Morocco - Third Agricultural Credit Project : Loan 1361 - Guarantee Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1361 MOR GUARANTEE AGREEMENT for a World Bank Loan pertaining to a Third Agricultural Credit Project in the Kingdom of Morocco and for amending certain agreements entered into between the parties hereto with respect to Loan No. 861 and Credit No. 338 between KINGDOM OF MOROCCO and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated February 7, 1977 GUARANTEE AGREEMENT AGREEMENT, dated February 7, 1977, between the KINGDOM OF MOROCCO (hereinafter sometimes called the Guarantor) and INTER- NATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS by the Loan Agreement of even date herewith among the Bank, the Association and Caisse Nationale de Cr4dit Agricole (hereinafter called the Borrower) (i) the Bank has agreed to make to the Borrower a loan in various currencies equivalent to thirty- five million dollars ($35,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guarantor agree to guarantee the obligations of the Borrower in respect of such loan as hereinafter provided and (ii) the Bank, the Association and the Borrower have agreed to amend certain agree- ments entered into among the parties thereto with resDect to Loan No. 861 and Credit No. 338; and WHEREAS the Guarantor, in consideration of the foregoing, has agreed so to guarantee such obligations of the Borrower, and the Guarantor and the Bank have agreed to amend certain agreements entered into between the parties hereto with respect to Loan No. 861 and Credit No. 338; NOW THEREFORE the parties hereto hereby agree as follows: -2- ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guar- antee Agreements of the Bank dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said Gen- eral Conditions Applicable to Loan and Guarantee Agreements being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in Section 1.02 of the Loan Agreement have the respective meanings therein set forth. -3- ARTICLE II Guarantee; Provision of Funds Section 2.01. Without limitation or restriction upon any of its other obligations under the Guarantee Agreement, the Guarantor hereby unconditionally guarantees, as primary obligor and not as surety merely, the due and punctual payment of the principal of, and interest and other charges on, the Loan, and the premium, if any, on the prepayment of the Loan, all as set forth in the Agree- ment. Section 2.02. (a) Without limitation or restriction upon the provisions of Section 2.01 hereof, the Guarantor shall make ar- rangements, satisfactory to the Bank, to provide or cause the Borrower to be provided with adequate resources (including, if needed, foreign exchange resources) (i) for the Borrover's own credit operations (including those of the CLCA(s)) and (ii) for the credit operations administered by the Borrower on behalf of the Guarantor. (b) Without limitation or restriction upon the provisions of subsection (a) above, the Guarantor shall cover (i) by means of subsidies, all losses incurred by the Borrower on its CLCA credit operations and (ii) all expenses incurred by the Borrower with respect to the operations (if any) carried out by the Bor- rower o-1 behalf of the Guarantor. Section 2.03. The Guarantor shall take all steps necessary to enable the Borrower to set and maintain interest rates on its time and savings deposits in accordance with the provisions of Section 5.08 of the Loan Agreement. 5 ARTICLE III Other Covenants Section 3.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members, not to seek, in normal circumstances, specific security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of foreign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Guarantor, in creating or permitting the creation of such lien, shall make express provi- sion to that effect; provided, however, that, if for any constitu- tional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or administrative subdivisions, the Guarantor shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; -6- and (ii) any lien arising in the ordinary course of banking trans- actions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means assets of the Guarantor, of any political or administrative sub- division thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Guarantor or any such subdivision, including gold and other foreign exchange assets held by Banque du Maroc or any institution performing the functions of a central bank or exchange stabilization fund, or similar func- tions, for the Guarantor. Section 3.02. (a) The Guarantor covenants that it will not take, or cause or permit any of its political subdivisions or any of its agencies or any agency of any such political subdivisions or the Banque du Maroc to take, any action which would prevent or inter-, fere with the performance by the Borrower of its obligations con- tained in the Loan Agreement and will take or cause to be taken all reasonable action necessary or appropriate to enable the Borrower to perform such obligations, including, without limitation, the obligations which are to be fulfilled by the Borrower, with the assistance of the Guarantor, pursuant to the provisions of Sec- tions 3.02, 3.05, 4.0l, 4.04, and 5.07 (b) of the Loan Agreement; it being understood that, in this latter instance, the assistance to be provided by the Guarantor to the Borrower shall include all administrative, legislative and financial measures or support required for the purpose. 7 (b) The Guarantor shall cause ORMVASM to carry out Part H of the Project with due diligence and efficiency and in conformity with appropriate agricultural research standards and practices and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.03. The Guarantor shall make, and maintain in ef- fect, arrangements to protect the Borrower against losses in con- nection with the payment of interest or other charges on, or the repayment of Drincianal of, the Loan resulting from changes in the rate of exchange between dirhams and the currency or curren- cies in which such payments are to be made. * Section 3.0L. The Guarantor shall facilitate the Drompt issuance of all necessary licenses and permits for the importation of goods and livestock required for the Project, if unavailable in the local market. Section 3.05. The Guarantor shall continue to guarantee loans to Cooperatives Agricoles under terms and conditions of the same import as those set forth in D4cret royal portant loi No. 358-66 of 15 Rebia I 1386 (July 4, 1966). Section 3.06. The Guarantor shall continue to assign the newly graduated technical agricultural personnel to all the MARA departments and agricultural institutions (including the Borrower), as and when required by such departments and institutions and in accordance with the priorities determined by the Guarantor. -8 0 Section 3.07. The Guarantor shall take all appropriate steps to revise, with due diligence, the laws and regulations governing the agricultural credit operations in the Kingdom of Morocco in order to ensure that the Borrower's actual lending and operating policies be consistent therewith. Section 3.08. The 1972 Guarantee Agreement and the 1972 Credit Agreement are hereby amended, as from the Effective Date hereof, by (i) the deletion of all provisions included in, or all references to, Section 2.04 of the 1972 Guarantee Agreement and (ii) the substitution therefor, and the consequential incor- poration into said Agreements, of Section 2.02 hereof, provided, that, in the 1972 Credit Agreement the terms Guarantor, Borrower and Bank in the new Section shall be modified to read Borrower, CNCA and Association, respectively. Section 3.09. If any provision included in the 1965 Guarantee Agreement, the 1972 Guarantee Agreement, or the 1972 Credit Agree- ment is inconsistent with any provision hereof, the pertinent pro- vision included herein shall govern. -9- ARTICLE IV Representative of the Guarantor; Addresses Section 4.01. The Minister of the Guarantor at the time re- sponsible for finance is designated as representative of the Guar- antor for the purnoses of Section 11.03 of the General Conditions. Section 4.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Guarantor: Ministere des Finances Rabat, Morocco Cable address: Telex: 31936M MINISTERE FINANCES Rabat For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (wUI) - 10 - IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. KINGDOM OF MOROCCO By /s/ Abdelhadi Boutaleb Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Is! Maurice P. Bart Acting Regional Vice President Europe, Middle East and North Africa