El Salvador - Coastal Highway Project : Loan 0104 - Loan Agreement - Conformed

LOAN NUMBER 104 ES Loan Agreement (COASTAL HIGHWAY PROJECT) BETWEEN REPUBLIC OF EL SALVADOR AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED OCTOBER 12, 1954 IL Evoan Ag~reemernt AGREEMENT, dated October 12, 1954, between RE- PUBLIC OF EL SALVADOR (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOP- MENT (hereinafter called the Bank). ARTICLE I Loan Regulations SECTION 1.01. The parties to this Loan Agreement ac- cept all the provisions of Loan Regulations No. 3 of the Bank dated October 15, 1952, subject, however, to the modi- fications thereof set forth in Schedule 3 to this Agreement (said Loan Regulations No. 3 as so modified being herein- after called the Loan Regulations), with the same force and effect as if they were fully set forth herein. ARTICLE II The Loan SECTION 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in this Agreement set forth or referred to, an amount in various currencies equivalent to eleven million one hundred thousand dollars ($11,100,000). SECTION 2.02. The Bank shall open a Loan Account on its books in the name of the Borrower and shall credit to such Account the amount of the Loan. The amount of the Loan may be withdrawn from the Loan Account as pro- vided in, and subject to the rights of cancellation and sis- pension set forth in, the Loan Regulations. SECTION 2.03. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not so withdrawn from time to time. 4 The date specified for the purposes of Section 2.02 of the Loan Regulations is 60 days after the date of this Agreement or the Effective Date, whichever shall be the earlier. SECTION 2.04. The Borrower fhall pay interest at the rate of four and one-half per cent (41/2%c) per annumf on the principal amount of the Loan so withdrawn and outstand- ing from time to time, SECTION 2.05. Interest and other charges shall be pay- able semi-annually on April 15 and October 15 in each year. SECTION 2.06. The Borrower shall repay the principal of the Loan in accordance with the amortization schedule set forth in Schedule 1 to this Agreement. ARTIOLE III Use of Proceeds of the Loan SECTION 3.01. The Borrower shall cause the proceeds of the Loan to be applied exclusively (a) to financing the for- eign exchange component of payments made or to be made under the contracts for the construction of the arterial highway entered into pursuant to Section 3.03 of this Agreement and under contracts with the technical consult- ant or consultants employed pursuant to Section 5.01(b) of this Agreement; or (b) to the extent that the Borrower and the Bank shall so agree, to financing the cost of equip- ment, supplies and services required to carry out the con- struction of the arterial highway included in the Project described in Schedule. 2 to this Agreement. SECTION 3.02. The Borrower shall cause all goods fi- nanced out of the proceeds of the Loan to be used in the territories of the Borrower exclusively in the carrying out of the Project. 5 SECTION 3.03. Except as the Borrower and the Bank shall otherwise agree, all contracts entered into by the Borrower for the construction of the arterial highway in- cluded in the Project or for the purchase of goods to be used in carrying out the Project shall be awarded on the basis of international competitive bidding and shall be in form and substance satisfactory to the Bank. Contracts providing for construction work on the arterial highway included in the Project shall contain provisions prohibiting subcontracting unless such subcontracting is approved by the Borrower and by the consultant or consultants employed pursuant to Section 5.01(b) of this Agreement. Any such subcontracting shall also be subject to the approval of the Bank, if the amount of the proposed subcontract is the equivalent of $100,000 or more. ARTICLE IV Bonds SECTION 4.01. The Borrower shall execute and deliver Bonds representing the principal amount of the Loan as provided in the Loan Regulations. SECTION 4.02. The Ministro de Hacienda of the Borrower and such person or persons as he shall appoint in writing are designated as authorized representatives of the Bor- rower for the purposes of Section 6.12 of the Loan Regula- tions. ARTICLE V Particular Covenants SECTION 5.01(a). The Borrower shall cause the Project to be carried out with due diligence and efficiency and in conformity with sound engineering and financial practices. 6 (b) Contractors mutually satisfactory to the Borrower and the Bank shall be employed by the Borrower to con- struct the arterial highway included in the Project. In connection with thw construction of the arterial highway included in the Project, the Borrower shall also retain a competent and experienced technical consultant or consult- ants mutually satisfactory to the Borrower and the Bank upon terms and conditions mutually satisfactory to the Borrower and the Bank. (c) 'The Borrower shall cause to be furnished to the Bank, promptly upon their preparation, the plans and specifications for the Project and any material modifications subseqtently made therein. The desigr standards for the arterial highway included in the Project shall be mutually satisfactory to the Borrower and the Bank. (d) The Borrower shall maintain or cause to be main- tained records adequate to show the foreign exchange com- ponent of the payments made under construction contracts entered into pursuant to Section 3.03 of this Agreement and under contracts with the technical consultant or con- sultants employed pursuant to Section 5.01(b) of this Agreetnent, to identify the goods financed out of the pro- ceeds of the Loan, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof), and to reflect in accordance with consistently maintained sound accounting practices the financial con- dition and operations of the agency or agencies of the Borrower responsible for the construction or operation of the Project or any part thereof; shall enable the Bank's representatives to inspect the Project, the goods and any relevant records and documents; and shall furnish to the Bank all such information as the Bank shall reasonably request concerning the expenditure of the proceeds of the Loan, the Project, the goods and the financial condition and operations of,the agency or agencies of the Borrower re- sponsible for the construction or operation of the Project or any part thereof. * 7 SECTION 5.02(a). The Borrower and the Bank shall co- operate fully to assure that the purposes of the Loan will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reasonably request with regard to the general status of the Loan. On the part of the Borrower, such information shall include information with respect to financial and economic condi- tions in the territories of the Borrower and the interna- tional balance of payments position of the Borrower. (b) The Borrower and the Bank shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Loan and the maintenance of the service thereof. The Borrower shall promptly inform the Bank of any condition which interferes with, or threatens to interfere with, the accom- plishment of the purposes of the Loan or the maintenance of the service thereof. (c) The Borrower shall afford all reasonable opportun- ity for accredited representatives of the Bank to visit any part of the territories of the Borrower for purposes related to the Loan. SECTION 5.03. It is the mutual intention of the Borrower and the Bank that no external debt hereafter created shall enjoy any priority over the Loan by way of a lien on govern- mental assets. To that end, the Borrower undertakes that, except as the Bank shall otherwise agree, the Borrower will not cause or permit to be created any lien on any assets of the Borrower, as security for any external debt, unless the payment of the principal of, and interest and other charges on, the Loan and the Bonds shall be secured by such lien equally and ratably with such other external debt (in which event, in the creation of any such lien express provision will be made to that effect); provided, however, that the foregoing provisions of this Section shall not apply to: (i) any lien created on property, at the time of purchase 8 thereof, solely as security for the payment of the purchase price of such property; (ii) any lien on counnercial goods tf. aeurt a debt maturing not more than one year after the date on which it is originally incurred and to be paid out of the proceeds of sale of such commercial goods; or (iii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. As used in this Section (a) the term "assets of the Bor- rower" includes assets of the Borrower or of any of its political subdivisions or of any Agency; and (b) the term "Agencyl" means any agency or instrumentality of the Borrower or of any political subdivision of the Borrower and shall include any institution or organization which is owned or controlled directly or indirectly by the Borrower or by any political subdivision of the Borrower or the operations of which are conducted primarily in the interest of or for account of the Borrower or any political sub- division of the Borrower, including the Banco Central de Reserva de El Salvador. SEcTON 5.04. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid without deduction for, and free from, any taxes or fees imposed under the laws of the Borrower or laws in effect in its territories; provided, however, that the provisions of this Section shall not apply to taxation of, or fees upon, pay- ments under any Bond to a holder thereof other than the Bank when such Bond is beneficially owned by an individual or corporate resident of the Borrower. SECTroN 5.05. The Loan Agreement and the Bonds shall be free from any taxes or fees th9t shall be imposed under the laws of the Borrower or laws in effect in its territories on or in connection with the execution, issue, delivery or registration thereof and the borrower shall pay all such taxes and fees, if any, imposed under the laws of the country 9 or countries in whose currency the Loan and the Bonds are payable or laws in effect in the territories of such country or countries. SECTION 5.06. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid free from all restrictions imoosed under the laws of the Borrower or laws in effect in its territories. SECTION 5.07. The Borrower shall at all times make available by appropriation or otherwise, for disbursement promptly as they are needed, all sums which shall be re- quired for the carrying out of the Project. Without limiting the foregoing, the Borrower shall make provision through adoption of an extraordinary budget pursuant to Article 125 of the Constitution of El Salvador for appropriation of an aggregate amount of not less than 14,800,000 colones to be used in the construction of the arterial highway in- cluded in the Project. The minimum amounts to be made available during the calendar years 1955 through 1958 for the construction of the arterial highway are as follows: 1955 ......... '3,000,000 colones 1956 ........ 3,200,000 colones 1957 ......... 4,200,000 colones 1958 ......... the balance of the 14,800,000 colones not previously made available Any sums appropriated as provided herein shall be used only for the purpose -or which they were appropriated, and if not completely expended in one calendar year shall be carried over to the next calendar year or years and shall be used only for such purpose. SECTION 5.08. The Borrower sb all cause the roads in its highway system to be maintained at all times in accordance 10 with sound engineering standards. To this end, the Bor- rower shall engage such technical personnel as shall be necessary and shall establish and maintain an adequate number of maintenance field shops. The Borrower shall at all times make available by appropriation or otherwise, for disbursement promptly as they are needed, all sums which shall be required for the proper maintenance of the Bor- rower's highway system. Specific appropriations shall be provided for road maintenance, and funds for such purpose shall be used only for the purpose for which they were appropriated. SECTION 5.09. The Borrower shall satisfy the Bank that adequate arrangements have been made .to insure the goods financed with the proceeds of the Loan against risks inci- dent to their purchase and importation into the territories of the Borrower. ARTICLE VI Remedies of the Bank SECTION 6.01. (i) If any event specified in paragraph (a) or paragraph (b) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of thirty days, or (ii) if any event specified in paragraph (c) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower, then at any sub- sequent time during the continuance thereof, the Bank, at its option, may declare the principal of the Loan and of all the Bonds then outstanding to be due and payable immedi- ately, and upon any such declaration suoh principal shall become due and payable immediately, anything in this Agreement or in the Bonds to the contrary notwithstanding. * 11 ARTICLE VII Effective Date; Termination SECTION 7.01. The following events are specified as ad- ditional conditions to the effectiveness of this Agreement within the meaning of Section 9.01(a) (ii) of the Loan Regu- lations: (a) any action necessary to enable the Borrower to employ the technical consultant or consultants referred to in Section 5.01(b) of this Agreement shall have been taken, and such consultant or consultants shall have been em- ployed; and (b) an extraordinary budget shall have been adopted as provided in Section 5.07 of this Agreement. SECTION 7.02. The following are specified as additional matters, within the meaning of Section 9.02(c) of the Loan Regulations, to be included in the opinion or opinions to be furnished to the Bank: (a) that all action necessary to enable the Borrower to employ the technical consultant or consultants referred to in Section 5.01(b) of this Agree- ment has been taken; and (b) that all action necessary for the adoption of an extraordinary budget as provided in Section 5.07 of this Agreement has been duly and validly taken. SECTION 7.03. A date 90 days after the date of this Agreement is hereby specified for the purposes of Section 9.04 of the Loan Regulations. ARTICLE VIII Miscellaneous SECTION 8.01. The Closing Date shall be April 15, 1959. SECTION 8.02. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: 12 For the Borrower: Ministerio de Obras PUiblicas Palacio Nacional San Salvador El Salvador, Central America and Ministerio de Hacienda Palacio Nacional San Salvador El Salvador, Central America For the Bank: International Bank for Reconstruction and Development 1818 H Street, N. W. Washington 25, D. C. United States of America SEUrIoN 8.03. The Ministro de Hacienda of the Bor- rower is designated for the purposes of Section 8.03 of the Loan Regulations. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Loan Agreement to be signed in their respective 13 names and delivered in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF EL SALVADOR By /s/ HECTOR DAVID CASTRO /s/ R. MEZA AYAU H. Authorized Representatives INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ EUGENE R. BLACK President * 14 SCHEDULE 1 Amortisation Schedule Principal Amount Payment of Outstanding After Principal Each Payment Date (expressed (expressed Payment Due in dollars)* in dollars)* October 15, 1958 - $11,100,000 April 15, 1959 $584,000 10,516,000 October 15, 1959 597,000 9,919,000 April 15, 1960 611,000 9,308,000 October 15, 1960 624,000 8,684,000 April 15, 1961 638,000 8,046,000 October 15, 1961 653,000 7,393,000 April 15, 1962 667,000 6,726,000 October 15, 1962 682,000 6,044,000 April 15, 1963 698,000 5,346,000 October 15, 1963 714,000 4,632,000 April 15, 1964 730,000 3,902,000 October 15, 1964 746,000 3,156,000 April 15, 1965 763,000 2,393,000 October 15, 1965 780,000 1,613,000 April 15, 1966 798,000 815,000 October 15, 1966 815,000 To the extent that any part of the Loan is repayable in a currency other than dollars (see Loan Regulations, Section 3.02), the figures in these columns represent dollar equivalents determined as for purposes of withdrawal. 15 Premiums on Prepayment and Redemption The following percentages are specified as the premiums payable on repayment in advance of maturity of any part of the principal amount of the Loan pursuant to Section 2.05(b) of the Loan Regulations or on the redemption of any Bond prior to its maturity pursuant to Section 6.16 of the Loan Regulations: Time of Prepayment or Redemption Premium Not more than 1 year before maturity /2 of 1% More than 1 year but not more than 3 years before maturity /4 of 1% More than 3 years but not more than 6 years before maturity 1% More than 6 years but not more than 9 years before maturity 11/2 More than 9 years before maturity 2% *4