El Salvador - Feeder Road Program And Complementary Projects : Loan 0216 - Loan Agreement - Conformed

LOAN NUMBER 216 ES Loan Agreement (Feeder Road Program and Complementary Projects) BETWEEN REPUBLIC OF EL SALVADOR AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED JANUARY 7, 1959 LOAN NUMBER 216 ES Loan Agreement (Feeder Road Program and Complementary Projects) BETWEEN REPUBLIC OF EL SALVADOR AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED JANUARY 7, 1959 AGREEMENT, dated January 7, 1959, between REPUB- LIC OF EL SALVADOR (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOP- MENT (hereinafter called the Bank). ARTICLE I Loan Regulations SECTION 1.01. The parties to this Loan Agreement accept all the provisions of Loan Regulations No. 3 of the Bank dated June 15, 1956, subject, however, to the modifica- tions thereof set forth in Schedule 3 to this Agreement (said Loan Regulations No. 3 as so modified being hereinafter called the Loan Regulations), with the same force and effect as if they were fully set forth herein. ARTICLE II The Loan SECTION 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in this Agreement set forth or referred to, an amount in various currencies equivalent to five million dollars ($5,000,000). SECTION 2.02. (a) The Bank shall open a Loan Account on its books in the name of the Borrower and shall credit to such Account the amount of the Loan. The amount of the Loan may be withdrawn from the Loan Account as pro- vided in, and subject to the rights of cancellation and suspension set forth in, the Loan Regulations. (b) Notwithstanding the foregoing, no withdrawals shall be made from the Loan Account in respect of goods to be used in carrying out parts B(2) and B(3) of the Project until (i) agreement between the Republic of Guatemala and the Borrower has been reached on the international aspects of the construction and maintenance of the bridge 4 across the Rio de Paz; and (ii) the Borrower has furnished to the Bank a legal opinion or opinions satisfactorv to the Bank of counsel acceptable to the Bank showing that such agreement constitutes a valid and bindig obligation of the Republic of Gu<temala and the Borrower in accordance with its termis. SEcTION 2.03. The Borrower shall pay to the Bank a commitment charge at the rate of thr'ee-fourths of one per cent (% of 1% ) per anum on the principal amount of the Loan not so withdrawn from time to time. Snch coinmit- ment charge shall accrue from a date sixtv davs after the date of this Agreement to the respective (ates on which amounts shallb withdrawn by the Borrower from the Loan Account as provided in Article IV of the Loan Regulations or shall be cancelle(d pursuant to Article V of the Loan Regulations. SECTIjON 2.04. The Borrower shall p-ay interest at the rate of five and three-fourths per cent (5%% ) per annum on the principal amount of the Loan so withdrawn and out- standing from time to time. SEcrIoN 2.05. Except as the Borrower and the Bank shall otherwise agree, the charge pavable for special coin- mitients entered into by the Bank at the request of the Borrower pursuant to Seetion 4.02 of the Loan Regulations shall be at the rate of one-half of one per cent (½ of 15 ) per annum on the principal amount of any such special coniinitients outstanding from time to time. SECTION 2.06. Interest and other charges shall be pay- able semi-annually on April 15 and October 15 iii each year. SECTION 2.07. The Borrower shall repay the principal of the Loan in accordance with the aniortization schedule set forth in Schedule 1 to this Agreement. 5 ARTICLE III Use of Proceeds of the Loan SECTION 3.01. The Borrower shall cause the proceeds of the Loan to be applied ext-isively to financing the cost of goods required to carry out the Project described in Sched- ule 2 to this Agreement. The specific goods to be financed out of the proceeds of the Loan and the methods and pro- cedures for procurement of such goods shall be determined by agreement between the Borrower and the Bank, subject to modification by further agreement between them. SECTION 3.02. Except as the Borrower and the Bank shall otherwise agree, the Borrower shall cause all goods financed out of the proceeds of the Loan to be used in the territories of the Borrower exclusively in the carrying out of the Project. SECTION 3.03. Except as the Borrower and the Bank shall otherwise agree, all contracts entered into by the Bor- rower for the construction or reconstruction of all the roads or sections of roads included in the Project shall be awarded on the basis of international competitive bidding and shall be in form and substance satisfactory to the Bank. ARTICLE IV Bonds SECTION 4.01. The Borrower shall execute and deliver Bonds representing the principal amount of the Loan as provided in the Loan Regulations. SECTION 4.02. The Ministro de Hacienda of the Bor- rower and such person or persons as he shall appoint in writing are designated as authorized representatives of the Borrower for the purposes of Section 6.12 of the Loan Regulations. 6 ARTICLE V Particular Covenants SECTION 5.01. (a) The Borrower shall cause the Project to be carried out with due diligence and efficiency and in conformity with sound engineering and financial practices. (b) Except as the Borrower and the Bank shall otherwise agree: (i) contractors mutually satisfactory to the Bor- rower and the Bank shall be employed by the Borrower to construct or reconstruct all roads or sections of roads included in the Project; and (ii) the Borrower shall, in the carrying out of the Project, retain competent and experi- enced technical consultants mutually satisfactory to the Borrower and the Bank upon terms and conditions mutually satisfactory to the Borrower and the Bank. (c) (i) The Borrower shall cause to be furnished to the Bank, promptly upon their preparation, the plans, speci- fications and work schedule for the Project and any mate- rial modifications subsequently made therein, in such detail as the Bank shall from time to time request; (ii) the general design standards and the types of pavement, if any, to be used on the roads or sections of roads included in the Project shall be determined by agreement between the Borrower and the Bank, subject to modification by further agreement between them. (d) The Borrower shall maintain or cause to be main- tained records adequate to identify the goods financed out of the proceeds of the Loan, to disclose the use thereof in the Project, and to record the progress of the Project (including the cost thereof) and to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of the agency or agencies of the Borrower responsible for the construction or opera- tion of the Project or any part thereof; shall enable the Bank's representatives to inspect the Project, the goods and any relevant records and documents; and shall furnish to the Bank all such information as the Bank shall reasonably 7 request concerning the expenditure of the proceeds of the Loan, the Project, and the goods, and the operations and financial condition of the agency or agencies of the Bor- rower responsible for the construction or operation of the Project or any part thereof. SECTION 5.02. (a) The Borrower and the Bank shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reasonably request with regard to the general status of the Loan. On the part of the Borrower, such information shall include information with respect to financial and economic condi- tions in the territories of the Borrower and the interna- tional balance of payments position of the Borrower. (b) The Borrower and the Bank shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Loan and the maintenance of the service thereof. The Borrower shall promptly inform the Bank of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Loan or the maintenance of the service thereof. (c) The Borrower shall afford all reasonable opportu- nity for accredited representatives of the Bank to visit any part of the territories of the Borrower for purposes related to the Loan. SECTION 5.03. It is the mutual intention of the Borrower and the Bank that no other external debt hereafter created shall enjoy any priority over the Loan by way of a lien on governmental assets. To that end, the Borrower undertakes that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of the Borrower as security for any external debt, such lien will ipso facto equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan and the Bonds, and that in the creation of any such lien express provision will be made to that effect, provided, however, that the foregoing provi- sions of this Section shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as secu- rity for the payment of the purchase price of such property; (ii) any lien on commercial goods to secure a debt maturing not more than one year after the date on which it is orig- inally incurred and to be paid out of the proceeds of sale of such commercial goods; or (iii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. The term "assets of the Borrower" as used in this Sec- tion includes assets of the Borrower or of any of its political subdivisions or of any agency of the Borrower or of any such )olitical subdivision, including assets of the Banco Central de Reserva de El Salvad or. SECTION 5.04. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid without deduction for, and free from, any taxes or fees imposed under the laws of the Borrower or laws in effect in its terri- tories; provided, however, that the provisions of this Sec- tion shall not apply to taxation of, or fees upon, payments under any Bond to a holder thereof other than the Bank when such Bond is beneficially owned by an individual or corporate resident of the Borrower. SECTION 5.05. The Loan Agreement and the Bonds shall be free from any taxes or fees that shall be imposed under the laws of the Borrower or laws in effect in its territories on or in connection with the execution, issue, delivery or registration thereof and the Borrower shall pay all such taxes and fees, if any, imposed under the laws of the country or countries in whose currency the Loan and the Bonds are payable or laws in effect in the territories of such country or countries. SECTION 5.06. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid free from 9 all restrictions imposed under the laws of the Borrower or laws in effect in its territories. SECTION 5.07. The Borrower shall satisfy the Bank that adequate arrangements have been made to insure the goods financed out of the proceeds of the Loan against risks inci- dent to their purchase and importation into the territories of the Borrower. SECTION 5.08. The Borrower shall at all times make available by appropriation or otherwise, for disbursement promptly as they are needed, all sums which shall be required for the carrying out of the Project. Without limit- ing the foregoing, the Borrower shall make provision through adoption of an extraordinary budget pursuant to Article 125 of the Constitution of El Salvador for appropri- ation of an aggregate amount of not less than 12,000,000 colones to be used in the carrying out of the Project. The minimum amounts to be made available during the calendar years 1959 through 1962 for the execution of the Project are as follows: 1959. . . . .. .. . 2,300,000 colones 1960. . . .. ......... 4,500,000 colones 1961. . . ...3,900,000 colones 1962.... ...... .. ......1,300,000 colones Any sums appropriated as provided herein shall be used only for the purpose for which they were appropriated, and if not completely expended in one calendar year shall be carried over to the next calendar year or years and shall be used only for such purpose. SECTION 5.09. The Borrower shall cause the roads in its highway system to be maintained at all times in accordance with sound engineering standards. To this end, the Bor- rower shall engage such technical personnel as shall be necessary and shall establish and maiintain an ad(lequate number of maintenance field shops. 10 ARTICLE VI Remedies of the Bank SEcTIoN 6.01. (i) If any event specified in paragraph (a) or paragraph (b) of Section 5.02 of the Loan Regula- tioiis shall occur and shall continue for a period of thirty days, or (ii) if any event specified in paragraph (c) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of sixty days after notice thereof shall have beon given by the Bank to the Borrower, then at any subsequent time during the continuance thereof, the Bank, at its option, may declare the principal of the Loan and of all the Bonds then outstanding to be due and payable im- mediately, and upon any such declaration such principal shall become due and payable immediately, anything in this Agreement or in the Bonds to the contrary notwithstanding. ARTICLE VII Effective Date; Termination S.ECrioN 7.01. The following events are specified as addi- tional conditions to the effectiveness of this Agreement within the meaning of Section 9.01 (a) (ii) of the Loan Relegulations: (a) any action necessary to enable the Bor- rower to emj)loy the technical consultants referred to in Section 5.01 (b) of this Agreement shall have been taken, and such consultants shall have been employed; and (b) an extraordinary budget shall have been adopted as provided in Section 5.08 of this Agreement. SFCTIoN 7.02. The following are specified as additional matters, within the meaning of Section 9.02 (c) of the Loan Regulations, to be included in the opinion or opinions to be furnished to the Bank: (a) that all action necessary to enable the Borrower to employ the technical consultants referred to in Section 5.01 (b) of this Agreement has been taken; and (b) that all action necessary for the adoption of n extraordinary budget as provided in Section 5.08 of this Agreement has been duly and validly taken. 11 SECTION 7.03. A date 90 days after the date of this Agree- ment is hereby specified for the purposes of Section 9.04 of the Loan Regulations. ARTICLE VIII Miscellaneous SECTION 8.01. The Closing Date shall be December 31, 1962. SECTION 8.02. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Borrower: Ministro de Obras Piiblicas Palacio Nacional San Salvador El Salvador and Ministro de Hacienda Palacio Nacional San Salvador El Salvador Alternative addresses for cablegrams and radiograms: Ministro de Obras Piblicas San Salvador and Ministro de Hacienda San Salvador For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington 25, D. C. 12 Alternative address for cablegrams and radiograms: Intbafrad Washington, D. C. SECTION 8.03. The Ministro de Hacienda of the Bor- rower is designated for the purposes of Section 8.03 of the Loan Regulations. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Loan Agreement to be signed in their respective names and delivered in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF EL SALVADOR By ROBERTO PARKER HECTOR DAVID CASTRO Authorized Representatives INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By W.A. B. ILIFF Vice President 13 SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars) * April 15, 1963 $156,000 October 15, 1963 161,000 April 15, 1964 165,000 October 15, 1964 170,000 April 15, 1965 175,000 October 15, 1965 180,000 April 15, 1966 185,000 October 15, 1966 191,000 April 15, 1967 196,000 October 15, 1967 202,000 April 15, 1968 208,000 October 15, 1968 214,000 April 15, 1969 220,000 October 15, 1969 226,000 April 15, 1970 233,000 October 15, 1970 239,000 April 15, 1971 246,000 October 15, 1971 253,000 April 15, 1972 260,000 October 15, 1972 268,000 April 15, 1973 276,000 October 15, 1973 284,000 April 15, 1974 292,000 * To the extent that any part of the Loan is repayable in a currency other than dollars (see Loan Regulations, Section 3.02), the figures in this column represent dollar equivalents determined as for pur- poses of withdrawal. 14 Premiums on Prepayment and Redemption The following percentages are specified as the premiums payable on repayment in advance of maturity of any part of the principal amount of the Loan pursuant to Section 2.05 (b) of the Loan Regulations or on the redemption of any Bond prior to its maturity pursuant to Section 6.16 of the Loan Regulations: Time of Prepayment or Redemption Premium Not more than 3 years before maturity. . of 1% More than 3 years but not more than 6 years before maturity.............. ..2% More than 6 years but not more than 11 years before maturity ............ 3/% More than 11 years but not more than 13 years before maturity............ 4%- More than 13 years before maturity .... 5%' 15 SCHEDULE 2 Description of Project The Project consists of: A. The construction and reconstruction of twenty-one feeder roads, eighteen of which will connect with the Coastal Highway. The general location of the roads will be as agreed between the Borrower and the Bank. B. The execution of the following three items comple- mentary to the Coastal Highway Project provided for in the loan agreement dated October 12, 1954, between the Borrower and the Bank: (1) The repair of the existing earthwork of the section between La. Libertad and Comalapa of the Coastal Highway and the pavement thereof consisting of a base and a double bituminous surface treatment. (2) The construction, in collaboration with the Govern- ment of Guatemala, of a two-lane highway bridge across the Rio de Paz on the border between El Salvador and Guatemala. (3) The construction of an extension of the Coastal Highway, approximately four kilometers long, to the site of the bridge across the Rio de Paz. 16 SCHEDULE 3 Modifications of Loan Regulations No. 3 For the purposes of this Agreement the provisions of Loan Regulations No. 3 of the Bank, dated June 15, 1956, shall be deemed to be modified by deleting Section 2.02 thereof.