Bolivia - Reconstruction Import Credit Project : Credit 1703 - Credit Agreement - Conformed

CREDIT NUMBER 1703 BO Development Credit Agreement (Reconstruction Import Credit Project) between REPUBLIC OF BOLIVIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated 1986 CREDIT NUMBER /703 Bo DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated Z-, 1986, between REPUBLIC OF BOLIVIA (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS (A) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Association to assist in the financing of the Project; (B) Parts A, B, C and D of the Project will be carried out by the Borrower, through the Comisid"n de Control Financiero del Sector Publico of its Ministry of Finance with the assistance of the Central Bank of the Borrower (Central Bank) as the financial agent of the Borrower; (C) Parts E and F of the Project will be carried out by Central Bank with the Borrower's assistance and, as part of such assistance, the Borrower shall make available to Central Bank the portion of the proceeds of the Credit necessary to carry out said Parts of the Project as provided in this Agreement; and 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 set forth in this Agreement and in the Project Agreement (hereinafter defined) of even date herewith between the Association and Central Bank; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Develop- ment Credit Agreements" of the Association, dated January 1, 1985 (General Conditions), constitute an integral part of this Agreement with the following modification, namely that, the last sentence of Section 3.02 is deleted. Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: - 2 - (a) "Project Agreement" means the agreement between the Association and Central Bank of even date herewith, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the Project Agreement; (b) "Subsidiary Agreement" means the agreement to be entered into between the Borrower and Central Bank pursuant to Section 3.01 (b) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Agreement; (c) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (d) "COMIBOL" means Corporacion Minera de Bolivia, a mining enterprise wholly owned by the Borrower and established by Decreto Supremo No. 3196 of October 2, 1952, of the Borrower, and the term includes any mining subsidiary thereof; (e) "ENDE" means Empresa Nacional de Electricidad, S.A., a power public utility wholly owned by the Borrower and established by Decreto Supremo No. 05999 of February 9, 1962 and Resolucion Suprema No. 127462 of February 4, 1965, of the Borrower; (f) "ENFE" means Empresa Nacional de Ferrocarriles, a rail- way public utility wholly owned by the Borrower and established by Decreto Supremo No. 06909 of November 1, 1964 of the Borrower; (g) "YPFB" means Yacimientos Petrolfferos Fiscales Bolivianos, a petroleum company wholly owned by the Borrower and established by Decreto Ley of December 31, 1936, of the Borrower; and the term includes any relevant sL-.idiary thereof; (h) "Public Enterprises" means collectively, COMIBOL, ENDE, ENFE, and YPFB; and Public Enterprise means any one of the former entities; (i) "BAMIN" means Banco Minero de Bolivia, a bank engaged in financing and trading activities in the mining sector, wholly owned by the Borrower, and established on July 24, 1936, reorgan- ized under Decreto Ley No. 9028 of December 15, 1969 and Resoluci'n Suprema No. 18/500 of September 17, 1976, of the Borrower; (j) "Eligible Exporter" means a private individual or entity, established under the laws of the Borrower, engaged in a -3- ctive enterprise, and that Central Bank has qualified as an exporter in the manufacturing or agricultural-based sectors and declared eligible to receive Sub-loans under Part F (1) of the Project; (k) "Eligible Importer" means any private individual or entity established under the laws of the Borrower, engaged in a productive business enterprise, including distributors of imported goods to individuals or entities engaged in productive business enterprises, and declared eligible by Central Bank to receive Sub-loans under Part F (2) of the Project; (1) "Financial Intermediary" means any private banking institution operating in Bolivia which has entered into, or proposes to enter into, a Participating Agreement (hereinafter defined) with Central Bank for purposes of making Sub-loans (hereinafter defined) to Eligible Exporters and Eligible Importers; (m) "Financing Agreement means any of the agreements to be entered into by the Borrower, Central Bank (in its capacity as financial agent of the Borrower) and any of the Public Enter- prises pursuant to the provisions of Section 3.02 (a) of this Agreement and Schedule 4 hereto; (n) "Participating Agreement" means any of the agreements to be entered into between Central Bank and BAMIN, and between Central Bank and any Financial Intermediary, for purposes of carrying out Parts E and F of the Project, respectively, pursuant to the provisions of Section 2.03 (a) of the Project Agreement; (o) "Sub-loan" means a loan denominated in dollars payable in national currency (hereinafter defined) made, or proposed to be made, by a Financial Intermediary to an Eligible Exporter for purposes of financing the acquisition of locally produced goods under Part F (1) of the Project, or to an Eligible Importer for purposes of financing the importE ton of goods under Part F (2) of the Project; (p) "SITC" means the United Nations Standard International Trade Classification, 1974 Revision (SITC, Rev. 2), published in Commodity Indexes for the Standard International Trade Classifi- cation, Revised, Statistical Papers, Series M, No. 38/Rev. 2 (1981); -4- (q) "New Economic Policy" means the program of economic reform measures adopted by the Borrower in its Decreto Supremo No. 21060, issued on August 29, 1985 and the complementary reform measures adopted thereafter; (r) "Comision" means the Comision de Control Financiero del Sector Publico, a unit within the Ministry of Finance of the Borrower, established by Resolucion Ministerial de Finanzas No. 22086 of February 20, 1986; (s) "national currency" means the unit of cuz,ency of the Borrover; and (t) "Project Coordinating Committee" means the committee to be established pursuant to Section 2.08 of the Project Agreement. ARTICLI II The Credit Section 2.01. The Association agrees to lend to the Bor- rower, on the terms and conditions set forth or referred to in the Development Credit Agreement, an amount in various currencies equivalent to forty-eight million four hundred thousand Special Drawing Rights (SDR 48,400,000). Section 2.02. (a) 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 between the Central Bank, on behalf of 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 goods and services required for the Project and to be financed out of the proceeds of the Credit. (b) The Borrower shall, for the purposes of the Project, open and maintain in dollars a Special Account in a commercial bank acceptable to the Association, on terms and conditions satisf.actory to the Association. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 3 to this Agreement. Section 2.03. The Closing Date shall be June 30, 1988 or such later date as the Association shall establish. The Asso- ciation shall promptly notify the Borrower of such later date. -5- Section 2.04. (a) The Borrower shall pay to the Association a commitment charge at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of the Credit not withdrawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agreement to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without re- strictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of tte General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. 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. Commitment charges and service charges shall be payable semi-annually on May 1 and November 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each May 1 and November 1 commencing November 1, 1996, and ending May 1, 2036. Each installment to and including the installment payable on May 1, 2006 shall be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter shall be one s' one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. Section 2.09. Central Bank 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. -6- ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set fcrth in Schedule 2 to this Agreement and to this end, without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, shall cause Central Bank to perform in accordance with the provisions of the Project Agreement, all the obligations of Central Bank therein set forth, shall take, and cause the Public Enterprises and BAMIN to take, all action to carry out their obligations under Parts A, B, C, D and E of the Project, respectively, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable each such entity to perform their respective obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall make the appropriate proceeds of the Credit available to Central Bank to carry out Parts A, B, C and D of the Project on behalf of the Borrower as the financial agent of the Borrower, and to carry out Parts E and F of the Project, under a Subsidiary Agreement to be entered into between the Borrower and Central Bank, under terms and conditions which shall have been approved by the Association. (c) The terms and conditions of the Subsidiary Agreement shall include, inter alia: (i) payment of an annual fee by the Borrower to Central Bank of one-half of one percent (1/2%) per annum on the amounts: (A) owed to the Borrower and adminis- tered by Central Bank, by each Public Enterprise pursuant to the respective Financing Agreement; and (B) owed to Central Bank under the Project by BAMIN and the Financial Intermediaries; and (ii) if, pursuant to Section 4.01 (b) of this Agreement there is a conversion of Indebtedness (as therein defined) into Borrower's equity with respect to any Public Enterprise, then such fee shall be paid on the amount of Indebtedness so converted, annually through Project completion. -7- (d) The Borrower shall exercise its rights under the Sub- sidiary Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Agreement or any provision thereof. Section 3.02. (a) The Borrower shall lend, through Central Bank as its financial agent, the appropriate proceeds of the Credit to COMIBOL, ENDE, ENFE, and YPFB, for purposes of carrying out Parts A, B, C and D of the Project, respectively, under separate Financing Agreements, satisfactory to the Association, to be entered into by the Borrower, Central Bank (in its capacity as financial agent of the Borrower) and with each Public Enter- prise, and which shall include, inter alia, the terms and condi- tions set forth in Schedule 4 to this Agreement. (b) The Borrower shall exercise its rights, or shall cause the Central Bank to exercise its rights, under each of the Financing Agreements in such a manner as to protect the interests of the Borrower, Central Bank and the Association, and to accom- plish the purposes of the Credit, and except as the Association shall otherwise agree, neither the Borrower, nor Central Bank shall assign, amend, abrogate or waive any such Financing Agree- ment or any provision thereof. Section 3.03. Except as the Association shall otherwise agree, procurement of the goods require, for: (i) Parts A through E of the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 2 to the Project Agreement; and (ii) Part F of the Project and to be financed by means of Sub-loans made from the proceeds of the Credit shall be governed by Schedule 1 to the Project Agreement. Section 3.04. The Borrower and the Association hereby agree that, with respect to the Project, the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) shall be carried out by Central Bank pursuant to Section 2.05 of the Project Agreement. Section 3.05. The Borrower shall: (i) not later than August 31, 1986, submit to the Association for its review, its program for COMIBOL personnel reductions; (ii) carry rut the - 8 - personnel reduction program by a date acceptable to the Associa- tion; (iii) not later than August 31, 1986, submit a schedule for closing mines and facilities owned or operated by COMIBOL that are not technically or financially operable; and (iv) carry out such closing schedule on a basis and by a date acceptable to the Association. Section 3.06. (a) Except as the Association shall otherwise agree, the Borrower shall cause ENFE to maintain, for each of ENFE's fiscal years after the fiscal year ending on December 31, 1986, a ratio of total working expenses to total operating revenues of not higher than 100%. (b) Before October 1 in each of ENFE's fiscal years through Project completion, the Borrower shall cause ENFE, on the basis of forecasts prepared by ENFE and satisfactory to the Associa- tion, to review whether it would meet the requirements set forth in paragraph (a) in respect of such year and the next following fiscal year, and shall furnish to the Association the results of such review upon its completion. (c) If any such review shows that ENFE would not meet the requirements set forth in paragraph (a) for the fiscal year covered by such review, the Borrower shall, or shall cause ENFE to, promptly take all necessary measures including, without limitation, adjustments to the structure or levels of its tariffs in order to meet such requirements. (d) For the purposes of this Section: (i) The term "total working expenses" means all expenses related to operations, including adminis- tration, adequate maintenance, taxes and payments in lieu of taxes, but excluding depreciation, interest and other charges on debt. (ii) The term "total operating revenues" means revenues from all sources related to operations. Section 3.07. The Borrower shall cause ENFE to: (a) not later than December 31, 1986, complete a study, satisfactory to the Association, of the ENFE cost and tariff structure; (b) not later than March 31, 1987, discuss the study with the Association and, taking into consideration the comments of the Association and the findings of the study, propose a plan of action, satis- -9- factory to the Association, to improve the ENFE cost and tariff structure; and (c) not later than June 30, 1987, implement such plan of action. Section 3.08. The Borrower shall cause ENFE to, by June 30, 1987, achieve the personnel levels provided in the plan submitted to the Association. Section 3.09. The Borrower shalp (a) not later than August 31, 1986, prepare a program to revise the level and structure of electricity tariffs, taking into account the provi- sions of the Codigo de Electricidad of 1968 of the Borrower; (b) not later than October 31, 1986, discuss the program with the Association and, taking into consideration the comments of the Association, propose a revised program satisfactory to the Association; and (c) thereafter implement such program. Section 3.10. The Borrower shall: (a) not later than August 31, 1986, prepare a program to improve the capital struc- ture of ENDE, based on sound financial principles; (b) not later than October 31, 1986, discuss the program with the Association and, taking into consideration the comments of the Association, propose a revised program satisfactory to the Association; and (c) thereafter implement such program. Section 3.11. The Borrower shall refrain from constructing, or initiating the construction of, new power generation facili- ties which would increase the national electrical generation capacity by more than 25 megawatts, per facility, unless other- wise agreed by the Association. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower and the Association shall review the financial condition, investment programs and import plans of each of the Public Enterprises. To that end, the Borrower shall cause each of the Public Enterprises to provide all information necessary or appropriate for purposes of con- ducting such review. Such review shall occur within nine months after the Effective Date of this Credit, and at all other times as the Association shall reasonably request. - 10 - (b) If, as a result of any review referred to in paragraph (a) of this Section, the Association determines that the cover- sion of Indebtedness of any of the Public Enterprises into Borrower's equity is required, the Borrower shall take, and shall cause each such Public Enterprise to take, the measures necessary to effect such conversion. (c) For purposes of this Section, "Indebtedness" means any debt, or portion thereof, of each Public Enterprise owed to the Borrower pursuant to the applicable Financing Agreement. Section 4.02. (a) The Borrower and the Association shall review the progress of implementing the New Economic Policy within nine months after the Effective Date of this Credit, and at all other times as the Association shall reasonably request. (b) If, as a result of any review referred to in paragraph (a) of this Section, it is determined by the Association that additional actions need to be taken by the Borrower, Central Bank, BAMIN, or any of the Public Enterprises, the Borrower and the Association shall agree on the actions to be taken and a timetable for completing said actions. (c) The Borrower shall ensure that such actions referred to in paragraph (b) of this Section shall be carried out in accordance with the agreed timetable, with due diligence and in a manner designed to achieve the objectives of this Credit. ARTICLE V Remedies of the Association Section 5.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional events are specified: (a) Central Bank shall have failed to perform any of its obligations under the Project Agreement. (b) The Borrower and the Association shall have failed to reach the agreement referred to in Section 4.02 (b) of this Agreement. (c) The Borrower has failed, or has failed to cause, the Central Bank, BAMIN, or any of the Public Enterprises, to carry out any of the measures referred to in Section 4.01 (b), or any - 11 - of the actions in accordance with the timetable referred to in Section 4.02 (c) of this Agreement. (d) As a result of events which have occurred after the date of the Development Credit Agreement, an extraordinary situation shall have arisen which shall make it improbable that Central Bank will be able to perform its obligations under the Project Agreement. (e) Ley of July 20, 1928, establishing the Central Bank, as amended by Ley No. 9428 of October 20, 1970 and Decreto Ley 94440 of November 4, 1970 of the Borrower, shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of Central Bank to perform any of its obligations under the Project Agreement. (f) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of Central Bank, any of the Public Enterprises or BAMIN, or for the suspension of their respective operations, provided, however, that the remedies of Section 6.02 of the General Conditions may apply, if the Association shall so choose, only to the amount of the Credit that corresponds to the part of the Project being carried out by the respective Public Enterprise or BAMIN. (g) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of the Comisio'n. (h) A change shall have been made in any Financing or Participating Agreement without the Association's consent, or that a default has occurred under a Financing or Participating Agreement, provided, however, that the remedies provided for in Section 6.02 of the General Conditions may apply, if the Association shall so choose, only to an amount of the Credit that corresponds to the credit advanced pursuant to such Financing or Participating Agreement. Section 5.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional events are specified: (a) the event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower; and - 12 - (b) the events specified in paragraphs (b), (c), (e), (f), (g) and (h) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as addi- tional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the Subsidiary Agreement has been executed on behalf of the Borrower and Central Bank; (b) one of the Financing Agreements has been executed by Central Bank, on behalf of the Borrower, and any one of the Public Enterprises; (c) one of the Participating Agreements has been executed by Central Bank and any one of the Financial Intermediaries; and (d) the Central Bank has established the Project Coordinat- ing Committee pursuant to Section 2.08 of the Project Agreement. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) that the Project Agreement has been executed and duly authorized or ratified by Central Bank, and is legally binding upon Central Bank in accordance with its terms; (b) that the Subsidiary Agreement has been executed and duly authorized or ratified by the Borrower and Central Bank and is legally binding upon the Borrower and Central Bank ia accordance with its terms; (c) that the Financing Agreement, entered into in com- pliance with Section 6.01 (b), has been executed and duly autho- rized or ratified by the Borrower, Central Bank and the res- pective Public Enterprise and is legally binding on the Borrower, Central Bank and said Enterprise in accordance with its terms; and - 13 - (d) that the Participating Agreement, entered into in compliance with Section 6.01 (c), has been executed and duly authorized or ratified by Central Bank and the respective Financial Intermediary and is legally binding on Central Bank and said Intermediary in accordance with its terms. Section 6.03. The date of &"f7 4t4'2/Mis hereby specified for the purposes of Section 12.04 of the General Conditions. Section 6.04. The provisions of paragraphs (a), (b), (c), (g) and (h) of Section 5.02 of this Agreement shall cease on the date on which the Development Credit Agreement shall terminate or on the date 17 years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. Except as provided in Section 2.09 of this Agreement, the Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministerio de Finanzas Comision de Control Financiero del Sector Publico Calle Bolivar No. 582 La Paz, Bolivia Cable address: MINFIN La Paz, Bolivia For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America - 14 - Cable address: Telex: INDEVAS 440098 (ITT), Washington, D.C. 248423 (RCA) or 64145 (WUI) IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, 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. REPUBLIC OF BOLIVIA By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By 74 &so(jC*e Regional Vice President Latin America and the Caribbean - 15 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financedL out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) Goods for 12,740,000 100% of foreign Part A of expenditures of the Project (2) Goods and 1,590,000 100% of foreign services for expenditures Part B of the Project (3) Goods for 3,960,000 100% of foreign Part C of expenditures the Project (4) Goods and ser- 9,670,000 100% of foreign vices for expenditures Part D of the Project (5) Goods for 1,760,000 100% of foreign Part E of expenditures the Project (6) Sub-loans 1,760,000 100% of amounts made under disbursed by Part F (1) the Central Bank of the for Sub-loans Project made by Financial Intermediaries - 16 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (7) Sub-loans under 3,960,000 100% of amounts Part F(2) (a) disbursed by of the Project Central Bank for Sub-loans made by Financial Intermediaries (8) Sub-loans under 2,200,000 100% of amounts Part F(2)(b) disbursed by of the Project Central Bank for Sub-loans made by Financial Intermediaries (9) Sub-loans under 6,330,000 100% of amounts Part F(2)(c) disbursed by of the Project Central Bank for Sub-loans made by Financial Intermediaries (10) Unallocated 4,430,000 TOTAL 48,400,000 2. For the purposes of this Schedule the term "foreign expen- ditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures under the Project before the date of this Agreement; (b) expenditures for goods included in the following SITC groups or sub-groups: - 17 - Group Sub-group Description of Items 112 - Alcoholic beverages 121 - Tobacco, unmanufactured tobacco refuse 122 - Tobacco, manufactured 667 - Pearls, precious and semi- precious stones, unworked or worked 688 - Uranium depleted in U235 and thorium, and their alloys, unwrought or wrought, and articles therefor, n.e.s.; waste and scrap of uranium depleted in U235 and of thorium 718 718.7 Nuclear reactors, and parts thereof, n.e.s. 897 897.3 Jewelry of gold, silver or platinum group metals (except watches and watch cases) and goldsmiths' or silversmiths' wares (including set gems) 971.0 Gold, non-monetary (excluding gold ores and concentrates) (c) payments made for expenditures under Parts A, B, C or D of the Project unless the Association has received satisfactory evidence that the applicable Financing Agreement has been entered into, including an acceptable legal opinion of counsel acceptable to the Association, that such Financing Agreement has been duly executed and authorized or ratified by the Borrower, Central Bank and the respective Public Enterprise and is legally binding upon the Borrower, Central Bank and the respective Public Enterprise, in accordance with its terms; (d) payments for expenditures under Part E of the Project unless the Association has received satisfactory evidence that the Participating Agreement has been entered into between BAMIN - 18 - and the Central Bank, including an acceptable legal opinion of counsel acceptable to the Association, that such Participating Agreement has been duly executed and authorized or ratified by Central Bank and BAMIN, and is legally binding upon the Central Bank and BAMIN in accordance with its terms; (e) payments made by the Central Bank on account of a Sub-loan under Part F of the Project unless the Association has received satisfactory evidence that a Participating Agreement has been entered into with the appropriate Financial Intermediary and that such Sub-loan has financed, in the case of Part F (1) of the Project, no more than a maximum of 75% of the cost of the locally produced goods procured, and, in the case of Part F (2) of the Project, only foreign expenditures for imported goods; (f) expenditures for goods procured under contracts costing less than $5,000 equivalent; (g) expenditures for goods and services supplied under a contract fi .aced in whole or in part by any national or international financing institution or agency other than the Association, or if such institutions or agencies have agreed to finance such goods and services; and (h) expenditures for petroleum fuel products, foodstuffs (other than seeds) and for goods intended for a military or para-military purpose or for luxury consumption. - 19 - SCHEDULE 2 Description of the Project The objectives of the Project are to help reactivate exports of Bolivia by financing priority imported equipment, spare parts and other inputs required by the mining, agricultural, indus- trial, energy, power and transportation sectors of the economy, and financing locally produced goods required by industrial exporters. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Association may agree upon from time to time to achieve such objectives: Part A: A program of imports by COMIBOL that will enable it to acquire, for purposes of improving the operation of the following COMIBOL owned mines and facilities: Huanuni, Bolivar, Santa Fe (Japo), Quechisla (San Vincente, Tatasi), and such other mines as shall be acceptable to the Association, supplies such as chemicals, bolts, steel plates, tools, equipment, such as pump and crusher, concentrator components, mine loading, drilling and transport equipment, and spare parts. Part B: A program of imports by ENDE that will enable it to acquire the necessary spare parts, replacement parts and materials for the repair and maintenance of the Corani and Santa Isabel Hydroplants, the thermal generation power plants for Santa Cruz and Villamontes, the national transmission system, and transformers and related equipment for the Cochabamba and Santa Cruz substations, and related installation services. Part C: A program of imports by ENFE that will enable it to acquire spare parts and materials for purposes of improving the efficiency of ENFE's Western and Eastern railways systems. Part D: A program of imports by YPFB that will enable it to acquire spare parts, equipment, pumps, compressors, boosters, chemicals and materials, such as tubulars and packers, and related installation services, for purposes of improving production of YPFB's oil fields and ensuring continued operation and maintenance of YPFB's pipelines and processing plants. - 20 - Part E: A program of imports, including raw materials, supplies and equipment, but excluding imports for mining explor- ation, by BAMIN, acting in its capacity of supplier of goods for private operations in the mining sector, for resale to private miners and mining enterprises. Part F: (1) A program of Sub-loans for private entities or individuals (Eligible Exporters) engaged in the manufacturing industries, including agricultural- based industries, for purposes of financing the acquisition of locally produced goods that will enable such entities or individuals to enhance their exporting capacity. (2) A program of Sub-loans for private entities or individuals (Eligible Importers) for purposes of financing the importation of goods that will enable such entities to enhance their productive capacity and who are engaged in: (a) mining, excluding exploration; (b) manufacturing industries and agricultural- based industries; and (c) agriculture. The Project is expected to be completed by December 31, 1987. - 21 - SCHEDULE 3 Special Account 1. For the purposes of this Schedule: (a) the term "Eligible Categories" means the Categories set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "Eligible Expenditures" means expenditures in respect of the reasonable cost of goods and services required for the Project and in respect of Sub-loans and to be financed out of the proceeds of the Credit allocated from time to time to the Eligible Categories in accordance with the provisions of Sche- dule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equi- valent to SDR 8,800,000 to be withdrawn from the Credit Account and deposited in the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Except as the Association shall otherwise agree, payments out of the Special Account shall be made exclusively for Eligible Expenditures in accordance with the provisions of this Schedule. 3. After the Association has received evidence satisfactory to it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Special Account may be made as follows: (a) On the basis of a request or requests by the Borrower for a deposit or deposits which add up to the aggregate amount of the Authorized Allocation, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) The Borrower shall furnish to the Association requests for replenishment of the Special Account at such intervals as the Association shall specify. On the basis of such requests, the Association shall withdraw from the Credit Account and deposit into the Special Account such amounts as shall be required to replenish the Special Account with amounts not exceeding the amount of payments made out of the Special Account for Eligible - 22 - Expenditures. All such deposits shall be withdrawn by the Asso- ciation from the Credit Account under the respective Eligible Categories, and in the respective equivalent amounts, as shall have been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. 4. For each payment made by the Borrower out of the Special Account for which the Borrower requests replenishment pursuant to paragraph 3 (b) of this Schedule, the Borrower shall furnish to the Association, prior to or at the time of such request, such and other evidence as the Association shall reasonably request, showing that such payment was made for Eligible Expenditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, requests for further deposits into the Special Account may be denied by the Association when either of the following situations arises: (i) the Association shall have determined that all further withdrawals should be made directly by the Borrower from the Credit Account in accordance with the provisions of paragraph (a) of Section 2.02 of this Agreement; or (ii) the total unwithdrawn amount of the Credit allo- cated to the Eligible Categories minus the amount of any outstanding special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions with respect to the Project, shall be equal to the equivalent of twice the amount of the Authorized Allocation. (b) Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to the Eligible Categories shall follow such procedures as the Association shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Association shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice have been or will be utilized in making payments for Eligible Expenditures. 6. (a) If the Association shall have determined at any time that any payment out of the Special Account: (i) was made for any expenditure or in any amount not eligible pursuant to paragraph 2 - 23 - of this Schedule, or (ii) was not justified by the evidence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Association, deposit into the Special Account (or, if the Association shall so request, refund to the Association) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. No further deposit by the Association into the Special Account shall be made until the Borrower has made such deposit or refund. (b) If the Association shall have determined at any time that any amount outstanding in the Special Account will not be required to cover further payments for Eligible Expenditures, the Borrower shall, promptly upon notice from the Association, refund to the Association such outstanding amount for crediting to the Credit Account. - 24- SCHEDULE 4 Terms and Conditions of Financing Agreements 1. The Borrower and Central Bank, as the financial agent of the Borrower, shall enter into a Financing Agreement with each COMIBOL, ENDE, ENFE, and YPFB, for purposes of carrying out Parts A, B, C and D of the Project, respectively, that shall provide the terms and conditions for, and procedures to be followed in, carrying out the respective import plan of such Public Enterprise. 2. The procedures to be followed under each Financing Agreement shall be satisfactory to the Association and shall include, inter alia: (i) review and verification of eligibility by the Comisidn, of proposed expenditures for goods under the respective import plan of each Public Enterprise, and of eligibility of proposed expenditures for services under the Project; (ii) authorization of credit by the Comision; (iii) notification by the ComisioIn to Central Bank of authorization of credit, the goods or services to be procured, that such goods and services are eligible expenditures under the Project, and the dollar equivalent of the amount to be paid for such goods or services; and (iv) issuance of credit by Central Bank, on behalf of and as financial agent for, the Borrower to the Public Enterprise for financing the importation of eligible goods and services. 3. The terms and conditions of each of the Financing Agreements shall be satisfactory to the Association and shall include, inter alia, provisions that: (i) such credit received by each Public Enterprise shall be denominated in dollars and repaid to the Borrower, through the Central Bank, in national currency, the rate of exchange to be determined as of the date each payment is made, such payments to be made at least semi-annually; - 25 - (ii) such credit shall bear a fixed interest rate of fourteen and one-half percent (14.5%) per annum on the principal amount withdrawn and outstanding from time to time, or such other rate and on such other terms as shall be acceptable to the Association; (iii) such credit shall be repaid over a period of ten (10) years, including a grace period of up to three (3) years; (iv) the list of specific goods to be imported by each Public Enterprise shall form a part of the Financ- ing Agreement and may be revised from time to time, but only upon prior approval by the Associa- tion, such list constituting the plan of eligible imported goods; (v) the Comision, through the Central Bank, shall have the right, with respect to each Public Enterprise to: (a) require the Public Enterprise to carry out its business with due diligence and effi- ciency in accordance with sound technical, financial and managerial standards, and to maintain adequate records, including separate records and accounts adequate to reflect, in accordance with consistently maintained sound accounting practices, the operations, resources and expenditures in respect of the Project; (b) require that the goods to be financed from the proceeds of the Credit shall be procured in accordance with Schedule 2 to the Project Agreement, and that such goods shall be used exclusively for the purposes of the Project; (c) inspect, by itself, or jointly with represen- tatives of Central Bank and the Association, if the Association shall so request, the goods and the installation services so financed, and any relevant records and docu- ments; - 26 - (d) require that the Public Enterprise take out and maintain with responsible insurers, such insurance against such risks and in such amounts as shall be consistent with sound business practices in order to cover hazards incident to the acquisition, transportation and delivery of goods and services (financed from the proceeds of the Credit) to the place of use or installation, any indemnity thereunder to be made payable in a currency freely usable by the Public Enterprise to replace or repair such goods or services; (e) obtain all such information as the Associa- tion, the Central Bank, or the Comision shall reasonably request regarding the foregoing administration, operations and financial condition of the Public Enterprise, and the benefits to be derived from the goods and services financed under the Financing Agree- ment; and (f) suspend or terminate the right of the Public Enterprise to use the proceeds of the Credit upon failure by the Public Enterprise to perform its obligations under the Financing Agreement. 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 -day of 198 }-. FOR SECRETARY