Indonesia - Rural Credit Project : Credit 0826 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 827 IND Project Agreement (Rural Credit Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and BANK RAKYAT INDONESIA Dated June 23, 1978 CREDIT NUMBER 827 IND PROJECT AGREEMENT AGREEMENT, dated June 23, 1978, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and BANK RAKYAT INDONESIA (hereinafter called BRI). WHEREAS by the Development Credit Agreement of even date herewith between Republic of Indonesia (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount iu various currencies equiva- lent to thirty million dollars ($30,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that BRI agrees to undertake such obligations toward the Association as hereinafter set forth; WHEREAS by a Subsidiary Loan Agreement to be entered into between Bank Indonesia, on behalf of the Borrower, and BRI, the proceeds of the credit provided for under the Development Credit Agreement will be made available to BRI on the terms and condi- tions therein set forth; and WHEREAS BRI, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. BRI shall carry out the Project described in Schedule 2 to the Development Credit Agreement with due diligence and efficiency and in conformity with appropriate administrative, financial and technical practices. -2- Section 2.02. Without any limitation or restriction on BRI's obligations under Section 2.01 of this Agreement, BRI shall carry out Part A of the Project in conformity with the Rules and Regulations, as such Rules and Regulations may be amended from time to time by BI, and with the Annex to Schedule 2 to the Development Credit Agreement. Section 2.03. (a) In order to assist BRI in carrying out Parts B (i), (ii) and C of the Project, BRI shall employ con- sultants or specialists whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. (b) BRI shall take all steps necessary to employ the program development economist, the training specialist, two of the three development bankers and two of the three agriculturalists included in Part B (i) of the Project not later than January 1, 1979, or such other da'te as the Association shall agree, and to employ the third development banker and the third agriculturalist included therein not later than April 1, 1979 or such other date as the Association shall agree. (c) BRI shall take all steps necessary to employ the consul- tants required under paragraph (a) of this Section to carry out Part C of the Project not later than April 1, 1979 or such other date as the Association shall agree. Section 2.04. BRI shall afford the Association a reasonable opportunity to comment on the qualifications and experience of the candidates for the position of head of the Program Development Department of its Planning Bureau before making any appointment to the said position before the Closing Date. Section 2.05. (a) BRI shall furnish to the Association, promptly upon their preparation, the reports and contract docu- ments for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) BRI: (i) shall maintain records and procedures adequate to record and monitor the progress of the Project (including its cost) and to identify the goods and services financed out of the proceeds of the Credit relent to it by the Borrower, and to disclose their use in the Project; (ii) shall enable the Associa- tion's representatives to visit the facilities and work sites -3- included in the Project and to examine the goods iinanced out of such proceeds and any relevant records and documents; and (iii) shall furnish to the Association all such information as the Association shall reasonably request concerning the Project, its cost, the expenditure of the proceeds of the Credit so relent to it and the goods and services financed out of such proceeds. (c) The records referred to in paragraph (b) of this Section shall include, inter alia, separate accounts for all Sub-loan approvals, disbursements, collections and arrears, on a branch basis. Such separate accounts for each fiscal year shall be audited, in accordance with appropriate auditing procedures consistently applied, by independent auditors acceptable to the Association, and shall be furnished to the Association, not later than nine months after the end of each such fiscal year. (d) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Associa- tion and BRI, BRI shall prepare and furnish to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by the Association and BRI of their respective obligations under the Prcject Agreement and the accomplishment of the purposes of the Credit. Section 2.06. BRI shall duly perform all its obligations under the Subsidiary Loan Agreement. F,cept as the Association shall otherwise agree, BRI shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any provision thereof. Section 2.07. BRI shall, not later than February 1 in each year, starting not later than February 1, 1979, furnish to the Association an annual lending program for each Sub-loan category based on a review of Project performance in the previous year (or, in the case of the first such review, a review of the performance of programs for the same Sub-loan categories in the Project Area) for lending under Part A of the Project for the twelve-month period beginning April 1 in such year. The lending targets for each Sub-project category, the Provinces in the Project Area in which lending for each category will take place and the extent of support of the Borrower's agencies required for such lending shall be included in such program and shall be acceptable to the Association. -4- Section 2.08. (a) BRI shall take such measures as shall be necessary to ensure that its branches participating in the Project achieve and maintain a satisfactory level of Sub-loan collection performance. The improvement of the performance of branches which have not achieved an annual collection rate of seventy percent under the Project shall be of particular concern to BRI. (b) Not later than February 1 in each year starting not later than February 1, 1980, or such other date as the Association shall agree, and until the Closing Date, BRI shall review with the Association the measures taken by BRI and the results achieved by it on Sub-loan collection performance in the previous calendar year. (c) For the purpose of this Section: (i) "collection rate" means the percentage of demand which has been collected; and (ii) "demand" means the aggregate of: (A) amounts of principal overdue at the beginning of the preceding four quarter period; and (B) amounts of principal fallen due during the said period. Section 2.09. (a) BRI shall at the request of the Associa- tion, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement and under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Credit. (b) BRI shall promptly inform the Association of any condi- tion which interferes or threatens to interfere with, the progress of the Project, the accomplishment of the purposes of the Credit, or the performance by BRI of its obligations under this Agreement and under the Subsidiary Loan Agreement. ARTICLE III Management and Operations of BRI Section 3.01. BRI shall at all times carry on its operations, manage its affairs, plan its future development and maintain its financial position in accordance with sound banking practices. -5- ARTICLE IV Financial Covenants Section 4.01. BRI shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 4.02. BRI shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than nine months after the end of each such year, (A) certified copies of its financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning the accounts and financial statements of BRI and the audit thereof as the Association shall from time to time reason- ably request. ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 5.02. (a) This Agreement and all obligations of the Association and of BRI thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) a date fifteen years after the date of this Agree- ment. (b) If the Development Credit Agreement terminates in accor- dance with its terms, before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify BRI of this event. -6- Section 5.03. All the provisions of this Agreement shall con- tinue in full force and effect notwithstanding any cancellation or suspension under the Development Credit Agreement. ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have des- ignated by notice to the party giving such notice or making such request. The addresses so specified are: For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For BRI: Kantor Besar Bank Rakyat Indonesia Jalan Veteran 8 P.O. Box 94 Jakarta, Indonesia Cable address: Telex: KABEBRI 44300 KBBRI IA Jakarta 44220 KBBRI IA -7- Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of BRI may be taken or executed by its President Director or such other person or persons as the Board of Directors of BRI shall designate in writing. Section 6.03. BRI shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of BRI, take any action or execute any documents required or permitted to be taken or executed by BRI pursuant to any of the provisions of this Agreement. Section 6.04. This Agreement may be executed in several coun- terparts, each of which shall be an original, and all collectively but one instrument. 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. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ S. Shahid Husain Regional Vice President East Asia and Pacific BANK RAKYAT IDONESIA By /s/ Danudirdjo Ashari Authorized Representative