Colombia - Irrigation Rehabilitation I Project : Loan 1996 - Guarantee Agreement - Conformed

OFCl 11 LOAN NUMBER 1996 CO Guarantee Agreement (Irrigation Rehabilitation I Project) between REPUBLIC OF COLOMBIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated , 1982 LOAN NUMBER 1996 CO GUARANTEE AG EMENT AGREEMENT, dated :;:7 , 1982, between REPUBLIC OF COLOMBIA (her inafter called the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (here- inafter called the Bank). WHEREAS by the Loan Agreement of even date herewith between the Bank and Instituto Colombiano de Hidrologla, Meteorologla Adecuaci6n de Tierras .(hereinafter called the Borrower) the Bank has agreed to make to the Borrower a loan in various currencies equivalent to thirty-seven million dollars ($37,000,000), 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 WHEREAS the Guarantor, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed so to guarantee such obligations of the Borrower; NOW THEREFORE the parties hereto hereby agree as follows: 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 Guarantee Agreements of the Bank dated October 27, 1980, with the same force and effect as if they were fully set forth herein, subject, however, to the modifications thereof set forth in Section 1.01 of the Loan Agreement (said General Conditions Applicable to Loan and Guarantee Agreements, as so modified, 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. ARTICLE II Guarantee; Provision of Funds Section 2.01. Without limitation or restriction upon any of its other obligations under the Guarantee Agreement, the -2- 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 and the punctual performance of all the other obligations of the Borrower, all as set forth in the Loan Agreement. Section 2.02. Without limitation or restriction upon the provisions of Section 2.01 of this Agreement, the Guarantor specifically undertakes to make arrangements, satisfactory to the Bank, promptly to provide the Borrower or cause the Borrower to be provided with such funds as are needed by the Borrower to comply with its obligations under paragraph (d) of Section 2.03 of the Loan Agreement and te meet the expenditures required for the carrying out of the Project (except Part II.A), such funds estimated to aggregate the equivalent to seventeen million four hundred thousand dollars ($17,400,000), provided, however, that if there is reasonable cause to believe that the amount of funds referred to above will be inadequate to meet the estimated expenditures required for the carrying out of the Project (except Part II.A), make or cause to be made arrangements, satisfactory to the Bank, to enable the Borrower promptly to be provided with such funds as are needed to meet such expenditures. ARTICLE III Other Covenants Section 3.01. (a) The Guarantor shall cause Fondo to carry out Part II.A of the Project through the Financial Intermediaries with due diligence and efficiency and in accordance with sound financial standards and appropriate banking practices and shall provide promptly as needed the funds and other resources required for the purpose. (b) The Guarantor shall cause Fondo to provide the financial assistance under Part II.A of the Project through the Financial Intermediaries in accordance with the terms and conditions applied by Fondo to farmers in its day-to-day credit operations. Section 3.02. (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 -3 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 provision to that effect; provided, however, that, if for any constitutional 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; and (ii) any lien arising in the ordinary course of banking transactions 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 subdivision 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 foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Guarantor. Section 3.03. The Guarantor shall exchange views and agree with the Bank and the Borrower, by June 1 and December 1 of each year, on the funding requirements for Parts I-A, II.B and III of the Project as provided under Section 2.03 (f) of the Loan Agreement. ARTICLE IV Representative of the Guarantor; Addresses Section 4.01. The Ministro de Hacienda y Cr6dito PGblico of the Guarantor is designated as representative of the Guarantor for the purposes of Section 11.03 of the General Conditions. -4- 'Section 4.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Guarantor: Ministerio de Hacienda y Cr6dito PGblico Republic of Colombia Palacio de los Ministerios Plaza San Agustfn Bogotg D.E. Colombia Cable address: MINHACIENDA Bogotg 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) IN VITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused tilis Agreement 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. REPUBLIC OF COLOMBIA By Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPME By Regional Vice President Lat America and the Caribbean INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this Lt4day of ZA4, 198 Z. U FOR SECRETARY