LOAN NUMBER 8327-BR

Loan Agreement

(Strengthening Public Management and Integrated Territorial DevelopmentTechnical Assistance Project - Programa de Fortalecimento da Gestdo do Setor

Piblico e do Desenvolvimento Territorial IntegradoRIO METROPOLE PROGESTAO II)

between

INTERNATIONAL BANK FOR RECONSTRUCTIONAND DEVELOPMENT

and

STATE OF RIO DE JANEIRO

Dated BO ,2014

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LOAN AGREEMENT

Agreement dated cA072 3O , 2014, betweenINTERNATIONAL BANK FOR RECONSTRUCTOIN AND DEVELOPMENT("Bank") and STATE RIO DE JANEIRO (Borrower). The Borrower and the Bankhereby agree as follows:

ARTICLE I- GENERAL CONDITIONS; DEFINITIONS

1.01. The General Conditions (as defined in the Appendix to this Agreement)constitute an integral part of this Agreement.

1.02. Unless the context requires otherwise, the capitalized terms used in thisAgreement have the meanings ascribed to them in the General Conditions or inthe Appendix to this Agreement.

ARTICLE II - LOAN

2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth orreferred to in this Agreement, the amount of forty eight million Dollars($48,000,000), as such amount may be converted from time to time through aCurrency Conversion in accordance with the provisions of Section 2.07 of thisAgreement ("Loan"), to assist in financing the project described in Schedule 1 tothis Agreement ("Project").

2.02. The Borrower may withdraw the proceeds of the Loan in accordance withSection IV of Schedule 2 to this Agreement. The Borrower's Representative forpurposes of taking any action required or permitted to be taken pursuant to thisSection is its Secretary of Public Works.

2.03. The Front-end Fee payable by the Borrower shall be equal to one quarter of onepercent (0.25%) of the Loan amount. The Borrower shall pay the Front-end Feenot later than 60 days after the Effective Date.

2.04. The interest payable by the Borrower for each Interest Period shall be at a rateequal to the Reference Rate for the Loan Currency plus the Variable Spread;provided, that upon a Conversion of all or any portion of the principal amount ofthe Loan, the interest payable by the Borrower during the Conversion Period onsuch amount shall be determined in accordance with the relevant provisions ofArticle IV of the General Conditions. Notwithstanding the foregoing, if anyamount of the Withdrawn Loan Balance remains unpaid when due and such non-payment continues for a period of thirty days, then the interest payable by the

Borrower shall instead be calculated as provided in Section 3.02 (e) of theGeneral Conditions.

2.05. The Payment Dates are May 15 and November 15 in each year.

2.06. The principal amount of the Loan shall be repaid in accordance with theamortization schedule set forth in Schedule 3 to this Agreement.

2.07. (a) The Borrower may at any time in each case with prior non-objection ofthe Guarantor, through the Secretariat of the National Treasury of theGuarantor's Ministry of Finance, request any of the followingConversions of the terms of the Loan in order to facilitate prudent debtmanagement: (i) a change of the Loan Currency of all or any portion ofthe principal amount of the Loan, withdrawn or unwithdrawn, to anApproved Currency; (ii) a change of the interest rate basis applicable to:(A) all or any portion of the principal amount of the Loan withdrawn andoutstanding from a Variable Rate to a Fixed Rate, or vice versa; or (B)all or any portion of the principal amount of the Loan withdrawn andoutstanding from a Variable Rate based on a Reference Rate and theVariable Spread to a Variable Rate based on a Fixed Reference Rate andthe Variable Spread, or vice versa; or (C) all of the principal amount ofthe Loan withdrawn and outstanding from a Variable Rate based on aVariable Spread to a Variable Rate based on a Fixed Spread; and (iii) thesetting of limits on the Variable Rate or the Reference Rate applicable toall or any portion of the principal amount of the Loan withdrawn andoutstanding by the establishment of an Interest Rate Cap or Interest RateCollar on the Variable Rate or the Reference Rate.

(b) Any conversion requested pursuant to paragraph (a) of this Section thatis accepted by the Bank shall be considered a "Conversion", as definedin the General Conditions, and shall be effected in accordance with theprovisions of Article IV of the General Conditions and of the ConversionGuidelines.

ARTICLE III - PROJECT

3.01 The Borrower declares its commitment to the objective of the Project and theProgram. To this end, the Borrower shall carry out, under the overall oversight ofthe Coordination Committee: (a) Part 1(a) of the Project through SEOBRAS; (b)Part 1(b) of the Project through SEOBRAS, in coordination with SETRANS; (c)Part 1(c) of the Project through SEOBRAS, in coordination with SEH, CEHABand ITERJ; (d) Part 1(d) of the Project through SEPLAG, in coordination withSEDEC, INEA and DRM; (e) Part 2(a) of the Project through SEPLAG, incoordination with SEASDH; (f) Part 2(b) of the Project through SEFAZ, in

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coordination with MP; (g) Part 2(c) of the Project through SEPLAG, incoordination with SEEDUC; (h) Part 2(d) of the Project through SEPLAG, incoordination with SES; (i) Part 3 of the Project through SEFAZ; and (j) Part 4 ofthe Project through SEOBRAS, all in accordance with the provisions of Article Vof the General Conditions.

3.02. Without limitation upon the provisions of Section 3.01 of this Agreement, andexcept as the Borrower and the Bank shall otherwise agree, the Borrower shallensure that the Project is carried out in accordance with the provisions ofSchedule 2 to this Agreement.

ARTICLE IV - REMEDIES OF THE BANK

4.01. The Additional Events of Suspension consist of the following, namely that theProgram shall have been amended, suspended, abrogated, repealed or waived soas to affect materially and adversely, in the opinion of the Bank, the ability of theBorrower to perform any of its obligations under this Agreement.

ARTICLE V - EFFECTIVENESS; TERMINATION

5.01. The Additional Conditions of Effectiveness consists of the following, namelythat the SEOBRAS Project Management Unit has been created and fully staffedin accordance with the provisions of Section I.A.3 of Schedule 2 to thisAgreement.

5.02. The Additional Legal Matter consists of the following, namely that the Loan hasbeen registered with the Guarantor's Central Bank.

5.03. Without prejudice to the provisions of the General Conditions, the EffectivenessDeadline is the date ninety (90) days after the date of this Agreement, but in nocase later than the eighteen (18) months after the Bank's approval of the Loanwhich expire on August 12, 2015.

ARTICLE VI- REPRESENTATIVE; ADDRESSES

6.01. Except as provided in Section 2.02 of this Agreement, the Borrower'sRepresentative is its Governor.

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6.02. The Recipient's Address is:

Vice-Governadoria do EstadoPalAcio Guanabara - AnexoRua Pinheiros Machado, s/n, 40 andar, Laranjeiras22231-090 - Rio de Janeiro, RJBrazilFacsimile (55-21) 2334-3223

With copies to:

Secretaria de Planejamento e GestdoAvenida Erasmo Braga, 118, 130 andar20020-000 - Rio de Janeiro, RJBrazilFacsimile: (55-21) 2332-7020

Secretaria de Estado de FazendaAvenida Presidente Vargas, 670, 150 andar20071-001 - Rio de Janeiro, RJBrazilFacsimile (55-21) 2334-4513

Secretaria de Estado de ObrasRua M6xico, 125, 90 andar, Centro20031-145 - Rio de Janeiro, RJBrazilFacsimile (55-21) 2333-0877

6.03. The Bank's Address is:

International Bank for Reconstruction and Development1818 H Street, N.W.Washington, D.C. 20433United States of America

Cable: Telex: Facsimile:

INTBAFRAD 248423 (MCI) 1-202-477-6391Washington, D.C.

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AGREED atAi J" 4tOA rea se of theday and year first above writt'n.

INTERNATIONAL BANK FORRECONSTRUCTION AND DEVELOPMENT

By

A orized Representative

STATE OF RIO DE JANEIRO

By

Aut ' ed present e

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SCHEDULE 1

Project Description

The objective of the Project is to support the Borrower to improve servicedelivery through introducing performance-based management information technologiesand an Integrated Territorial Development Approach in key public services.

The Project consists of the following parts:

Part 1. Stren2thening metropolitan management throu2h inte2ration andcoordination in urban development, housing, transport, environment, anddisaster risk mana2ement.

(a) Strengthening of the Borrower's metropolitan governance frameworkthrough, inter alia: (i) monitoring and evaluating territorial developmentimpacts; and (ii) the development of an integrated master plan formetropolitan urban development.

(b) Strengthening of the Borrower's metropolitan transport managementcapacity through, inter alia: (i) the evaluation and consolidation of theexisting transportation ticketing system (Bilhete Unico); (ii) thedefinition of an action plan for the revision of the AMTU-RJ's role; and(iii) the strengthening of the AGETRANSP institutional capacity.

(c) Strengthening of the Borrower's metropolitan housing managementcapacity through, inter alia: (i) the carrying out of technical studies todevelop an institutional strengthening proposal for the SEH and theCEHAB; (ii) the carrying out of technical studies to design low incomehousing programs and integrate those programs with social programs;and (iii) the design of an integrated plan for sustainable urban landregularization.

(d) Improvement of the Borrower's disaster risk management capacity andearly warning system for high rainfall events through, inter alia: (i) thedevelopment and implementation of hardware for the existingBorrower's early warning system to monitor and respond to geologicaland hydrological disaster risks; (ii) the carrying out of a study to modelthe hydrological disaster warning system, including basic protocols to beused by the Borrower and its municipalities; (iii) the mapping of theBorrower's landslide and flood risks; and (iv) the carrying out of trainingto various Borrower's disaster risk management teams.

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Part 2. Improvin2 living conditions in the most vulnerable social settings

(a) Strengthening of the Borrower's capacity to implement an integrated andevidence -based medium-term social development strategy through, interalia, the support to the Borrower's restructuring and strategic planningprocess for social programs by: (i) developing and implementing astrategic plan for the SEASDH; (ii) carrying out technical studies todesign a model for a monitoring and evaluation system, and acquisitionof information management hardware and software; (iii) strengthening ofexisting public sector management procedures and administrativesystems; and (iv) strengthening the SUAS' management andeffectiveness capacity.

(b) Enhancement of the Borrower's capacity to identify, locate and supportmissing and involuntarily interned people through, inter alia: (i) thedevelopment of a software and a methodology (for reporting, classifyingand analyzing data on missing people) to implement the PLID; and (ii)the extension of the MSM Information System to all the hospitals locatedin the Borrower's territory.

(c) (i) Strengthening of the Borrower's: (A) education management capacityincluding evidence-based policy making capacity for secondaryeducation; and (B) management capacity on school infrastructure; and(ii) enhancement of the quality of secondary education, all through, interalia: (1) the expansion of SEEDUC's analytical and system managementcapacity; (2) the evaluation of infrastructure conditions in the Borrower'ssecondary schools; and (3) the development and implementation of a 4-year plan to build and refurbish necessary secondary schoolinfrastructure.

(d) Strengthening of the Borrower's health monitoring and evaluationprocesses and public hospitals' information systems through, interalia:(i) the evaluation of the comparative performance of differentmodels of organizing and delivering primary health care; and (ii) theanalysis and restructuring of administrative and clinical processes inpublic hospitals.

Part 3. Strenmthenin2 core finance and taxation functions

Development and adoption of new practices aimed at strengthening theBorrower's tax administration and financial management systems through, inter alia: (a)(i) the carrying out of technical studies to develop a methodology for estimating lostrevenue due to tax waivers, (ii) the development of proposed revisions to the taxcollection procedures, and (iii) the design and implementation of diagnostic mechanismsneeded to implement best practices in debt management; (b) the implementation of a

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control system for the Borrower's Automobile Property Tax (IPVA); (c) the development

of procedures, processes, manuals and databases to improve the management and costingof public investment programs, to better assess medium term implications of fiscal policy

decisions; and (d) the provision of training for technical specialists and managers.

Part 4. Project Manaement

Provision of support for the overall management of the Project.

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SCHEDULE2

Project Execution

Section I. Implementation Arran2ements

A. Institutional Arrangements

1. (a) The Borrower shall, and shall cause INEA, DRM, ITERJ, CEHAB and MP tocarry out the pertinent Project activities under their responsibility in accordancewith the Project Operational Manual, the Procurement Plan and (b) except as theBank shall otherwise agree, the Borrower shall not amend or waive any provisionof these documents without the Bank's prior written approval. In case of anyconflict between the terms of said documents and those of this Agreement, theterms of this Agreement shall prevail.

2. For purposes of the carrying out of Parts 1(d), 2(a), 2(c), and 2(d) of the Project,the Borrower, through SEPLAG, shall operate and maintain, until the completionof the execution of the Project, a Project management unit (the SEPLAG ProjectManagement Unit), with competent staff, in adequate numbers and withqualifications and experience satisfactory to the Bank, and in accordance, asapplicable, with the provisions of Section III of this Schedule, including thefollowing key staff: a general coordinator, a financial management specialist anda procurement specialist.

3. For purposes of the carrying out of Parts 1(a), 1(b), 1(c) and 4 of the Project, theBorrower, through SEOBRAS, shall create and thereafter operate and maintain,until the completion of the execution of the Project, a Project management unit(the SEOBRAS Project Management Unit) with competent staff, in adequatenumbers and with qualifications and experience satisfactory to the Bank, and inaccordance, as applicable, with the provisions of Section III of this Schedule,including the following key staff: a general coordinator, a financial managementspecialist and a procurement specialist.

4. For purposes of the carrying out of Parts 2 (b) and 3 of the Project, the Borrower,through SEFAZ, shall operate and maintain, until the completion of the executionof the Project, a Project management unit (the SEFAZ Project Management Unit)with competent staff, in adequate numbers and with qualifications and experiencesatisfactory to the Bank, and in accordance, as applicable, with the provisions ofSection III of this Schedule, including the following key staff: a generalcoordinator, a financial management specialist and a procurement specialist.

5. The Borrower shall establish, and thereafter maintain, throughout theimplementation of the Project, a coordination committee (the CoordinationCommittee), overseen by the Vice Governor's Office and including members of

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all the Project Management Units, with functions and responsibilities acceptableto the Bank, as set forth in the Project Operational Manual, including the overallsupervision and coordination of activities among the Project Management Units.

6. For purposes of implementing Part 1(d) of the Project, the Borrower, not laterthan 30 days after the Effectiveness Date, shall enter into separate agreementswith INEA and DRM (the INEA and DRM Agreements), under terms andconditions satisfactory to the Bank, as set forth in the Project OperationalManual, including, inter alia: (a) the obligation of the Borrower to: (i) supportthe implementation of Part 1(d) of the Project by providing INEA and DRM, asthe case may be, with all the required goods, consultant services and non-consulting services to carry out the Project activities under its responsibility; and(ii) abide by the technical decisions made by INEA and DRM with respect to theimplementation of Part 1(d) of the Project; and (b) the obligation of INEA and,as the case may be, to: (i) provide technical support and leadership for, andcoordinate the technical aspects of, the carrying out of Part 1(d) of the Project, allwith due diligence and efficiency in conformity with appropriate administrative,technical, environmental and social standards and practices, and in accordancewith the terms of this Agreement, the INEA Agreement and the DRMAgreement, as the case may be, the Project Operational Manual, and the Anti-corruption Guidelines; and (ii) take or permit to be taken all action to enable theBorrower to comply with its obligations under this Agreement. The Borrowershall exercise its rights and carry out its obligations under the INEA Agreementand DRM Agreement in such manner as to protect the interests of the Borrowerand the Bank and to accomplish the purposes of the Project; and except as theBank shall otherwise agree, the Borrower shall not amend, waive, terminate orfail to enforce the INEA Agreement and/or the DRM Agreement or provisionthereof. In the event of any inconsistency between the provisions of the INEAAgreement and/or the DRM Agreement and the provisions of this Agreement, theprovisions of this Agreement shall prevail.

7. For purposes of implementing Part 2(b) of the Project, the Borrower, not laterthan 30 days after the Effectiveness Date, shall enter into an agreement with MP(MP Agreement) under terms and conditions satisfactory to the Bank, as set forthin the Project Operational Manual, including inter alia: (a) the obligation of theBorrower to: (i) support the implementation of Part 2(b) of the Project byproviding MP with all the required goods, consultant services and non-consultingservices to carry out the Project activities under its responsibility; and (ii) abideby the technical decisions made by MP with respect to the implementation ofPart 2(b) of the Project; and (b) the obligation of MP to: (i) provide technicalsupport and leadership for, and coordinate the technical aspects of, the carryingout of Part 2(b) of the Project, all with due diligence and efficiency in conformitywith appropriate administrative, technical, environmental and social standardsand practices, and in accordance with the terms of this Agreement, the MPAgreement, the Project Operational Manual, and the Anti-corruption Guidelines;

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and (ii) take or permit to be taken all action to enable the Borrower to complywith its obligations under this Agreement. The Borrower shall exercise its rightsand carry out its obligations under the MP Agreement in such manner as toprotect the interests of the Borrower and the Bank and to accomplish thepurposes of the Project; and except as the Bank shall otherwise agree, theBorrower shall not amend, waive, terminate or fail to enforce the MP Agreementor provisions thereof. In the event of any inconsistency between the provisions ofthe MP Agreement and the provisions of this Agreement, the provisions of thisAgreement shall prevail.

8. For purposes of implementing Part 1(c) of the Project, the Borrower, throughSEH, not later than 30 days after the Effectiveness Date, shall enter into separateagreements with CEHAB and ITERJ (the CEHAB and ITERJ Agreements) underterms and conditions satisfactory to the Bank, as set forth in the ProjectOperational Manual, including inter alia: (a) the obligation of the Borrower to:(i) support the implementation of Part 1(c) of the Project by providing CEHABand ITERJ, as the case may be, with all the required goods, consultant servicesand non-consulting services to carry out the Project activities under itsresponsibility; and (ii) abide by the technical decisions made by CEHAB andITERJ, as the case may be, with respect to the implementation of Part 1(c) of theProject; and (b) the obligation of CEIAB and ITERJ to: (i) provide technicalsupport and leadership for, and coordinate the technical aspects of, the carryingout of Part 1(c) of the Project, all with due diligence and efficiency in conformitywith appropriate administrative, technical, environmental and social standardsand practices, and in accordance with the terms of this Agreement, the CEHABand ITERJ Agreements, as the case may be, the Project Operational Manual, andthe Anti-corruption Guidelines; and (ii) take or permit to be taken all action toenable the Borrower to comply with its obligations under this Agreement. TheBorrower shall exercise its rights and carry out its obligations under the CEHABand ITERJ Agreements in such manner as to protect the interests of the Borrowerand the Bank and to accomplish the purposes of the Project; and except as theBank shall otherwise agree, the Borrower shall not amend, waive, terminate orfail to enforce the CEHAB and ITERJ Agreements or provisions thereof. In theevent of any inconsistency between the provisions of the CEHAB and/or ITERJAgreement and the provisions of this Agreement, the provisions of thisAgreement shall prevail.

B. Anti-Corruption

The Borrower shall ensure that the Project is carried out in accordance with theprovisions of the Anti-Corruption Guidelines.

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C. Safeguards

1. The Borrower shall, and shall cause, whenever necessary, DRM, INEA, MP,CEHAB and ITERJ to: (i) ensure that the Project activities under theirresponsibility are carried out in accordance with the Environmental ManagementFramework; (ii) prepare and furnish to the Bank any needed EnvironmentalManagement Plan, in accordance with the provisions of the EnvironmentalManagement Framework, and acceptable to the Bank; and (iii) immediatelythereafter, implement each Environmental Management Plan in accordance withits terms, and in a manner acceptable to the Bank.

2. The Borrower shall, and shall cause, whenever necessary, DRM, INEA MP,CEHAB and ITERJ to: (i) ensure that the Project activities are carried out inaccordance with the Resettlement Policy Framework; (ii) prepare and furnish tothe Bank any needed resettlement action plan, in accordance with the provisionsof the Resettlement Policy Framework, and acceptable to the Bank; and (iii)immediately thereafter, implement each Resettlement Plan in accordance with itsterms, and in a manner acceptable to the Bank."

3. With respect to the technical assistance activities to be provided under theProject, the Borrower shall, and shall cause DRM, MP, INEA, CEHAB andITERJ (as the case may be) to, ensure that the terms of reference for said Projectactivities shall be satisfactory to the Bank following its review thereof, and tothat end such terms of reference shall duly incorporate the requirements of theapplicable Bank Safeguard Policies, as applied to the advice conveyed throughsuch technical assistance.

Section II. Project Monitorin2, Reporting and Evaluation

A. Project Reports

1. The Borrower, through the Coordination Committee, shall monitor and evaluatethe progress of the Project and shall prepare Project Reports in accordance withthe provisions of Section 5.08 of the General Conditions and on the basis of theperformance indicators set forth in the Project Operational Manual. Each ProjectReport shall cover the period of one calendar semester, and shall be furnished tothe Bank not later than one month after the end of the period covered by suchreport.

2. For purposes of Section 5.08 (c) of the General Conditions, the report on theexecution of the Project and related plan required pursuant to that Section shallbe furnished to the Bank not later than six months after the Closing Date.

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B. Financial Management, Financial Reports and Audits

1. The Borrower, through SEOBRAS, shall maintain or cause to be maintained afinancial management system in accordance with the provisions of Section 5.09of the General Conditions.

2. Without limitation on the provisions of Part A of this Section, the Borrower,through SEOBRAS, shall prepare and furnish to the Bank not later than thirtydays after the end of each calendar semester, interim unaudited financial reportsfor the Project covering the semester, in form and substance satisfactory to theBank.

3. The Borrower, through SEOBRAS, shall have its Financial Statements audited inaccordance with the provisions of Section 5.09 (b) of the General Conditions.Each audit of the Financial Statements shall cover the period of one fiscal year ofthe Borrower. The audited Financial Statements for each such period shall befurnished to the Bank not later than six months after the end of such period.

Section III. Procurement

A. General

1. Goods and Non-consulting Services. All goods and non-consulting servicesrequired for the Project and to be financed out of the proceeds of the Loan shallbe procured in accordance with the requirements set forth or referred to inSection I of the Procurement Guidelines, and with the provisions of this Section.

2. Consultants' Services. All consultants' services required for the Project and tobe financed out of the proceeds of the Financing shall be procured in accordancewith the requirements set forth or referred to in Sections I and IV of theConsultant Guidelines, and with the provisions of this Section.

3. Definitions. The capitalized terms used below in this Section to describeparticular procurement methods or methods of review by the Bank of particularcontracts, refer to the corresponding method described in the ProcurementGuidelines, or Consultant Guidelines, as the case may be.

B. Particular Methods of Procurement of Goods and Non-consulting Services

1. International Competitive Bidding. Except as otherwise provided in paragraph2 below, goods and non-consulting services shall be procured under contractsawarded on the basis of International Competitive Bidding.

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2. Other Methods of Procurement of Goods and Non-consulting Services. Thefollowing table specifies the methods of procurement, other than InternationalCompetitive Bidding, which may be used for goods and non-consulting services.The Procurement Plan shall specify the circumstances under which such methodsmay be used:

Procurement Method(a) National Competitive Bidding, including in respect of goods and non-

consulting services, pregdo eletr6nico (set forth in the Guarantor's Law No10.520 of July 17, 2002), subject to the following additional procedure,namely, that the bidding documents shall be acceptable to the Bank

(b) Shopping, including in respect of goods and non-consulting services, pregdoeletr6nico (set forth in the Guarantor's Law No 10.520 of July 17, 2002),subject to the following additional procedure, namely, that the biddingdocuments shall be acceptable to the Bank.

(c) Direct Contracting

C. Particular Methods of Procurement of Consultants' Services

1 . Quality- and Cost-based Selection. Except as otherwise provided in paragraph2 below, consultants' services shall be procured under contracts awarded on thebasis of Quality and Cost-based Selection.

2. Other Methods of Procurement of Consultants' Services. The following tablespecifies methods of procurement, other than Quality and Cost-based Selection,which may be used for consultants' services. The Procurement Plan shall specifythe circumstances under which such methods may be used.

Procurement Method(a) Selection under a Fixed Budget

(b) Least-Cost Selection(c) Selection Based on the Consultant's Qualifications(d) Single-Source Selection(e) Procedures set forth in paragraphs 5.2 through 5.3 of the Consultant

Guidelines for the Selection of Individual Consultants(f) Single Source Procedures for the Selection of Individual Consultants set forth

in Paragraph 5.6 of the Consultant Guidelines for the Selection of Individual

Consultants

D. Review by the Association of Procurement Decisions

The Procurement Plan shall set forth those contracts which shall be subject to theAssociation's Prior Review. All other contracts shall be subject to Post Review

by the Bank.

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Section IV. Withdrawal of the Proceeds of the Financing

A. General

1. The Borrower may withdraw the proceeds of the Loan in accordance with theprovisions of Article II of the General Conditions, this Section, and suchadditional instructions as the Bank shall specify by notice to the Borrower(including the "World Bank Disbursement Guidelines for Projects" dated May2006, as revised from time to time by the Bank and as made applicable to thisAgreement pursuant to such instructions), to finance Eligible Expenditures as setforth in the table in paragraph 2 below.

2. The following table specifies the categories of Eligible Expenditures that may befinanced out of the proceeds of the Loan ("Category"), the allocation of theamounts of the Loan to each Category, and the percentage of expenditures to befinanced for Eligible Expenditures in each Category.

Category Amount of the Loan Percentage ofAllocated Expenditures to be

Financed(expressed in USD) (inclusive of Taxes)

(1) Goods, non- 48,000,000 100%consulting services,consultant servicesOperating Costs, andTraining under theProject

TOTAL AMOUNT 48,000,000

3. For the purposes of this table:

(a) the term "Training" means expenditures (other than for non-consultingservices) incurred in connection with the carrying out of training activities,seminars, and workshops under the Project, including the reasonable travelcost, accommodation and per-diem of the trainers and trainees (as the casemay be), training materials, rental costs of training facilities and scholarships(tuition only);

(b) the term "Operating Costs" means the operational costs, which would nothave been incurred by the respective Project Management Unit, absent the

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Project, for, inter alia, operation and maintenance of vehicles, repairs, fuel,spare parts and insurance, maintenance of the Project's monitoring andinformation system, travel and per diem costs for technical staff carrying outsupervisory and quality control activities, equipment and computermaintenance, office supplies, utilities, and rent for office facilities, butexcluding expenditures for salaries and related benefits; and

(c) the term "Non-consultant services" means expenditures related to services oftechnical nature, which do not have an intellectual component, and that canbe contracted solely on the basis of price, including, inter alia, catering,publications and printing.

B. Withdrawal Conditions; Withdrawal Period

1. Notwithstanding the provisions of Part A of this Section, no withdrawal shall bemade:

(a) from the Loan Account until the Bank has received payment in full of theFront-end Fee; or

(b) for payments made prior to the date of this Agreement, except thatwithdrawals up to an aggregate amount not to exceed $9,600,000 equivalentmay be made for payments made prior to this date but on or after July 17,2013, for Eligible Expenditures under Category (1), but in no case more thanone year prior to the date of this Agreement.

2. The Closing Date is June 30, 2017. The Bank shall only grant an extension of theClosing Date after the Guarantor's Ministry of Finance has informed the Bankthat it agrees with such extension.

Section V. Other Undertakings

Without limitations to the provisions of Section 5.08 (b) of the GeneralConditions, no later than one year after the Effective Date, or such other date asthe Bank shall agree upon, the Borrower shall: (a) carry out jointly with theBank, a mid-term review of the implementation of the Project, which shall coverthe progress achieved in the implementation of the Project; and (b) followingsuch mid-term review, act promptly and diligently to take any corrective actionas shall be recommended by the Bank.

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SCHEDULE3

Amortization Schedule

The following table sets forth the Principal Payment Dates of the Loan and thepercentage of the total principal amount of the Loan payable on each PrincipalPayment Date ("Installment Share"). If the proceeds of the Loan have been fullywithdrawn as of the first Principal Payment Date, the principal amount of theLoan repayable by the Borrower on each Principal Payment Date shall bedetermined by the Bank by multiplying: (a) Withdrawn Loan Balance as of thefirst Principal Payment Date; by (b) the Installment Share for each PrincipalPayment Date, such repayable amount to be adjusted, as necessary, to deduct anyamounts referred to in paragraph 4 of this Schedule, to which a CurrencyConversion applies.

Principal Payment Date Installment Share(Expressed as a Percentage)

On each May 15 and November 15Beginning November 15, 2018through May 15, 2038 2.44%

On November 15, 2038 2.40%

2. If the proceeds of the Loan have not been fully withdrawn as of the first PrincipalPayment Date, the principal amount of the Loan repayable by the Borrower oneach Principal Payment Date shall be determined as follows:

(a) To the extent that any proceeds of the Loan have been withdrawn as of thefirst Principal Payment Date, the Borrower shall repay the Withdrawn LoanBalance as of such date in accordance with paragraph I of this Schedule.

(b) Any amount withdrawn after the first Principal Payment Date shall be repaidon each Principal Payment Date falling after the date of such withdrawal inamounts determined by the Bank by multiplying the amount of each suchwithdrawal by a fraction, the numerator of which is the original InstallmentShare specified in the table in paragraph 1 of this Schedule for said PrincipalPayment Date ("Original Installment Share") and the denominator of whichis the sum of all remaining Original Installment Shares for Principal PaymentDates falling on or after such date, such amounts repayable to be adjusted, asnecessary, to deduct any amounts referred to in paragraph 4 of this Schedule,to which a Currency Conversion applies.

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3. (a) Amounts of the Loan withdrawn within two calendar months prior to anyPrincipal Payment Date shall, for the purposes solely of calculating theprincipal amounts payable on any Principal Payment Date, be treated aswithdrawn and outstanding on the second Principal Payment Date followingthe date of withdrawal and shall be repayable on each Principal PaymentDate commencing with the second Principal Payment Date following thedate of withdrawal.

(b) Notwithstanding the provisions of sub-paragraph (a) of this paragraph, if atany time the Bank adopts a due date billing system under which invoices areissued on or after the respective Principal Payment Date, the provisions ofsuch sub-paragraph shall no longer apply to any withdrawals made after theadoption of such billing system.

4. Notwithstanding the provisions of paragraphs 1 and 2 of this Schedule, upon aCurrency Conversion of all or any portion of the Withdrawn Loan Balance to anApproved Currency, the amount so converted in the Approved Currency that isrepayable on any Principal Payment Date occurring during the ConversionPeriod, shall be determined by the Bank by multiplying such amount in itscurrency of denomination immediately prior to the Conversion by either: (i) theexchange rate that reflects the amounts of principal in the Approved Currencypayable by the Bank under the Currency Hedge Transaction relating to theConversion; or (ii) if the Bank so determines in accordance with the ConversionGuidelines, the exchange rate component of the Screen Rate.

5. If the Withdrawn Loan Balance is denominated in more than one Loan Currency,the provisions of this Schedule shall apply separately to the amount denominatedin each Loan Currency, so as to produce a separate amortization schedule foreach such amount.

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APPENDIX

Section I. Definitions

1. "AGETRANSP" means Agencia Reguladora de Serviqos Pblicos Concedidos deTransportes Aquavidrios, Ferroviarios e Metrovidrios e de Rodovias do Estadodo Rio de Janeiro, the Borrower's Public Services Regulatory Agency, or anysuccessor thereto satisfactory to the Bank.

2. "AMTU-RJ" means Agincia Metropolitana de Transportes Urbanos, Borrower'sMetropolitan Urban Transport Agency, or any successor thereto satisfactory tothe Bank.

3. "Anti-Corruption Guidelines" means the "Guidelines on Preventing andCombating Fraud and Corruption in Projects Financed by IBRD Loans and TDACredits and Grants", dated October 15, 2006, and revised in January 2011.

4. "Bank Safeguards Policies" means the World Bank's operational policies andprocedures set forth in the World Bank's Operational Manual under OP/BPs4.01, 4.04, 4.09, 4.10, 4.11, 4.12, 4.36, 4.37, 7.50 and 7.60 published atwww.WorldBank.or/opmanual.

5. "CEHAB" means Companhia Estadual de Habitaqdo, the Borrower's HousingCompany as created and operating under the Borrower's Law 263 datedDecember 24, 1962, published in the Borrower's Official Gazette on December24, 1962, and Decree No 39 dated March 24, 1975, published in the Borrower'sOfficial Gazette on March 24, 1975, or any successor thereto satisfactory to theBank.

6. "CEHAB Agreement" means the agreement referred to in Section I. A. 8 of thisAgreement.

7. "Category" means a category set forth in the table in Section IV of Schedule 2 tothis Agreement.

8. "Consultant Guidelines" means the "Guidelines: Selection and Employment ofConsultants by World Bank Borrowers" published by the Bank in January 2011.

9. "Coordination Committee" means the Borrower's committee referred to inSection I.A.5 of Schedule 2 to this Agreement.

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10. "DRM" means Departamento de Recursos Minerais, the Borrower's Department

of Mineral Resources, as created and operating under DRM Legislation, or any

successor thereto satisfactory to the Bank.

11. "DRM Agreement" means the agreement referred to in Section I. A. 6 of this

Agreement.

12. "Environmental Management Framework" or "EMF" means the Borrower's

environmental management framework, acceptable to the Bank, dated December

2011, published on www.progestao.rj.gov.br on December 20, 2011, and referred

to in Section I.C.1 of Schedule 2 to this Agreement.

13. "Environmental Management Plan" means any environmental management plan,acceptable to the Bank, as referred to in Section I.C.1 of Schedule 2 to this

Agreement.

14. "Escola SEEDUC" means the Borrower's program, as created and operating

under the Borrower's Law No 5.693 dated April 16, 2010, for in-service training

of teachers of the Borrower's secondary education network.

15. "General Conditions" means the "International Bank for Reconstruction and

Development General Conditions for Loans", dated March 12, 2012.

16. "INEA" means Instituto Estadual do Ambiente, the Borrower's Environmental

Institute, as created and operating under NEA Legislation, or any successor

thereto satisfactory to the Bank.

17. "INEA Agreement" means the agreement referred to in Section I. A. 6 of this

Agreement.

18. "Integrated Territorial Development Approach" means the approach taken by the

Borrower to harmonize and coordinate planning and service delivery at the level

of the Borrower's metropolitan region.

19. "IT" means information technology.

20. "ITERJ" means Instituto de Terras e Cartografia do Estado do Rio de Janeiro,the Borrower's Land and Mapping Institute as created and operating under the

Borrower's Law 1.738 dated November 5, 1990, published in the Borrower's

Official Gazette on November 6, 1990, and Law 2.695 dated February 19, 1997,

published in the Borrower's Official Gazette on February 2, 1997.

21. "ITERJ Agreement" means the agreement referred to in Section I. A. 8 of this

Agreement.

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22. "MP" means Ministirio Pblico do Estado do Rio de Janeiro, the Borrower'spublic prosecutor.

23. "MP Agreement" means an agreement referred to in Section I. A. 7 of thisAgreement.

24. "MSM Information System" means the Borrower's Mental Health Module(M6dulo Saude Mental) Information System, created by the BorrowersResolution No 1.784 dated December 4, 2012, for the purposes of registering andmanaging more efficiently data relating to people who are involuntarily internedfor medical and/or psychiatric reasons (such as drugs and alcohol addictions ormental health illnesses), and ensuring a higher level of accountability and controlover the assistance and services provided to said people or any successor theretosatisfactory to the Bank.

25. "PLID" means Programa de Identiflcagdo e Localizaqdo de Desaparecidos, theBorrower's Program for the Identification and Localization of missing people,established pursuant to the Borrower' Resolution No 1.716 dated February 7,2012.

26. "Procurement Guidelines" means the "Guidelines: Procurement under IBRDLoans and IDA Credits" published by the Bank in January 2011.

27. "Procurement Plan" means the Borrower's procurement plan for the Project, datedSeptember 27, 2013, and referred to in paragraph 1.18 of the ProcurementGuidelines and paragraph 1.25 of the Consultant Guidelines, as the same shall beupdated from time to time in accordance with the provisions of said paragraphs.

28. "Program" means PRO-GESTAO, the Borrower's program to improve publicadministration and management, as established and operating under theBorrower's Law No 5.282, dated June 30, 2008, as amended by Law No 5.336,dated November 28, 2008.

29. "Project Management Units" means collectively the SEFAZ Project ManagementUnit, the SEOBRAS Project Management Unit and the SEPLAG ProjectManagement Unit.

30. "Project Operational Manual" means the operational manual for the Project, datedSeptember 27, 2013, satisfactory to the Bank, which shall contain, inter alia: (i)the functions and responsibilities of the personnel of the Project ManagementUnits in charge of daily Project coordination and monitoring; (ii) the proceduresfor procurement of goods, non-consulting services and consultants' services forthe Project, as well as for financial management and Project audits of the Project;(iii) the flow of funds and disbursement arrangements of the Project; and (iv) thestaffing plan for the Project Management Units.

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31. "Resettlement" means: (i) the impact of an involuntary taking of land under theProject, which taking causes affected persons to have their: (A) standard of living

adversely affected; or (B) right, title or interest in any house, land (includingpremises, agricultural and grazing land) or any other fixed or movable assetacquired or possessed, temporarily or permanently; or (C) access to productiveassets adversely affected, temporarily or permanently; or (D) business,occupation, work or place of residence or habitat adversely affected, temporarilyor permanently; or (ii) the involuntary restriction of access to legally designatedparks and protected areas resulting in adverse impacts on the livelihoods of the

displaced persons.

32. "Resettlement Policy Framework", whenever necessary, means the Borrower's

framework dated November 2011, acceptable to the Bank, which sets forth, inter

alia, the principles and objectives governing Resettlement preparation andimplementation, and a description of the process for preparing and approvingResettlement Plans under the Project published on www.progestao.rj.gov.br on

December 20, 2011, and referred to in Section I.C.2 of Schedule 2 to this

Agreement.

33. "SEASDH" means Secretaria Estadual de Assistencia Social e Direitos Humanos,the Borrower's Secretariat of Social Assistance and Human Rights, as created

and operating under the Borrower's Decree No 40.486 dated January 1, 2007, or

any successor thereto satisfactory to the Bank.

34. "SEDEC" means Secretaria de Defesa Civil, the Borrower's Secretariat for Civil

Defense, as created and operating under the Borrower's Decree No 43.017, dated

June 9, 2011, or any successor thereto satisfactory to the Bank.

35. "SEEDUC" means Secretaria de Educaqdo, the Borrower's Secretariat for

Education, as created and operating under the Borrower's Decree No 40.486

dated January 1, 2007, or any successor thereto satisfactory to the Bank.

36. "SEFAZ" means Secretaria Estadual da Fazenda, the Borrower's Secretariat of

Finance as created and operating under the Borrower's Decree No 40.613, dated

February 16, 2007, or any successor thereto satisfactory to the Bank.

37. "SEFAZ Project Management Unit" means the Project management unit referred

to in Section I.A.4 of Schedule 2 to this Agreement within SEFAZ in charge of

the daily implementation of the Parts of the Project referred to in said section,and operating under the SEFAZ Project Management Unit Regulation.

38. "SEH" means Secretaria Estadual de Habitaqdo, the Borrower's Secretariat of

Housing, as created and operating under the Borrower's Decree N0 32.621 dated

January 1, 2007, published in the Borrower's Official Gazette on January 1,

2007, or any successor thereto satisfactory to the Bank.

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39. "SEOBRAS" means Secretaria Estadual de Obras, the Borrower's Secretariat ofPublic Works, as created and operating under the Borrower's Decree No 40.486dated January 1, 2007, published in the Borrower's Official Gazette on January1, 2007, or any successor thereto satisfactory to the Bank.

40. "SEOBRAS Project Management Unit" means the Project management unitreferred to in Section I.A.3 of Schedule 2 to this Agreement within SEOBRASin charge of the daily implementation of the Parts of the Project referred to insaid section, and operating under the SEOBRAS Project Management UnitRegulation.

41. "SEPLAG" means Secretaria de Planejamento e Gestdo, the Borrower'sSecretariat for Planning and Management, as created and operating under theBorrower's Decree No 40.486 dated January 1, 2007, or any successor theretosatisfactory to the Bank.

42. "SEPLAG Project Management Unit" means the Project management unitreferred to in Section I.A.2 of Schedule 2 to this Agreement within SEPLAG incharge of the daily implementation of the Project and operating under theProject Management Unit Regulation.

43. "SES" means Secretaria Estadual de Sadde, the Borrower's Secretariat of Health,created and operating under the Borrower's Decree No 40.486 dated January 1,2007, modified by the Borrower's Decree No 43.017 dated June 9, 2011, or anysuccessor thereto satisfactory to the Bank.

44. "SETRANS" means Secretaria Estadual de Transporte, the Borrower's,Secretariat of Transport, as created and operating under the Borrower's DecreeNo 40.486 dated January 1, 2007, published in the Borrower's Official Gazette onJanuary 1, 2007, or any successor thereto satisfactory to the Bank.

45. "SUAS" means Sistema Unico de Assistincia Social, Universal Social AssistanceSystem.

46. "Vice Governor's Office" means Vice-Governadoria do Estado do Rio deJaneiro, the Borrower's vice governor's office.

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