Honduras - Third Agricultural Credit Project : Loan 2284 - Project Agreement - Conformed

DOFFC EIT L OAN NUMBER 2284 HO Project Agreement (Third Agricultural Credit Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and BANCO CENTRAL DE HONDURAS Dated 1983 LOAN NUMBER 2284 HO PROJECT AGREEMENT AGREEMENT, dated L t aei , 1983, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (herein- after called the Bank) and BANCO CENTRAL DE HONDURAS (hereinafter called Banco Central.) WHEREAS (A) by the Loan Agreement of even date herewith between Republic of Honduras (hereinafter called the Borrower) and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to forty-five million dollars ($45,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that Banco Central agree to undertake such obligations toward the Bank as are hereinafter set forth; (B) by a subsidiary loan agreement to be entered into between the Borrower and Banco Central, the proceeds of the loan provided for under the Loan Agreement will be made available to Banco Central on the terms and conditions therein set forth; and WHEREAS Banco Central, in consideration of the Bank's entering into the Loan 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 Loan Agreement, the Preamble to this Agreement and the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. Banco Central shall carry out the Project, described in Schedule 2 to the Loan Agreement, with due diligence and efficiency and in conformity with appropriate administrative, financial, and agricultural practices, and shall provide, or -2- cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 2.02. In order to assist Banco Central in carrying out Parts B and C of the Project, Banco Central shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank, such consultants to be selected in accordance with principles and procedures satisfactory to the Bank on the basis of the "Guide- lines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. Section 2.03. Except as the Bank shall otherwise agree, procurement of the goods and civil works required for the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 1 to this Agreement. Section 2.04. (a) Banco Central undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by Banco Central to replace or repair such goods. (b) Banco Central shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the purposes of the Project. Section 2.05. (a) Banco Central shall furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Project, and any material modifications thereof or addi- tions thereto, in such detail as the Bank shall reasonably request. (b) Banco Central: (i) shall maintain records and proce- dures adequate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Loan, and to disclose their use in the Project; (ii) shall enable the Bank's representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any relevant - 3 - records and documents; and (iii) shall furnish to the Bank at regular intervals all such information as the Bank shall reason- ably request concerning the Project, its cost and, where appro- priate, the benefits to be derived from it, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. (c) Upon the award by Banco Central of any contract for goods, works or services to be financed out of the proceeds of the Loan, the Bank 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 four months after the Closing Date or such later date as may be agreed for this purpose between Banco Central and the Bank, Banco Central, through the Project Unit shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank 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 Banco Central and the Bank of their respective obligations under the Project Agreement and the accomplishment of the purposes of the Loan. (e) Banco Central shall enable the Bank's representatives to examine all plants, installations, sites, works, buildings, property and equipment of Banco Central and any records and documents relevant to the Project. Section 2.06. Banco Central shall: (a) enter into the Subsidiary Loan Agreeo.ent with the Borrower; (b) for the purposes of carrying out Part A of the Project, enter into lending contracts with each Financial Intermediary (the Project Administration Contracts) on such terms and condi- tions as shall be satisfactory to the Bank, including such terms and conditions as are set forth in Section 1 of Schedule 2 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower, the Bank and Banco Central; (c) duly perform its obligations under the Subsidiary Loan Agreement and each Project Administration Contract and exercise -4- its rights thereunder, in such a manner as to protect the in- terests of the Borrower, the Bank and Banco Central and to accomplish the purposes of the Loan, and except as the Bank shall otherwise agree, Banco Central shall not assign, nor amend, abro- gate, waive or fail to enforce, the Subsidiary Loan Agreement and each Project Administration Contract, or any provision thereof; and (d) open and maintain on its books a Project Account, such Project Account to have as many sub-Project Accounts as shall be satisfactory to the Bank, to which the proceeds of the Loan made available to Banco Central by the Borrower under the Subsidiary Loan Agreement shall be credited and through which all payments under the Subsidiary Loan Agreement and each Project Administra- tion Contract, shall be made. Section 2.07. (a) Banco Central shall, at the request of the Bank, exchange views with the Bank with regard to the progress of the Project, the performance of its obligations under this Agree- ment and under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Loan. (b) Banco Central shall promptly inform the Bank of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Loan, or the performance by Banco Central of its obligations under this Agreement and under the Subsidiary Loan Agreement. Section 2.08. Banco Central shall furnish to the Bank, promptly upon their execution, certified copies of every Project Administration Contract, and shall furnish to the Bank upon request, copies of any Sub-loan Contract. Section 2.09. Banco Central shall: (a) conduct the Project activities through the Project Unit, such Unit to be provided with facilities and personnel in a manner satisfactory to the Bank and to be headed by the Project Director; (b) expand the activities of the Project Unit providing thereto the services of the persons referred to in Section 6.01 (e) of the Loan Agreement, a new small office in Juticalpa, resources to foster extension services and, in general, all resources required for the carrying out of the Project additional to those provided under the applicable Prior Agreement; - 5 - (c) maintain the Project Unit until the Project completion report referred to in Section 2.05 (d) of this Agreement has been delivered to the Bank in form and substance satisfactory to the Bank; (d) employ, upon terms and conditions of employment satis- factory to the Bank: (i) a Project Director, acceptable to the Bank, who shall perform, inter alia, the functions referred to in Schedule 3 to this Agreement; and (ii) a Deputy Project Director, acceptable to the Bank, who shall in the absence of the Project Director discharge in lieu thereof; (e) at all times take all action necessary or advisable to enable the Project Executive Committee to carry out its functions as provided in Section 3.02 of the Loan Agreement; and (f) without limitation or restriction upon the provisions of paragraph (a) of this Section: (i) maintain and operate two revolving funds in Lempiras in amounts, satisfactory to the Bank, adequate for meeting the financial requirements of a timely exe- cution of the Project, and (ii) maintain rules and guidelines, satisfactory to the Bank, for the operation of such funds. One of the funds to be used for purposes of Part A of the Project and the other for those of Parts B and C thereof. Section 2.10. Banco Central shall, once the mechanism referred to in Section 3.04 of the Loan Agreement has been estab- lished, promptly and adequately restore the liquidity of any Financial Intermediary which has been substantially and adversely affected by the replacement of land, held as collateral under Sub-loan Contracts, by Agrarian Reform Bonds issued in connection with the expropriation of such land under the Agrarian Reform Law. ARTICLE III Management and Operations of Banco Central Section 3.01. Banco Central shall carry on its operations and conduct its affairs in accordance with sound administrative, financial and agricultural practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. Banco Central shall ensure that the proceeds of all payments made by Financial Intermediaries under Project -6- Administration Contracts which are not utilized by Banco Central to make payments to the Borrower under the Subsidiary Loan Agreement shall be utilized by Banco Central to fund further agricultural lending programs managed by the Project Unit. ARTICLE IV Financial Covenants Section 4.01. (a) Banco Central shall maintain and cause each Financial Intermediary to maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition, including, without limitation to the foregoing, separate accounts reflecting all expenditures on account of which withdrawals are requested from the Loan Account on the basis of statements of expenditure. (b) Banco Central shall retain, until one year after the Closing Date, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing the expenditures on account of which withdrawals are requested from the Loan Account on the basis of statements of expenditure, and shall enable the Bank's representatives to examine such records. Section 4.02. Banco Central shall: (a) have and cause each Financial Intermediary to 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 Bank; (b) furnish and cause each Financial Intermediary to furnish to the Bank as soon as available, but in any case not later than four months after the end of each such year: (i) certified copies of its financial statements for such year as so audited; and (ii) the report of such audit by said auditors of such scope and in such detail as the Bank shall have reasonably requested, including, without limitation to the foregoing, separate opinions by said auditors in respect of the expenditures and records referred to in Section 4.01 (b) of this Agreement, as to whether the proceeds of the Loan made available to it and withdrawn from the Loan Account on the basis of statements of -7- expenditure have been used for the purpose for which they were provided; and (c) furnish and cause each Financial Intermediary to fur- nish to the Bank such other information concerning said accounts, financial statements, records and expenditures, as well as the audit thereof, as the Bank shall from time to time reasonably 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 Loan Agreement becomes effective. Section 5.02. This Agreement and all obligations of the Bank and of Banco Central thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms, and the Bank shall promptly notify Banco Central thereof. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancella- tion or suspension under the General Conditions. 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 designated by notice to the party giving such notice or making such request. The addresses so specified are: -8- 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) For Banco Central: Banco Central de Honduras Tegucigalpa, D.C. Honduras Cable Address: Telex: BANTRAL 1121 HTBANTRAL Tegucigalpa 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 Banco Central, or by Banco Central on behalf of the Borrower under the Loan Agreement, may be taken or executed by the President of Banco Central or such other person or persons as the President of Banco Central shall designate in writing, and Banco Central shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collec- tively but one instrument. 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