to the Association Bank such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Loan Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Borrower Borrower, through PEU, shall: (i) retain, until at least one year after the Association Bank has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Credit Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (ii) enable the AssociationBank’s representatives to examine such records; and (iii) ensure that such reports and statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the AssociationBank), referred to in paragraph (b) of this Section. (a) Without limitation upon the Borrower’s progress reporting obligations set out in Section VI paragraph 2 of Schedule 4 5 to this Agreement, the Borrower Borrower, through PEU, shall prepare and furnish prepare, or cause to be prepared prepared, and furnished furnish to the Association Bank a financial monitoring reportreport (FMR), in form and substance satisfactory to the AssociationBank, 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 under the CreditLoan, 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 Association 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 Association Bank not later than 45 days after each subsequent calendar quartersemester, and shall cover such calendar quartersemester.