Tanzania - Export Rehabilitation Program : Credit 1133 - Credit Agreement - Conformed

DoCumENT S DIT NUMBER 1133 TA Development Credit Agreement (Export Rehabilitation Program) between UNITED REPUBLIC OF TANZANIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated p h , 1981 CREDIT NUMBER 1133 TA DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated ph ;.ZL( , 1981, between UNITED REPUBLIC OF TANZANIA (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) the Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) the Borrower has taken measures to strengthen its export sector, including, inter alia, the following: adjustments in the producer prices for coffee and sisal and the removal of the production tax on tobacco; establishment of a special agricultural account; improvements in the foreign exchange allocation system; preparation of a time table for the updating of the financial accounts of major agricultural parastatal organizations; and introduction of measures to promote non-traditional exports; (C) the Borrower intends to take further measures to support its export rehabilitation program and to prepare structural changes in its economy, which measures are summarized in the Memorandum of Understanding of even date herewith between the Borrower and the Association; WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth; 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 Development Credit Agreements of the Association, dated June 30, 1980, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agreements of the Association 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 have the respective meanings therein set forth and the following additional terms have the following meanings: -2- (a) "BOT" means Bank of Tanzania, the Borrower's central bank; (b) "BET" means Board of External Trade, established by the Board of External Trade Act, Cap 5 of 1978, which is respon- sible for advising the Borrower on external trade matters; (c) "Tanzanian Shillings" means the currency of the Borrower; and (d) "Special Agricultural Account" means the account estab- blished on April 15, 1981 by the Borrower in the Bank of Tanzania. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equiva- lent to forty million nine hundred thousand Special Drawing Rights (SDR 40,900,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement bet'ieen the Borrower and the Association for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of the imported goods included in such Schedule and to be financed out of the proceeds of the Credit. Section 2.03. Except as the Association shall otherwise agree, contracts for goods costing more than $5,000,000 equivalent to be financed out of the proceeds of the Credit shall be procured on the basis of procedures that include broad international tendering amongst suppliers from the Bank's member countries, Switzerland and Taiwan and contract award to the lowest evaluated responsive bidder. Before requesting a withdrawal of proceeds of the Credit on account of any such contract, the Borrower shall cause the Association to be furnished with a brief report, in form and substance satisfactory to the Association, on the procedures followed in procuring such contract. If the Association shall have reasonably determined that the procedures followed in procuring such contract are inconsistent with the procedures set forth or -3- referred to in this Section, no expenditures under such contract shall be financed out of the proceeds of the Credit. The Associa- tion shall promptly inform the Borrower of, and state the reasons for, any such determination., Section 2.04. The Closing Date shall be March 31, 1982 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semiannually on March 1 and September 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each March 1 and September 1 commencing September 1, 1991, and ending March 1, 2031, each installment to and including the installment payable on March 1, 2001, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the United Kingdom of Great Britain and Northern Ireland is hereby specified for the purposes of Section 4.02 of the General Conditions. Section 2.09. (a) BOT is designated as representative of the Borrower for the purposes of taking any action required or permitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions. (b) The Borrower shall entrust BOT with responsibility for the coordination and collection of relevant documentation and the preparation of withdrawal applications for the Credit. Unless the Association shall otherwise agree, each of such applications shall include evidence satisfactory to the Association of the importation into Tanzania of the goods for which financing is requested under such application and of the date of such importation. -4- ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out the Project, or cause the Project to be carried out, with due diligence and efficiency and in conformity with appropriate financial and administrative practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Without limitation or restriction to the foregoing, the Borrower shall take or cause to be taken all such action, including the expeditious granting of import licenses, as shall be necessary or convenient to facilitate the timely importation of the goods to be financed out of the Credit. Section 3.02. The Borrower shall open an account (the Project Account) with BOT and shall, upon each withdrawal from the Credit Account, deposit or cause to be deposited in such Project Account in accordance with appropriate financial procedures the equivalent in Tanzanian Shillings of the currency or currencies withdrawn from the Credit Account (such equivalent to be determined as of the respective dates of such withdrawals). The amounts so deposited in the Project Account shall be used exclusively to finance the local currency capital or recurrent costs of rural development related projects being carried out by the Borrower and included in its central government budget. Section 3.03. The Borrower undertakes to insure, or cause to be insured, the imported goods to be financed out of the proceeds of the Credit against hazards incident to the acquisition, transportation and delivery thereof to the point of entry into Tanzania, and for such insurance any indemnity shall be payable in a currency freely usable by the purchaser or importer to replace or repair such goods. Section 3.04. (a) The Borrower shall: (i) maintain or cause to be maintained records adequate to identify the goods financed out of the proceeds of the Credit, and to disclose their use in the Project; (ii) enable the Association's accredited representa- tives to examine any relevant records and documents in connection with the goods financed out of the proceeds of the Credit; and (iii) furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning - 5 - the Project, the expenditure of the proceeds of the Credkt and the goods financed out of such proceeds and their procurement. (b) The Borrower shall furnish to the Association all such information as the Association shall reasonably request concerning the utilization of the amounts deposited in the Project Account pursuant to Section 3.02 of this Agreement. (c) Upon the award by the Borrower of any contract for goods to be financed out of the proceeds of the Credit, the Association may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (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 Borrower and the Association, the Borrower 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 of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Association of their respective obligations under the Development Credit Agreement and the accomplishment of the purposes of the Credit. Section 3.05. The Borrower shall not later than September 30, 1981, establish within BOT and thereafter maintain a unit, which shall be responsible, inter alia, for: (i) monitoring and reporting on (A) all grants received from governments, public agencies and international organizations and (B) all external debt obligations undertaken by government ministries, parastatal organizations and private borrowers and (ii) annually preparing and updating of projections of the foreign exchange estimated to be needed in the following 10 years to service such external debt obligations. Section 3.06. The Borrower shall not later than June 30, 1981, furnish to the Association, for its review and comments, a draft export credit guarantee program and shall, not later than December 31, 1981, implement such export credit guarantee program. Section 3.07. The Borrower shall cause BET (i) by Decem- ber 31, 1981 to fill the positions of External Trade Policy Manager and Export Promotion and Publicity Manager with qualified and experienced personnel and (ii) in case of any vacancy in any of BET's professional staff positions after such date, promptly fill such vacancy with qualified and experienced staff. - 6 - Section 3.08. The Borrower shall not later than September 30, 1981, formulate and thereafter implement an action program acceptable to the Borrower and the Association, to streangthen its agricultural support services. Section 3.09. The Borrower shall (i) maintain the Special Agricultural Account established with BOT to meet the import requirements of the agricultural sector and (ii) ensure that, in accordance with procedures satisfactory to the Association, it will make available to the said account (A) during the period April 1, 1981 to March 31, 1982, from its own resources, an aggregate amount in foreign e-change equivalent to US$50 million and (B) during the period April 1, 1982 to March 31, 1983 and during each subsequent twelve month period, an aggregate amount in foreign exchange of not less than 15 percent of all receipts from the sale of its major export crops (i.e. coffee, tea, sisal, cotton, tobacco and cashewnuts) during such period. Section 3.10. The Borrower shall (i).-not later than August 31, 1981, in accordance with terms of reference satisfac- tory to the Association, complete a study of its system of setting producer prices for food and export crops, taking into account especially the effect of fuel, transportation and other marketing costs in the determination of such prices and (ii) based on this study and on the annual reviews of its producer prices, adjust such prices to provide adequate incentives for agricultural producers. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall cause BOT to maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations, resources and expenditures, in respect of the Project and the Project Account. (b) The Borrower shall cause BOT: (i) to have the Project Account for each fiscal year audited, in accordance with appro- priate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) to furnish to the Association as soon as available, but in any case not later than six months after the end of each such year, (A) a certified statement of the Project Account for such year as so audited and -7- (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) to furnish to the Association such other information concerning the Project Account and the audit thereof as the Association shall from time to time reasonably request. ARTICLE V Effective Date; Termination Section 5.01. The date I , is hereby specified for purposes of Section 12.01 (b) of the General Conditions. Section 5.02. The obligations of the Borrower under Sections 3.05, 3.07, 3.09 and 3.10 (ii) of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date five years after the date of this Agreement, whichever shall be the earlier. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Minister responsible for Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministry of Finance P.O. Box 9111 Dar es Salaam United Republic of Tanzania Cable address: TREASURY Dar es Salaam - 8- 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) IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this 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. UNITED REPUBLIC OF TANZANIA By 5 Pa (3 oc*04, Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By ~~ (s 09Q; PR. 4) 0444Q4~c Regional Vice President Eastern Africa SCHEDULE 1 Withdrawal of Proceeds of the Credit 1. The table below sets forth the Categories of imported items to be financed out of the proceeds of the Credit and the alloca- tion of amounts of the Credit to each Category: Amount of the Credit Allocated (Expressed in Category SDR Equivalent) (1) Agricultural 14,720,000 equipment and machinery, replacement parts and spares (2) Unprocessed 12,260,000 rubber and agri- cultural packing materials, in- cluding tin plate and jute bags (3) Agricultural 1,660,000 chemicals, including coffee fungicide (4) Vehicle replace- 12,260,000 ment parts TOTAL 40,900,000 2. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: - 10 - (a) expenditures in the currency of the Borrower, or for goods or services supplied from, the territory of the Borrower; (b) t)ayments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manu- facture, procurement or supply thereof; (c) expenditures made prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding $5,000,000 equivalent may be made on account of payments made for such expenditures before that date but after November 15, 1980; (d) payment for contracts of less than $10,000 equivalent; or (e) expenditures for goods to be supplied under a contract which any national or international financing institution or any other agency shall have financed or agreed to finance. 3. Notwithstanding the allocation of an amount of the Credit set forth in the second column of the table in paragraph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance all expenditures in that Category, the Association may, by notice to the Borrower, reallocate to such Category, to the extent required to meet such estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expendi- tures. - 11 - SCHEDULE 2 Description of the Project The Project consists of (i) the rehabilitation of the Borrower's agricultural export industries and support for food production by improving the operation and maintenance of existing productive and processing capacity in the agricultural sector through the provision of foreign exchange for the importation into Tanzania of essential equipment and materials and (ii) the streng- thening of the Borrower's institutions and procedures to monitor and control its foreign exchange resources and obligations. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the 4L day of 198 L. FOR SECRETARY