Yugoslavia - Structural Adjustment Loan : Loan 2326 - Guarantee Agreement - Conformed

OFFICIAL DOCUMENTS LOAN NUMBER 2326 YU Guarantee Agreement (Structural Adjustment Loan) between SOCIALIST FEDERAL REPUBLIC OF YUGOSLAVIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated , 1983 LOAN NUMBER 2326 YU GUARANTEE AGREEMENT AGREEMENT, dated , 1983, between SOCIALIST FEDERAL REPUBLIC OF YUGOSLAIA (hereinafter called the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (here- inafter called the Bank). WHEREAS (A) the Bank has received a letter dated May 25, 1983 from the Guarantor describing a program of actions, objec- tives and policies designed to achieve a structural adjustment of the Guarantor's economy, declaring the Guarantor's commitment to the execution of that program, and requesting assistance from the Bank in the financing of essential imports to be made during the execution of such program; (B) on the basis, inter alia, of the foregoing, the Bank has decided in support of such program to provide assistance to Udruzena Beogradska Banka (hereinafter called the Borrower) by making to the Borrower a loan in various currencies equivalent to two hundred seventy-five million dollars ($275,000,000), on the terms and conditions set forth in the Loan Agreement of even date herewith between the Bank and the Borrower, but 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 enter- ing 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 modification thereof set forth in Section 1.01 of the Loan Agreement (said General Conditions Applicable to Loan and Guarantee Agreements being hereinafter called the General Conditions). - 2- 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 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 Loan Agreement. 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 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. - 3 - (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 or as security for the payment of debt incurred for the purpose of financing the purchase 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 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 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 3.02. The Guarantor covenants that it will not take, or cause or permit to be taken, any action which would prevent or interfere with the performance by the Borrower of its obligations contained in the Loan Agreement and that, within the limits of its constitutional powers, it will take or cause to be taken all reasonable action necessary or appropriate to enable the Borrower to perform its obligations under the Loan Agreement. Section 3.03. The Guarantor shall from time to time furnish to the Bank information as shall have been determined in agree- ment between the Guarantor and the Bank on the progress achieved in carrying out the program for structural adjustment referred to in the Preamble to this Agreement and on the basis of said infor- mation, the Guarantor and the Bank shall, from time to time, at the request of either party, exchange views on the progress achieved I.n carrying out said program and the measures specified in the Schedule to this Agreement. During each such exchange of views, the Guarantor shall furnish to the Bank such additional information as the Bank shall reasonably request. ARTICLE IV Representative of the Guarantor; Addresses Section 4.01. The Federal Secretary for Finance 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: Savezni Sekretarijat za Finansije 3 Omladinskih Brigada 11070 Belgrade Yugoslavia Cable address: Telex: SAVEZNI SEKRETARIJAT ZA FINANSIJE 11062 YU SIV Belgrade, Yugoslavia 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 WITNESS WHEREOF, the parties hereto, acting through their represeAtatives thereunto duly authorized, have caused this Agreement to e signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. SOCIALIST FEDERAL REPUBLIC OF YUGOSLAVIA By Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By f "e oI Regional Vice President Europe, Middle East and North Africa - 5 - SCHEDULE Review with Respect to Paragraph 4 of Schedule I to the Loan Agreement The Guarantor and the Bank shall review the measures taken with respect to: (a) the completion of a program of priority investment projects in the energy sector for the period 1983 through 1985, required to achieve planned targets; (b) the adequacy of progress in monitoring investment expenditures incurred during the previous six-month period; (c) the adequacy of progress in monitoring the operation of the system of foreign exchange allocation and in the formulation of a program aiming at an increase of foreign exchange mobility; (d) the adequacy of progress in the carrying out of energy conservation studies for enterprises which shall have been selected in consultation with the Bank; and (e) the adequacy of progress in finalizing: (i) the conclu- sion of a social compact on the criteria for and evaluation of the socio-economic justification of proposed investments; (ii) the revision of the Guarantor's five-year development plan (1981-1985) including sectoral and sub-sectoral priorities; and (iii) the improvement of financial planning procedures in commer- cial banks. 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 i day ofi_AM , 1983;. FOR SECRETARY