On ratification of the Loan Agreement (Project of Post-privatization Support for Agriculture) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development dated June 23, 1998

Home / RLA / On ratification of the Loan Agreement (Project of Post-privatization Support for Agriculture) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development dated June 23, 1998

On ratification of the Loan Agreement (Project of Post-privatization Support for Agriculture) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development dated June 23, 1998

To ratify the Loan Agreement (Project of Post-privatization Support for Agriculture) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development dated June 23, 1998, concluded in the District Colombia, United States of America. President of the Republic of Kazakhstan Loan Agreement (Agricultural Post-Privatization Support Project) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development dated June 23, 1998 Loan number 4331 KZ

Agreement dated June 23, 1998 between the Republic of Kazakhstan (the Borrower) and the International Bank for Reconstruction and Development (the Bank). Whereas (A) The Bank has received a letter from the Borrower dated May 4, 1998, setting out a program of measures, goals and policies aimed at providing post-privatization support to rural enterprises (the Program) and declaring the Borrower's commitment to Programs; (C) The Borrower has requested the Bank to support the implementation of the Program by providing a number of loans in the amount of up to 85,000,000 over a period of up to ten years, which will be used by the Borrower to implement (C) The Borrower, having verified the feasibility and priority of the Project described in Annex 2 to this Agreement, which forms the first stage of the Program, has requested the Bank to assist in financing this The project; (D) The agreement (British Grant Agreement) to be concluded between the Borrower and the British Know-How Foundation (BFNH) stipulates that the BFNH will provide the Borrower with a grant in the total amount of 525,000 British pounds (British Grant) to assist in financing (part of) (E) the agreement (EU Agreement) to be concluded between the Borrower and the European Union (EU) stipulates that the EU will provide the Borrower with a grant in the total amount of 1,200,000 ECUs, equivalent to 1,300,000 US dollars. USA (EU grant) for assistance in financing (part) Taking into account that the Bank has agreed, in particular on the basis of the above, to provide the Borrower with a Loan to support the first phase of the Program on the terms and for the period provided for in this Agreement; the parties hereby agree as follows:

Article I General terms and conditions. Definitions Section 1.01. "General Terms and Conditions Applicable to Single Currency Loans and Guarantees Agreements" of the Bank dated May 30, 1995, as amended until December 2, 1997 (General Terms and Conditions) are an integral part of this Agreement: Section 1.02. Unless the context otherwise requires, some terms defined in the General Terms and Conditions have the meanings that correspond to those specified in these definitions, and additional terms have the following meanings: (a) "CC" - Advisory Councils referred to in paragraph 6 of Part A of Annex 5 to this Agreement; (b) "CCZ" - the Committee on External Borrowings of the Borrower, established as part of the Ministry of Finance; (c) "Unlimited Sub-loan" means a Sub-Loan that, by definition, qualifies as an unlimited Sub-Loan in accordance with the provisions of paragraph (2 (b) of Part D of Annex 5 to this Agreement; (d) "Ministry of Agriculture" means the Ministry of Agriculture of the Borrower and includes any successor or successors; (e) "Ministry of Finance" - the Borrower's Ministry of Finance and includes any legal successor or successors; (f) "UFA" or "Participating Financial Institutions" are collectively the financial institutions selected to participate in the Project in accordance with Part B of Annex 5 to this Agreement; and "UFA" or "Participating Financial Institution" in the singular means any of the mentioned institutions; (g) "PIU"" is the Project Implementation Department established within the Ministry of Agriculture to assist in the implementation of the Project; (h) "APP" is the advance payment for the preparation of the project provided by the Bank to the Borrower in accordance with the exchange of letters dated December 2, 1997 and December 26, 1997. between the Borrower and the Bank; (i) "SKTS" - Rural Consulting Centers established in accordance with Section 6.01 (a) of this Agreement; (j) "Rural Enterprise" - in the singular means the enterprise to which UFA offers to allocate or has allocated a Sub-Loan; and "Rural enterprises" collectively means all of these enterprises; (k) "Special Account" - the account described in section 2.02 (B) of this Agreement. (l) "Sub-loan" - a loan allocated or offered by UFA from the Loan funds to Rural enterprises for a Subproject; (m) "Subproject" - a specific development project to be carried out by a Rural Enterprise using Sub-Loan funds; (n) "Sub-Loan Agreements" - internal loan agreements to be concluded between the Borrower and UFA in accordance with paragraph 3 of Part B of Annex 5 to this Agreement, subject to possible amendments from time to time, and such a term includes all additional appendices to Sub -Loan Agreements; "Sub-loan Agreement" in the singular means any of the above agreements.; "Sub-loan" means a loan offered or granted in accordance with the terms of the relevant agreement. Sub-loan Agreements; (o) "Tenge" is the legal currency of the Borrower.

Article II Loan Section 2.01. The Bank agrees to provide the Borrower with an amount equal to fifteen million US dollars (US$ 15,000,000) for the term and conditions set forth or specified in the Loan Agreement. Section 2.02. (a) In accordance with the provisions of Annex 1 to this Agreement, the Loan amount may be withdrawn from the Loan Account for: (i) the amount paid (or, if the Bank agrees, payable) By the borrower due to the fact that the Rural Enterprise withdrew the funds of the Sub-Loan for the purchase at similar prices of goods and services necessary for the Subproject, in respect of which an application for withdrawal of funds from the Loan Account is submitted.; and (ii) the expenses incurred (or, if the Bank agrees, which will be incurred) in connection with the purchase at a reasonable price of the goods and services necessary for the Project described in Annex 2 to this Agreement and provided for financing from the Loan. (b) For the purposes of the Project, the Borrower may open and maintain a special dollar deposit account with a bank acceptable to the Bank and on terms acceptable to the Bank, including adequate protection of funds from counter-claims, confiscation or seizure. Deposits to a Special Account and payments from this account are made in accordance with the provisions of Annex 6 to this Agreement. The agreement. (c) Immediately after the Effective Date, the Bank, on behalf of the Borrower, shall withdraw from the Loan Account and pay itself the amount necessary to reimburse the principal amount of the Project Preparation Advance withdrawn from the account and not repaid on that date, as well as to pay all unpaid fees on it. After that, the outstanding balance of the approved Advance amount for the preparation of the project is canceled. Section 2.03. The closing date is January 31, 2002 or such later date as the Bank determines. The Bank shall immediately notify the Borrower of such a later date. Section 2.04. (a) The Borrower shall pay the Bank a commission for the commitment of the principal amount of the Loan, which has not been withdrawn from the Account from time to time, at a rate of three quarters of one percent (3/4 of 1%) per annum. Section 2.05. (a) The Borrower pays interest on the withdrawn and from time to time outstanding principal amount of the Loan at a rate equal to the Base LIBOR Rate plus the total LIBOR spread for each interest accrual period. (B) For the purposes of this section: (i) "Interest Accrual Period" means the beginning of the interest accrual period from the date of this Agreement, including that date, but excluding the first interest payment date following it, and after the initial period, each period starting from and including the Interest Payment Date, but excluding the next date of the interest payment. (ii) "Interest Payment Date" is the date specified in Section 2.06 of this Agreement. (iii) The "LIBOR Base Rate" is the rate of supply on the London interbank market for six-month deposits in dollars, estimated on the first day of the Interest Accrual Period (or in the case of initial The Accrual Period is estimated on the Date of the interest payment, either on the day of such Interest Accrual Period, or on the day following the first day of interest accrual), which is reasonably determined by the Bank and expressed as a percentage per annum. (iv) "Total LIBOR spread" - for each Interest Accrual Period: (a) half of one percent (1/2 of %); (b) minus (or plus) the weighted average margin for each Interest Accrual Period, below (or above) The London Interbank Offer Rate or other indicative rates for six-month deposits in respect of the Bank's outstanding borrowed funds or portions of borrowed funds allocated by the Bank to finance single-currency loans or portions of loans that are reasonably determined by the Bank and expressed as a percentage per annum. (c) The Bank shall immediately notify the Borrower of the LIBOR base rate and the total LIBOR spread, which are determined for each interest accrual period. (d) If, due to changes in the market environment that affect the determination of interest rates specified in Section 2.05, the Bank determines that it is in the interests of its borrowers in general and the Bank in particular that it is necessary to apply a different basis for determining Loan interest rates than specified in Section 2.05, the Bank may change the basis for determining the interest rates on the Loan, upon notification The Borrower has at least six (6) months notice of such a new base. Basic the rate becomes effective after the expiration of the notification period, except in cases when the Borrower notifies the Bank of his objection during the specified period, in which case the specified changes should not apply to the Loan. Section 2.06 Interest and other fees are payable on June 15th and December 15th of each year. Section 2.07. The Borrower repays the principal amount of the Loan in accordance with the repayment schedule set out in Appendix 3 to this Agreement.

Article III Project Execution

Section 3.01. (a) The Borrower declares its commitment to the Project objectives set out in Annex 2 to this Agreement and, to this end, implements the Project through the Ministry of Agriculture with due integrity and efficiency and in accordance with good administrative and financial practices, and, if necessary, promptly provides the funds, facilities, services and other resources required. for the Project. (B) Without limitation with respect to the provisions of paragraph (a) of this Section, and except as otherwise agreed by the Bank and the Borrower, the Borrower performs the Project in accordance with the Implementation Program described in Annex 5 to this Agreement; Section 3.02. Unless otherwise agreed with the Bank, the purchase of goods and services of consultants The funds required for the Project and provided for financing from the Loan funds are regulated by the provisions of Annex 4 to this Agreement. Section 3.03. For the purposes of Section 9.08 of the General Terms and Conditions and without limitation its provisions, the Borrower will: (a) prepare, on the basis of guidance acceptable to the Bank, and submit to the Bank, no later than six (6) months after the Closing Date or such later date as may be agreed between the Bank and the Borrower, a plan to ensure the continuity of the objectives (B) provide the Bank with a reasonable opportunity to exchange views on the above-mentioned plan with the Borrower.

Article IV Financial regulations

Section 4.01.(a) In accordance with good accounting practices, the Borrower maintains or ensures the maintenance of accounting documents and accounts that adequately reflect the operations, resources and expenses of the institutions and departments responsible for the implementation of the Project or any part of it. (B) The Borrower: (i) ensures that the accounting documents and accounts referred to in paragraph (a) of this Section, including the Special Account, are audited for each financial year in accordance with appropriate auditing principles consistently applied by independent auditors acceptable to the Bank; (ii) submit to the Bank, as soon as it is ready, but no later than six months after the end of the financial year, a report on such audit conducted by the said auditors, to the extent and with such details as the Bank may reasonably request; and (iii) provide the Bank with other information related to the said accounting documents, accounts and audits that the Bank may reasonably request from time to time. (c) For all expenses for which funds have been withdrawn from the Loan Account on the basis of expense statements, the Borrower: (i) maintains or ensures the maintenance, in accordance with paragraph (a) of this Section, of accounting documents and accounts reflecting such expenses; (ii) retains, for at least one year after the Bank has received the audit report for the last financial year when funds were withdrawn from the Loan account or payments were made from a Special Account, all accounting documents (contracts, payment orders, invoices, invoices, receipts and other documents) confirming such expenses(iii) provides an opportunity for representatives of the Bank to verify such documentation; and (IV) ensure that such accounting documents and accounts are included in the annual audit referred to in paragraph (B) of this Section, and ensure that the audit report contains a separate opinion from said auditors on whether the expense statements presented during such a financial year can serve as the basis for said withdrawals, taking into account the procedures and the methods of internal control used in their preparation.

Article V Bank's sanctions

Section 5.01. In accordance with section 6.02 (1) of the General Terms and Conditions, the following additional events are specified: (a) A situation has arisen that makes it impossible to execute the Program or any significant part of it. (B) The British or EU Grant did not enter into force before August 31, 1998 or such later date or dates as the Bank may agree to; However, the provisions of this paragraph do not apply if, to the satisfaction of the Bank, the Borrower proves that he has sufficient funds for the Project from other sources on terms that do not contradict the obligations of the Borrower under this Agreement. The agreement. (c) (i) Pursuant to subparagraph (ii) of this paragraph: (A) the Borrower's right to withdraw funds from a British or EU Grant or any other grant or loan provided to the Borrower to finance the Project has been suspended, cancelled or terminated in whole or in part in accordance with the terms of the relevant agreement, or (C) the maturity date has arrived and payment before the agreed repayment date for these funds. (ii) The provisions of subparagraph (i) of this paragraph shall not apply if the Borrower proves to the satisfaction of the Bank that (A) such suspension, cancellation, termination or early repayment is not caused by the Borrower's inability to fulfill its obligations under such an Agreement; and (C) the Borrower has sufficient funds for the Project from other sources than contrary to the obligations of the Borrower under the present The agreement. Section 5.02. In accordance with section 7.01 (k) of the General Terms and Conditions, the following additional event is stipulated, namely, the event provided for in paragraph (c)(i)(C) of Section 5.01 of this Agreements subject to the reservation of paragraph (c) (ii) of this Section.

Article VI

Effective date. Termination Section 6.01. The following events are established as additional conditions for the entry into force of this Loan Agreement in the context of Section 12.01 (c) of the General Terms and Conditions: (a) in accordance with the applicable law or legislative act, the JCC has been legally established and registered. (B) At least one Sub-Loan Agreement has been concluded with UFA. (c) The Law on Registration of Collateral of Movable Property acceptable to the Bank has been promulgated by the Borrower's Parliament. (d) The Borrower has appointed an auditor acceptable to the Bank to audit the accounts in accordance with Article IV of this Agreement. Section 6.02. The following events, which must be reflected in the opinion or opinions submitted to the Bank, are established as additional in the context of Section 12.02 (c) of the General Terms and Conditions: (a) In accordance with the applicable legislation or the Borrower's legislative act, the SCC is organized and registered. (B) The Sub-Loan Agreement specified in Section 6.01 (B) of this The Agreement has been duly approved or ratified, and signed on behalf of the Borrower and UFA and formally handed over, and according to its terms is legally binding on both parties. Section 6.03. A period of sixty (60) days is hereby established from

the date of signing of this Agreement for the purposes of Section 12.04 of the General Terms and Conditions.

Article VII Representatives of the Borrower; addresses Section 7.01. The Minister of Finance of the Borrower, who is responsible for finance at that time, is designated as the representative of the Borrower for the purposes of Section 11.03 of the General Terms and Conditions. Section 7.02. For the purposes of Section 11.01 of the General Terms and Conditions, the following addresses are defined: For the Borrower: Ministry of Finance 473000 Republic of Kazakhstan Akmola, Republic Square 60, Telex: 264126 For the Bank: Ipternation1 Bank fog Restructionand Development 1818 H Street, N,W. Washington, D.C. 20433 United States of America Telegraph: Telex: IM Office 248423 (MSL) Washington, D.C. 64145 (MSL) In witness whereof, the Parties, acting through their duly authorized representatives, have signed this Agreement in the District Colombia, United States of America, on the day and year indicated above. For the Republic of Kazakhstan For the International Bank for Reconstruction and Development

Appendix 1 Withdrawal of Loan funds from account 1. The table below identifies the categories of expenses to be financed from the Loan, the allocated Loan amounts for each Category, and the percentage of expenses to be financed from the Loan for each Category.: Category Allocated Loan amount (as a percentage of expenses to be financed in dollars) (in%) (1) Consulting services and training 1,190,000 100% (2) Goods (including 2,20,000 100% of foreign expenses, car) 100% of local costs (free of charge) and 85% of local costs for other locally purchased goods. (3) Sub-loans 12,290,000 100% in the first 12 months; 80% thereafter (4) Operating expenses 360,000 100% until December 31, 1999; 80% before December 31, 2000; and 60% thereafter; (5) Refinancing of the 853,000 Advance for Project Preparation Amounts are determined in accordance with Section 2.02 (c) Agreements (6) Undistributed amount of 287,000 Total 15,000,000 2. For the purposes of this Application:

(a) The term "foreign expenditure" means expenditure in the currency of any country other than the Borrower's country on goods or services supplied from any country other than the Borrower's country; and (b) the term "local expenditure" means expenditure in the Borrower's currency or on goods or services supplied from the Borrower's territory; (c) The term "operating expenses" means additional expenses of the KVZ, SCC and PRU in connection with the implementation of the Project, management, monitoring and control, including office equipment and stationery, rent, maintenance, communications, vehicle operation, business trips and travel, audit of Project accounts, but excluding salaries of officials The Borrower; and (d) the term "first twelve months" has the same meaning as set out in paragraph 4 (b) (iii) of Part B of Annex 5 to this Agreement. 3. Regardless of the provisions of paragraph 1 above, funds will not be withdrawn: (a) on account of payments for expenses made prior to the date of this The Agreement, except in cases where funds in the total amount of not more than 1,500,000 in the equivalent of US dollars may be withdrawn from the account in accordance with sub-paragraphs 3 (b) and (c) in respect of Category 3 indicated in the table in paragraph 1 of this Annex, against payments for expenses made before that date, but after March 1, 1998; (b) on account of payments under the Sub-Loan, in respect of which the Borrower has submitted a withdrawal request, if the Bank has not received satisfactory evidence that a Loan Agreement acceptable to the Bank has been concluded with UFA on behalf of the Borrower; (c) in respect of the Sub-Loan, if the Sub-Loan is not provided in accordance with the procedure and on the conditions specified or mentioned in Annex 5 to this Agreement. 4. The Bank may request that funds be withdrawn from the Loan Account based on the billing statements to pay for contractual goods in the amount of up to 300,000 in dollars per contract, contractual services in the amount of 100,000 in dollars per contract with a consulting firm and up to 25,000 in dollars with individual consultants in accordance with with such conditions, which the Bank will specifically notify the Borrower about.

Appendix 2 Project Description The objective of the Program is to improve the productive activities of Rural enterprises in Kazakhstan, including: (a) the continuation of the Borrower's policy of supporting the development of the private sector in rural areas and strengthening the market economy; (ii) improving access to information, advice and training for newly emerging rural enterprises; (iii) supporting the development of financial markets in rural areas and improving access to commercial financial services for private and other types of rural enterprises; and (iv) implementing further institutional and legal reforms to improve the rural financial system and strengthen bankruptcy proceedings. The aim of the Project is to: (i) accelerate the commercialization of Rural enterprises, which will lead to increased productivity and higher incomes in farms; (ii) to assist Rural enterprises in preparing business plans that can be used when applying to commercial banks for financing; and (iii) to strengthen the legal and institutional framework for agricultural lending and bankruptcy of agricultural enterprises in two areas of the Borrower, in particular, in Akmola and Almaty. The project, consisting of the following parts, taking into account the changes made to it, which may be agreed upon from time to time by the Borrower and the Bank, provides for the following objectives: Part A: Consulting services for rural enterprises 1. The organization of Rural Advisory Centers in Almaty and Akmola regions in order to: (a) provide direct assistance to Rural enterprises undergoing restructuring and make necessary changes to ownership structures, management, commercial and production practices in order to increase productivity and ensure sustainability and financial viability; and (b) identify, train and certify a network of local consultants to provide assistance in preparing business plans and advising Rural enterprises on managerial, commercial and technical issues. 2. (a) Improving access to information for shareholders of newly privatized Rural enterprises; (B) the establishment of a local business support infrastructure to provide technical and commercial advice and training to restructured Rural enterprises; and (c) the establishment of local organizational and human resources capabilities to provide advice related to social issues arising during the restructuring process. 3. Provision and dissemination of information focused on land title documents and the potential use of ownership documents in setting up new businesses or generating income for members of Rural enterprises who own the rights. 4. Provide commercial and technical advice to Rural enterprises in order to strengthen their commercial viability and establish infrastructure to support local entrepreneurship in order to provide technical and commercial advice to Rural enterprises undergoing restructuring, including building local capacity to provide advice related to social issues arising during the restructuring process. Part B. Loan for restructured rural enterprises 1. Providing financing through participating financial institutions that have passed the selection process for Rural Enterprises that have successfully completed restructuring and prepared business plans with financing proposals that have an adequate financial rate of return and have proven the ability to recover funds. 2. Provision of a credit line to individual UFUS to finance Subprojects that meet the selection criteria. Part C. Institutional development 1. Developing an institutional framework to support the long-term development of a sustainable financial system in rural areas capable of meeting the industry's credit needs. Including: (a) strengthening the organizational and human resources capabilities of UFA to analyze the liquidation and commencement of restructuring of Rural debtor enterprises and practical procedures for resolving debt problems, bankruptcy and liquidation in order to encourage creditor-led restructuring and strengthen the ability of creditors to initiate restructuring by providing advice and assistance to creditors in using bankruptcy legislation and liquidation of agricultural enterprises; (B) Training of judges, liquidators and administrative staff on special issues of bankruptcy of agricultural enterprises facing bankruptcy of their rights, and options related to the restructuring of Rural enterprises. 2. Development of the legislative framework for crediting agriculture, including (a) the development of a crop collateral system, a system for storing goods as collateral, and the use of warehouse receipts as collateral to ensure guaranteed storage and pledge of crops as collateral; (B) providing assistance in the development of legislation, rules and practical procedures for the use of agricultural products as collateral for commercial bank loans in order to strengthen guaranteed lending, such as warehouse receipts and debtors' accounts; and (c) providing assistance in the practical application of legislation on bankruptcy of agricultural enterprises and registration of collateral rights to movable property. Part D: Project Management Support

Providing technical assistance, training, equipment, and additional operational costs to manage and oversee the progress of the project, including assistance in organizing and operating the Project Implementation Department within the Borrower's Ministry of Agriculture. *** The project is expected to be completed by August 31, 2001.

Appendix 3 Loan repayment schedule Repayment date Repayment of the principal amount in dollars December 15, 2003 320,000 June 15, 2004 325,000 December 15, 2004 335,000 June 15, 2005 345,000 December 15, 2005 355,000 June 15, 2006 365,000 December 15, 2006 380,000 June 15, 2007 390,000 December 15, 2007 400,000 June 15, 2008 415,000 15 December 2008 425,000 June 15, 2009 440,000 December 15, 2009 450,000 June 15, 2010 465,000 December 15, 2010 475,000 June 15, 2011 490,000 December 15, 2011 505,000 June 15, 2012 520,000 December 15, 2012 535,000 June 15, 2013 550,000 December 15, 2013 570,000 June 15, 2014 585,000 December 15, 2014 605,000 June 15, 2015 620,000 December 15, 2015 640,000 15 June 2016 660,000 December 15, 2016 675,000 June 15, 2017 695,000 December 15, 2017 720,000 June 15, 2018 745,000

* The figures in this column represent the dollar amount due, except as provided in section 4.04 (d) of the General Terms and Conditions.

Appendix 4 Procurement and consulting services Section I. Procurement of goods Part A: General provision The procurement of goods and works is carried out in accordance with the provisions of section 1 "Guidelines. Purchases of IBRD loans and credits IDA", published by the Bank in January 1995 and revised in January 1996 and September 1997 (Guidelines), as well as in accordance with the following provisions of this section: Part B: International Competitive Bidding

1. Unless otherwise provided in Part C of this Annex, the procurement of goods and works is carried out under contracts concluded in accordance with the provisions of sections P of the "Guidelines" and the provisions of paragraph 5.

Appendices I.

2. The following provision applies to the purchase of goods and works under contracts awarded as a result of the provisions of paragraph 1 of Part B. (a) Grouping of contracts As appropriate, contracts for the purchase of goods should be grouped into tender packages with an equivalent value of $300,000 and above. (B) Benefits for domestically produced goods The provisions of paragraphs 2.54 and 2.55 of the Guidelines and Annex 2 thereto shall apply to goods manufactured on the territory of the Borrower. Part C: Other procurement procedures 1. Limited international auctions Unless otherwise provided for in paragraphs 2, 3, 4 and 5 of this Section, goods that, with the consent of the Bank, can be purchased from a limited number of suppliers may be purchased under contracts awarded in accordance with the provisions of paragraph 3.2 of the Guidelines. 2. International procurement (in free trade) Unless otherwise provided in paragraphs 3, 4 and 5 of this section, goods with an estimated value equivalent to up to 300,000 dollars. USD per contract may be purchased under contracts awarded on the basis of international procurement procedures (in free trade) in accordance with the provisions of paragraphs 3.5 and 3.6 of the Guidelines. 3. National procurement (in free trade) (a) Unless otherwise provided in paragraphs 4 and 5 of this section, goods with an estimated value of less than the equivalent of USD 100,000. USD per contract may be purchased under contracts awarded on the basis of national procurement procedures (in free trade) in accordance with the provisions 3.5 and 3.6 of the Guidelines. (B) Vehicles with a total value not exceeding the equivalent of USD 30,000 may be purchased under contracts awarded on the basis of national procurement procedures (in free trade) in accordance with provisions 3.5 and 3.6 of the Guidelines. 4. Direct conclusion of contracts, Unless otherwise provided in paragraph 5 of this section, the goods to which the manufacturer has the exclusive right may, with the prior consent of the Bank, be purchased in accordance with the provisions of paragraph 3.7 of the Manual. 5. Commercial practice Goods with an estimated value of up to 20,000 thousand dollars. In a single contract, they can be purchased at competitive prices in accordance with normal business practices acceptable to the Bank, while due consideration must be given to other important factors, such as delivery time, product efficiency and reliability, maintenance, and spare parts availability. Part D: Review of procurement decisions by the Bank 1. Procurement planning The proposed procurement plan for the Project is submitted for consideration and approval by the Bank before sending out invitations for pre-selection for bidding or for submitting bids in accordance with the provisions of paragraph 1 of the Annex to the Bank's Guidelines. The purchase of all goods and works is carried out in accordance with the procurement plan approved by the Bank and in accordance with the provisions of paragraph 1.2. (a) For each contract under Parts B.1, C.1 and C.4 of this section, the procedure described in paragraphs 2 and 3 of Annex 1 to the Guidelines applies. (B) Regarding the first contract under the first three For subprojects, regardless of the procurement method, the procedure set out in paragraphs 2 and 3 of Appendix 1 to the Guidelines applies. 3. Subsequent review For each contract that has not been concluded in accordance with paragraph 2 of this Part, the procedures set out in paragraph 4 of Annex 1 to the Guidelines shall apply. Section II. Recruitment of consultants Part A. General provision Procurement of consulting services is carried out in accordance with the provisions of the Introduction and Section IV of the Guidelines "Selection and Recruitment of Consultants by Borrowers of the World Bank", published by the Bank in January 1997 and revised in September 1997. (Guidance on Consultants), and the following provisions of Section II of this Annex. Part B. Selection based on quality and cost 1. Unless otherwise provided in Part C of this Section, consulting services are procured under contracts awarded in accordance with the provisions of Section P of the Consultant Guidelines, paragraph 3, Appendix 1, Appendix 2 to the Guidelines, and the provisions of paragraphs 3.13 - 3.18 applicable to the selection of consultants based on an assessment based on quality and cost. 2. The following provisions apply to the procurement of consulting services under contracts awarded in accordance with the provisions of the preceding paragraph. A short list of consultants to provide consulting services to Rural enterprises in Part (B) of the Project, estimated to cost up to 100,000 US dollars per contract, may consist entirely of national consultants in accordance with paragraphs 2.07 of the Consultant Guidelines. Part C: Different selection procedure for consultants 1. Individual consultants The services of consultants who meet the requirements listed in paragraph 5.1 of the Consultant Guidelines are purchased under contracts awarded to individual consultants in accordance with the provisions of paragraphs 5.1-5.3 of the Consultant Guidelines. 2. Non-competitive selection Services that meet the requirements of paragraph 3.9 of the Guidance on Consultants may, with the prior consent of the Bank, be purchased in accordance with the provisions of paragraphs 3.8-3.11 of the Guidance on Consultants. Part D: The Bank's review of the selection of consultants 1. Selection planning Prior to sending requests for proposals to consultants, the proposed consultant selection plan for the Project is submitted to the Bank for review and approval in accordance with the provisions of paragraph 1 of Annex 1 to the Consultant Guidelines. The selection of all consultant services must be carried out in accordance with the selection plan approved by the Bank and in accordance with the provisions of paragraph 1.2. Preliminary review (a) For each contract with a consulting firm with an estimated value equivalent to USD 200,000 and above, the procedure set out in paragraphs 1, 2 (with the exception of the third subparagraph of paragraph 2 (a) and 5 of Appendix 1 to the Guidance on Consultants. (B) For each contract with a consulting firm with an estimated value of the equivalent of US$ 100,000 and above, but not exceeding the equivalent of US$ 200,000. The procedure set out in paragraphs 1, 2 (with the exception of the second subparagraph of paragraph 2 (a) and 5 of Annex 1 to the Guidance on Consultants) applies. (c) For each contract with an individual consultant with an estimated cost equivalent to USD 25,000 and above, a description of the qualifications, experience, terms of reference and conditions of employment of consultants is submitted to the Bank for preliminary review and approval. The contract is awarded only after receiving the specified approval. 2. Subsequent review For each contract, the conclusion of which was not regulated by paragraph 2 of this Part, the procedure set out in paragraph 4 of Annex 1 to the Guidance on Consultants applies.

Appendix 5 Implementation program Part A General provisions 1. The Borrower performs Parts A, C and D of the Project through the Ministry of Agriculture using OPP. 2. The Borrower ensures the existence of a PRU staffed by a sufficient number of employees and having functions, powers and premises that are considered acceptable to the Bank. 3. The Borrower will ensure that, until the completion of the Project, the PRU will annually prepare, and then submit to the Bank for review and approval, an annual work program indicating targets for the restructuring of Rural enterprises, technical assistance and training needs provided for the reporting period. 4. By December 31, 1998, the Borrower, through the Ministry of Environment and Natural Resources, according to the plan agreed with the Bank, will provide environmental training for employees of the ORP, the SCC and the UFA. 5. (a) The Borrower will ensure the existence of the CCC, staffed by a sufficient number of employees, and having functions, powers and premises that are considered acceptable to the Bank. (B) The responsibilities of the CCC will include, among other things, assisting Rural Enterprises in carrying out restructuring and ensuring that Rural enterprises applying for a loan under the Project meet the required selection criteria set out in Part C of this Applications. (c) SCC: (i) until April 30, 1999 (ii) prepare a cost-recovery plan for providing consulting services to Rural enterprises and discuss it with the Bank, and (ii) subsequently implement the plan, taking into account the Bank's comments, if any. 6. By September 30, 1998, the Borrower will organize, in accordance with the terms of reference acceptable to the Bank, and subsequently ensure the existence of Advisory Boards with functions and powers that are considered acceptable to the Bank. 7. The borrower will adopt a commercial lending policy and, for this purpose, will gradually stop the widespread practice of subsidizing the interest rate on agricultural loans provided from budgetary funds. To this end, the Borrower will stop subsidizing all agricultural loans from the budget by January 1, 2000, except in cases discussed and agreed with the Bank before that time. 8. The Borrower: (a) will ensure that the appropriate policies and procedures are in place to enable the Borrower to monitor and evaluate the Project on an ongoing basis and achieve its objectives in accordance with indicators acceptable to the Bank. (B) prepare according to the terms of reference satisfactory to the Bank and submit to the Bank on or about February 15, 2000. a report summarizing the results of the activities carried out in accordance with paragraph (a) of this Section to monitor and evaluate the progress of the project for the period preceding the date of the said report, and listing recommended measures to ensure the effective implementation of the Project and achieve its objectives in the period after such date; and (c) review jointly with the Bank before March 15, 2000 at a later date, at the request of the Bank, the report referred to in subparagraph (B) of this paragraph, and then will take all necessary measures to ensure the effective completion of the project and achieve its objectives based on the conclusions and recommendations of the said report and the Bank's opinion on the matter. Part B Participating financial institutions 1. The Borrower performs Part B of the Project through UFA, selected to participate in the Project in accordance with paragraph 2.2. The Borrower, in consultation with the Bank, selects financial institutions to participate in Part B of the Project in accordance with the selection criteria agreed with the Bank, which includes: (a) A valid banking license of a financial institution; (B) A certificate of compliance with regulatory indicators issued by the National Bank of Kazakhstan certifying that the financial institution complies with all banking laws and regulations and fully complies with prudential standards, including capital adequacy, restrictions on loans to single borrowers and internal borrowers, and the bank's open foreign exchange position; (c) Accounts and financial statements prepared in accordance with with International Accounting Standards (IAS). (d) An acceptable audit report of a financial institution covering transactions over the past year, including a portfolio analysis prepared by an internationally recognized auditing firm in accordance with International Standards on Auditing (ISA). (e) A sufficient network of branches of the financial institution to serve rural clients; (f) An acceptable governing body of the financial institution that develops general policies and carries out proper supervision of the financial institution's operations; (g) The financial institution's expressions of interest and expertise in lending to agricultural clients; (h) The financial institution's internal administrative, operational, and financial systems and procedures acceptable to the Bank; and (i) the financial institution's willingness to participate in an organizational and human resources development program. 3. (a) For the purposes of Part B of the Project, the Borrower will re-credit the Loan amount allocated to Category (3) of the Table, paragraph 1 of Annex 1 to this Agreement, to UFA under sub-loan agreements to be concluded between the Borrower and each of the UFOs on terms approved by the Bank. Unless otherwise agreed with the Bank, such conditions include the following: (i) The amount of the sub-loan to each UFA is provided in dollars or tenge; (ii) The principal amount of the Sub-Loan is repaid by UFA in dollars or an equivalent amount in tenge, paid to the Borrower in equal semi-annual installments over a period of fifteen years, including a three-year grace period; (iii) The interest rate is charged on the outstanding balance Sub-Loans in an amount acceptable to the Bank and is determined as follows: (a) The interest rate for Sub-Loans in dollar terms is the prevailing interest rate, which is determined in accordance with Section 2.05 of this Agreement plus a margin determined from time to time by the Borrower and agreed with the Bank to compensate the Borrower for: (1) fees for the obligation payable in connection with the Loan, and (2) the credit risk associated with the Sub-Loan; and (B) the interest rate on Sub-Loans denominated in tenge is determined according to a method acceptable to the Bank, taking into account similar factors that apply to Sub-Loans in dollar terms. (b) The Borrower uses the rights obtained under the Sub-Loan Agreements in such a way as to ensure the interests of the Borrower and the Bank and achieve the objectives of the Project, and unless otherwise agreed with the Bank, the Borrower must not transfer, modify, violate or waive the Sub-Loan Agreements or any of its provisions. 4. (a) The maximum amount provided by the Borrower from the funds of the UFA Loan will, for any period of time, be limited to the amount corresponding to a specific percentage of the total amount of the lawfully paid amounts of the Sub-Loan, as stipulated in the terms Sub-loan Agreements and in accordance with the Borrower's policy acceptable to the Bank; however, in the case of a particular UFA, the percentage of total legally paid amounts of Sub-Loans may under no circumstances exceed 100% for the first twelve months and 80% thereafter. (b) For the purposes of this paragraph: (i) "lawful disbursements of sub-loans" means amounts within the scope of Sub-loans paid to the Beneficiary for any legitimate expenses for which UFA is entitled to use (or has used) the loan facility agreed upon under the Sub-Loan Agreement; (ii) the "cumulative legitimate Sub-Loan payments" of a particular UFA over a specified period of time means the cumulative amounts lawfully paid by UFA for all Sub-Loans to all Beneficiaries during a specified period time; and (iii) "the first twelve months" means, for any particular UFA, a period of twelve months after the date of the conclusion of the Sub-Loan Agreement. Part C Rural Enterprises and Subprojects

1. The Borrower, in consultation with the Bank, selects Rural Enterprises and Subprojects in accordance with the selection criteria agreed with the Bank, including the following: 1. Rural enterprise: To get the right to receive Sub-loans, Rural enterprises must: (a) be 100 percent privately owned and properly registered as a family farm or a legal entity recognized by applicable law or regulation (joint-stock company, production cooperative or partnership), (b) have a unit structure that is open and fully documented (when the shares of a legal entity (joint-stock company, the terms of such transfer must be fully documented in the form of an official lease or sale agreement, which specifies the terms of the transfer), and (c) undergo or are in the process of restructuring and can prove their financial and commercial viability in a business plan. and the ability to repay the loan. (B) Subprojects: The subprojects to be financed include: (a) agriculture and other agricultural activities such as agro-processing, agricultural services that are directly related to Rural enterprises receiving Sub-loans under the Project, and (B) the contribution of the Rural Enterprise in cash or in kind to the cost of the Subproject in the amount of at least 10 percent, in the case of restoration or modernization, or 25 percent in the case of development of activities in a new direction, (c) evidence of a debt service ratio of at least 1.3 during the term of the Sub-loan, which is calculated based on the total debt of a Rural enterprise.

2. For the purposes of Part B of the Project, the Borrower will ensure that UFA will re-loan part of the Sub-Loan funds to Rural Enterprises within the framework of Sub-Loan Agreements to be concluded between UFA and Rural Enterprises in accordance with the procedure and conditions approved by the Bank, including those listed or mentioned in Part D.

3. The Borrower will ensure that UFA uses its rights in relation to each Subproject in such a way as to: (i) protect the interests of the Bank and the Borrower; (ii) fulfill its obligations under The re-crediting agreement and the sub-loan agreements; and (iii) achieve the objectives of the project.

Part D Approval procedure, terms and conditions of Sub-loans

1. Terms and Conditions: (a) The amount of the Sub-Loan is allocated to each Rural Enterprise in dollars or tenge. (b) The principal amount of the Sub-Loan is repaid by the relevant Rural Enterprise in dollars or tenge and paid to UFA in equal installments every six months for a period not exceeding twelve years, including a grace period not exceeding three years. (c) the interest rate is charged on the principal withdrawn and outstanding amount of each Sub-Loan at the prevailing interest rate in accordance with the terms of the relevant Sub-Loan Agreement, which is determined in accordance with paragraph 3 (a) (iii) of Part B of this Annex, plus a market-based spread determined by the UFC that issues the Sub-Loan. In addition, Sub-loans denominated in tenge are subject to a surcharge for the risk of exchange rate fluctuations based on the market. (d) The amount owed on Sub-Loans to one sub-borrower should not exceed $500,000. However, under special circumstances determined by the Bank on a case-by-case basis, the amount of each Sub-Loan with an aggregate limit equivalent to 5,000,000 US dollars may be the equivalent of up to 750,000 US dollars.

2. The costs of goods or services required for the Subproject are not subject to financing from the Loan funds if: (a) The Subproject for such Subproject has not been approved by the Bank, and such expenses occurred no earlier than 90 days prior to the date of receipt by the Bank of the application and the information required under paragraph 3 (a) of Part B of this Applications for such a Sub-Loan; or (B) The Sub-loan for such a Subproject is unlimited, for which the Bank has authorized the withdrawal of funds from the Loan Account, and such expenses occurred no earlier than 90 days prior to the date of receipt by the Bank of the request and information required under paragraph 3 (b) of this Applications for such an unlimited Sub-Loan. For the purposes of this Agreement, an unlimited loan is defined as a Sub-Loan under A subproject in the amount provided for financing from the Loan, which should not exceed the amount of (i) 350,000 in the equivalent of USD. When combined with other outstanding amounts financed or proposed for financing from the proceeds of a Loan or any other loan due under other agreements between the Bank and the Borrower that were concluded prior to the date of this Agreement, the funds of which were used or are being used to finance goods and services directly and materially related to such Subproject, or (ii) 500,000 equivalent dollars. The sum of all other unlimited Sub-Loans financed or offered for financing from the Loan funds, while the specified amounts may change from time to time by the decision of the Bank.

3. (a) When submitting a Sub-Loan (with the exception of an unlimited Sub-loan) for approval by the Bank, the Borrower submits an application in a form acceptable to the Bank, accompanied by: (i) a description of the Rural Enterprise and an expert assessment of the Subproject, including a description of the costs proposed for financing from the Loan and an assessment of the state of the environment based on environmental guidelines acceptable to the Bank; (ii) the proposed terms and conditions of the Sub-Loan, including the repayment schedule; and (iii) any other information reasonably requested by the Bank. (b) Each request by the Borrower for permission to withdraw funds The Loan Account for the Unlimited Sub-Loan must contain (i) a brief description of the Rural Enterprise and the Subproject, including a description of the costs proposed for financing from the Loan, and (ii) terms and conditions of the Sub-Loan, including its repayment schedule. (c) Applications and requests drawn up in accordance with sub-paragraphs (a) and (B) of this paragraph shall be submitted to the Bank during the period up to and including June 30, 2001.

4. Sub-loans are granted on terms that allow the Borrower, on the basis of a written agreement with a Rural enterprise or other appropriate legal procedure, to obtain adequate rights to protect the interests of the Bank and the Borrower, including, in the case of a Sub-Loan, the right: (a) require a Rural Enterprise to perform and maintain Subproject with due integrity and efficiency and in accordance with appropriate technical, financial, managerial and environmental standards and regulations, and maintain appropriate records; (b) require that: (i) the goods and consulting services financed from the funds of the Sub-Loan be purchased in accordance with the provisions of Annex 4 to this Agreement; and (ii) that such services be used exclusively in the implementation of Subprojects; (c) carry out inspections, independently or with the participation of representatives of the Bank, and if necessary The Bank requires direct on-site inspections of the enterprises included in the Subproject, as well as their activities and any relevant reporting and documentation.; (d) require that: (i) A rural enterprise conclude and maintain Insurance contract with reliable insurance companies against such risks and for such amounts as are considered sufficient according to good business practice; and (ii) without limiting the provisions of the preceding paragraph, such insurance should cover the risks associated with the acquisition, transportation and delivery of Loan-financed goods to the place of use or installation, and compensation for losses in such cases should be paid in a currency that the Rural Enterprise can freely use to replace or repair such goods.; (e) receive any information reasonably requested by the Bank or the Borrower regarding the above, as well as the management, activities and financial condition of the Rural Enterprise, as well as the benefits received from the Subproject; (f) suspend or completely revoke the right of the Rural Enterprise to use the Loan funds, in case it fails to fulfill its obligations stipulated in the contract with The borrower. Appendix 6 Special account

1. For the purposes of this Annex (a), the term "legitimate categories" means categories (1) to (4) listed in the Table of paragraph 1 of Annex 1 to this Agreement.; (b) the term "legitimate expenses" means expenses for goods and services necessary for the implementation of the Project, purchased at a reasonable cost, provided for financing from Loan funds, which are periodically allocated to legitimate Categories in accordance with the terms of Annex 1 to this Agreement, however, with the condition that, notwithstanding the provisions of paragraph 2 (B) of Part D, Appendices (5) to this Agreement, payments for expenses financed from unlimited Sub-loans, They can be made by making payments from a Special Account before the Bank approves the withdrawal of funds from the Loan account for the above purposes. However, such expenses are considered legitimate only if such withdrawals are subsequently approved by the Bank; and (c) the term "Approved allocation" means an amount equivalent to $1,500,000. The amount of $1,000,000 to be withdrawn from the Loan account and credited to the Special Account in accordance with paragraph 3 (a) of this Annex, provided that, unless the Bank agrees otherwise, the Approved Allocation will be limited to an amount equivalent to $1,000,000 until the total amount of all outstanding special obligations assumed By the Bank according to According to Section 5.02 of the General Terms and Conditions, it will not be equal to or exceed 3,000,000 in dollar terms.

2. Payments of funds from a Special Account are made exclusively for eligible expenses in accordance with the terms of this Appendix. 3. After providing the Bank with acceptable evidence that the Special Account has been opened in accordance with the established procedure, withdrawal The Approved Allocation and subsequent withdrawal of funds for the purpose of replenishing the Special Account will be made in the following order: (a) in order to withdraw funds from the Approved Allocation, the Borrower submits a request or requests to the Bank for a deposit that does not exceed the total amount or amounts of the Approved Allocation. Based on such request or requests, the Bank, on behalf of the Borrower, makes withdrawals from the Loan account and deposits them in a Special Account in the amount or amounts requested by the Borrower. (b) (i) in order to replenish the Special Account, the Borrower submits requests to the Bank for funds to be transferred to the Special Account at a frequency determined by the Bank. (ii) prior to receipt of each of the above-mentioned requests or upon receipt of such request, the Borrower shall submit to the Bank the documentation and other evidence provided for in paragraph 4 of this Annex for making the payment or payments in accordance with which replenishment of funds in the Special Account is requested. On the basis of each such request, the Bank, on behalf of the Borrower, debits funds from the Loan account and charges them to a Special Account in the amount requested by the Borrower, the validity of which is confirmed by the mentioned financial and other documents indicating that this amount has been debited from the Special Account to pay for related expenses. The Bank's withdrawal of the specified deposits from the Loan Account is carried out within the framework of the legitimate categories and in the corresponding equivalent amounts, which is confirmed by the submitted financial and other documents.

4. For each payment made by the Borrower from a Special Account, the Borrower, within the period specified in the Bank's request, submits to the Bank documentation and other evidence that such payment was made solely for legitimate expenses.

5. Regardless of the provisions of paragraph 3 of this Annex, the Bank does not accept requests for further deposits to the Special Account: (a) if at any point the Bank has determined that all further withdrawals are made by the Borrower directly from the Loan account, as provided for in Article V of the General Terms and Conditions and paragraph (a) of Section 2.02 of this Agreement; or (B) if the Borrower has not submitted to the Bank within the period specified in Section 4.01 (B) (ii) of this Annex any audit reports to be submitted to the Bank in accordance with the specified Section regarding the audit of accounts and Special Account statements; (c) if at any time the Bank has notified the Borrower of its intention to suspend partially or completely the Borrower's right to withdraw funds from the Loan Account in accordance with the provisions of Section 6.02 of the General Terms and Conditions; or (d) as soon as the total outstanding amount of the Loan funds intended to finance the eligible categories, less the total amount of all outstanding special obligations provided by the Bank in accordance with the provisions of section 5.02 of the General Terms and Conditions for the Project, is twice the amount of the Approved Appropriations. After that, the withdrawal from the Loan account of the remaining outstanding amounts intended to finance legitimate categories is carried out in accordance with the procedure specified by the Bank in a special notification to the Borrower. Such further withdrawals will be made in amounts acceptable to the Bank only after the Bank has verified that all amounts remaining on deposit A special account as of the date of the mentioned notification will be used to make payments for legitimate expenses.

6. (a) If the Bank determines at any time that any payments from the Special Account (i) were made to cover expenses or in amounts that do not comply with the terms of paragraph 2 of this Annex, or (ii) are not justified by the documentation provided to the Bank, the Borrower immediately upon receipt of the Bank's notification (A) provides such additional confirmation as the Bank may request.; or (C) deposits to a Special Account (or, upon the request of the Bank, reimburses the Bank) an amount equal to the amount of such payment or part of it, which is not sufficiently confirmed or does not fall into the category of legitimate payments. Unless the Bank agrees otherwise, no funds will be deposited into the Special Account by the Bank until the Borrower submits such confirmation in each specific case or makes the mentioned contribution to the Special Account or reimburses the funds. (b) If the Bank determines at any time that any outstanding amount in the Special Account will not be required to cover further payments for eligible expenses, the Borrower will immediately reimburse the Bank for such outstanding amount upon receipt of notification from the Bank. (c) Upon receipt of the Bank's notification, the Borrower may reimburse the Bank in whole or in part for the funds deposited in the Special Account. (d) Funds reimbursed to the Bank in accordance with paragraph 6 (a), (B) and (c) of this Annex shall be credited to the Loan account for subsequent withdrawal or cancellation in accordance with the provisions of this Agreement, including the General Terms and Conditions.

This Law establishes the rules for registering the pledge of movable property in order to realize and protect the rights of individuals and legal entities who have legitimate rights to this property.

The Law of the Republic of Kazakhstan dated June 30, 1998 No. 254.

President

Republic of Kazakhstan

Constitution Law Code Standard Decree Order Decision Resolution Lawyer Almaty Lawyer Legal service Legal advice Civil Criminal Administrative cases Disputes Defense Arbitration Law Company Kazakhstan Law Firm Court Cases