Uganda - Economic Recovery Program : Credit 1844 - Credit Agreement - 4 - Conformed

AFRICAN FACILITY CPEDIT NUMBER A-34 UG African Facility Credit Agreement (Economic Recovery Program) between THE REPUBLIC OF UGANDA and INTERNATIONAL DEVELOPMENT ASSOCIATION as ADMINISTRATOR of the SPECIAL FACILITY FOR SUB-SAHARAN AFRICA Dated 3O , 1987 AFRICAN FACILITY CREDIT NUMBER A-34 UG AFRICAN FACILITY CREDIT AGREEMENT AGREEMENT, dated 3d 1987, between THE REPUBLIC OF UGANDA (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION as ADMINISTRATOR of the SPECIAL FACILITY FOR SUB-SAHARAN AFRICA (the Administrator). WHEREAS (A) the Executive Directors of the International Development Association (IDA) have established, by their Resolution No. IDA 85-1 of May 21, 1985 (the Resolution), a Special Facility for Sub-Saharan Africa (the African Facility) constituted by the funds which shall be contributed by the International Bank for Reconstruction and Development (the Bank) and other donors and administered by IDA, acting as Administrator of the African Facility, for the purpose of, and in accordance with, the provisions of the Resolution; (B) the Administrator has received a letter, dated July 1, 1987, from the Borrower describing a program of actions, objectives and policies designed to achieve overall recovery of the Borrower's economy (hereinafter called the Program), declaring the Borrower's commitment to the execution of the Program and requesting assistance from the Administrator in the financing of urgently needed imports required during such execution, and the Administrator has determined that such assistance would be in accordance with the provisions of the Resolution; (C) the Borrower has also requested IDA to provide additional assistance towards the financing of the Program, and by an agreement of even date herewith between the Borrower and IDA (the Development Credit Agreement), IDA is agreeing to provide such assistance in an aggregate principal amount equivalent to fifty million nine hundred thousand Special Drawing Rights (SDR 50,900,000) (the IDA Credit); (D) the Borrower and the Overseas Development Administration (hereinafter called ODA) intend to enter into an agreement (the ODA Agreement) pursuant to which a financial contribution in an amount of ten million pounds sterling (lO,000,000) will be made to the Borrower by the United Kingdom of Great Britain and Northern Ireland under the Special Joint Financing Agreement for the Special African Facility (hereinafter called the ODA Financial Contribution) in support of the Program; (E) the Borrower and the Canadian International Development Agency (hereinafter called CIDA) intend to enter into an agreement (the CIDA Grant Agreement) pursuant to which a grant will be made - 2 - to the Borrower by Ganada (hereinafter called the CIDA Grant) in an amount equivalent to fifteen million Canadian dollars (Can$15,000,000) in support of the Program; (F) the Borrower and the Danish International Development Agency (hereafter called DANIDA) intend to enter into an agreement (the DANIDA Grant Agreement) pursuant to which a grant will be made to the Borrower by Denmark (hereinafter called the DANIDA Grant), in an amount equivalent to five million dollars ($5,000,000) in support of the Program; (G) the Borrower and the Swedish International Development Authority (hereinafter called SIDA) intend to enter into an Agreement (the SIDA Grant Agreement) pursuant to which a grant will be made to the Borrower by Sweden (hereinafter called the SIDA Grant), in an amount equivalent to ten million Swedish kronor (SKr 10,000,000) in support of the Program; WHEREAS the Administrator has agreed on the basis, inter alia, of the foregoing, to extend the African Facility Credit to the Borrower on the terms and conditions set forth in this Agreement; 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 International Development Associa- tion, dated January 1, 1985, with the modifications set forth below (the General Conditions), constitute an integral part of this Agreement: (a) the term "Association", when used in the General Condi- tions, means the Iaternational Development Association acting as Administrator of the African Facility, except in the phrase "member of the Association" in Sections 2.01 (5), 4.02 (b) and 6.02 (e) thereof; (b) the terms "Development Credit Agreement", "Credit" and "Credit Account", when used in the General Conditions, are amended to read "African Facility Credit Agreement", "African Facility Credit" and "African Facility Credit Account", respectively; - 3 - (c) the last sentence of Section 3.02 and the second sentence of Section 5.01 are deleted; and (d) in Sections 6.02 and 7.01, the term "Association" shall also include the International Development Association acting in its own capacity. 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: (a) "SITC" means the United Nations InternaJional Trade Classification, 1986 Revision (SITC, Rev. 3); (b) "U Sh" means Uganda Shillings, the currency of the Borrower; and (c) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement. ARTICLE II The African Facility Credit Section 2.01. The Administrator agrees to lend to the Borrower on the terms and conditions set forth or referred to in the African Facility Credit Agreement, an amount in various currencies equivalent to eighteen million eight hundred thousand Special Drawing Rights (SDR 18,800,000). Section 2.02. (a) The amount of the African Facility Credit may be withdrawn from the African Facility Credit Account in accordance with the provisions of Schedule 1 to this Agreement. (b) The Borrower shall, for the purposes of the Project, open and maintain in dollars a special account in a commercial bank, on terms and conditions satisfactory to the Administrator. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 4 to this Agreement. Section 2.03. The Closing Date shall be September 30, 1989, or such later date as the Administrator shall establish. The Administrator shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to IDA a commitment charge at the rate of one-half of one percent (1/2 of 1%) per annum on the principal amount of the African Facility Credit not withdrawn from time to time. The commitment charge shall accrue from a date sixty (60) days after the date of the African Facility Credit Agreement to the respective dates on which amounts shall be withdrawn by the Borrower from the African Facility Credit Account cr shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as IDA shall reasonably request; (ii) without restrictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for purposes of Section 4.02 of the 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 Borrewer shall pay to IDA a service charge at the rate of three-fourths of one percent (3/4 of 1%) per annum on the amount withdrawn from the African Facility Credit Account and outstanding from time to time. Section 2.06. Commitment charges and service charges shall be payable semiannually on May 15 and November 15 in each year. Section 2.07. The Borrower shall repay to IDA the principal amount of the African Facility Credit in semiannual installments payable on each May 15 and November 15, commencing November 15, 1997 and ending May 15, 2037. Each installment to and including the installment payable on May 15, 2007, shall be one-half of one percent (1/2 of 1%) of such principal amount, and each installment thereafter shall be one and one-half percent (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. (a) The Bank of Uganda is designated as repre- sentative 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) Without limitation or restriction to the foregoing, the Borrower hereby entrusts the Bank of Uganda with responsibility for the preparation of withdrawal applications under the African -5- Facility Credit and for collection of documents and other evidence to be furnished to the Administrator in support of such applications. ARTICLE III Particular Covenants Section 3.01. (a) The Borrower and the Administrator shall, from time to time at the request of either party, exchange views on the progress achieved in carrying out the Program, the Borrower's arrangements to monitor such progress and the actions specified in Schedule 3 to this Agreement. (b) Prior to each such exchange of views, the Borrower shall furnish to the Administrator, for its review and comment, a report on the progress achieved in carrying out the Program and such actions, in such detail as the Administrator shall reasonably request. Section 3.02. Except as the Administrator shall otherwise agree, procurement of the goods required for the Program and to be financed out of the proceeds of the African Facility Credit shall be governed by the provisions of Schedule 2 to this Agreement, subject to the eligibility restrictions set forth in Section 2.02 (b) of this Agreement. Section 3.03. (a) The Borrower shall maintain or cause to be maintained records and accounts adequate to reflect, in accordance with consistently maintained sound accounting practices, the expenditures financed out of the proceeds of the African Facility Credit. (b) The Borrower shall: (i) have the records and accounts referred to in para- graph (a) of this Section, including those for the Special Account, for each fiscal year, audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Administrator; (ii) furnish to the Administrator, as soon as available, but in any case not later than nine months after the end of each such year, a certified copy of the report of such audit by said auditors, of such - 6 - scope and in such detail as the Administrator shall have reasonably requested; and (iii) furnish to the Administrator such other information concerning said records and accounts and the audit thereof as the Administrator shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the African Facility Credit Account were made on the basis of statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Admini- strator has received the audit report for the fiscal year in which the last withdrawal from the African Facility Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) as evidence of such expenditures; (iii) enable the Administrator's representatives to examine such records upon prior notice; and (iv) ensure that such records and accounts are included in the annual audit referred to in paragraph (b) of this Section, and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. ARTICLE IV Remedies of the Administrator Section 4.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional events are specified: (a) an event has occurred which shall make it improbable that the Program, or a significant part thereof, will be carried out; -7- (b) (i) Subject to subparagraph (ii) of this paragraph: (A) the right of the Borrower to withdraw the proceeds of any grant or credit (including the IDA Credit) made to the Borrower for the financing of the Program shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the agreement providing therefor; or (B) any such credit shall have become due and payable prior to the agreed maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Administrator that: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obligations under such agreement; and (B) adequate funds for the Program are available to the Borrower from other sources on terms and condi- tions consistent with the obligations of the Borrower under this Agreement. Section 4.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional event is specified, namely, that the event specified in paragraph (b) (i) (B) of Section 4.01 of this Agreement shall occur, subject to the proviso of sub- paragraph (ii) of that paragraph. ARTICLE V Effective Date; Termination; Designation of Administrator Section 5.01. The following event is specified as an additional condition to the effectiveness of the African Facility Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions, namely, that all conditions precedent to the effectiveness of the Development Credit Agreement except for the effectiveness of this Agreement, have been fulfilled. Section 5.02. The date ninety (90) days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. - 8 - Section 5.03. In the event that the Executive Directors of IDA decide to terminate the functions of IDA as Administrator of the African Facility, pursuant to paragraph 10 of the Resolution, the Administrator may, by notice to the Borrower, designate another party which, on the date specified in such notice, shall assume part or all of the rights and obligations of the Admini- strator under this Agreement, in accordance with the Resolution, and such decision of the Executive Directors, as specified in such notice. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. Except as provided in Section 2.09 (a) 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 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 8147 Kampala, Uganda Cable address: Telex: FINSEC 61170 Kampala For the Administrator: Administrator of the African Facility (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) -9- 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. THE REPUBLIC OF UGANDA By /~ (1/ C.W C 6.4, Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION as ADMINISTRATOR of the SPECIAL FACILITY FOR SUB-SAHARAN AFRICA By Regional Vice President Africa - 10 - SCHEDULE 1 Withdrawal of the Proceeds of the African Facility Credit 1. Subject to the provisions set forth or referred to in this Schedule, the proceeds of the African Facility Credit may be with- drawn from the African Facility Credit Account for expenditures made (or, if the Administrator shall so agree, to be made) in respect of the reasonable cost of goods required during the execu- tion of the Program and to be financed out of such proceeds. 2. Notwithstanding the provisions of paragraph 1 above, no with- drawals shall be made in respect of: (a) expenditures for goods included in the following SITC groups or sub-groups: Group Sub-group Description of Items 112 - Alcoholic beverages 121 - Tobacco, unmanufactured tobacco refuse 122 - Tobacco, manufactured (whether or not containing tobacco substitutes) 525 - Radioactive and associated materials 667 - Pearls, precious and semi- precious stones, unworked or worked - 11 - Group Sub-group Description of Items - 718.7 Nuclear reactors, and parts thereof, fuel elements (cartridges), non-irradiated for nuclear reactors - 897.3 Jewelry cf gold, silver or platinum group metals (except watches and watch cases) and goldsmiths' or silversmiths' wares (including set gems) 971 Gold, non-monetary (excluding gold ores and concentrates) (b) expenditures in the currency of the Borrower or for goods supplied from the territory of the Borrower; (c) payments made for expenditures prior to the date of this Agreement, except that withdrawals in an aggregate amount not exceeding the equivalent of SDR 3,800,000 may be made on account of payments made for such expenditures before that date but after May 15, 1987; (d) expenditures for goods procured under contracts costing less than five thousand dollars $5,000 equivalent; (e) expenditures for goods supplied under a contract which any national or international financing institution or agency other than the Administrator shall have financed or agreed to finance; (f) expenditures for goods intended for . mfilitary or para- military purpose or for luxury consumption; and (g) expenditures in excess of an aggregate amount equivalent to SDR 3,800,000 for petroleum products. 3. No withdrawal shall be made, and no commitment shall be entered into, for payments to the Borrower or others in respect of expenditures to be financed out of the proceeds of the African Facility Credit after the aggregate of the proceeds of the African Facility Credit withdrawn from the African Facility Credit Account - 12 - and the total amount of such commitments shall have reached the equivalent of SDR 10,400,000, unless the Administrator shall be satisfied, after an exchange of views as described in Section 3.01 of this Agreement: (a) with the progress achieved by the Borrower in the carrying out of the Program; and (b) that the actions described in Schedule 3 to this Agreement have been taken. 4. If, after such exchange of views, the Administrator is not so satisfied, and this situation shall not have been rectified by the Borrower within (90) ninety days after notice thereof by the Administrator, the Administrator may, by notice to the Borrower, cancel the amount of the African Facility Credit unwithdrawn from the African Facility Credit Account or any part thereof. - 13 - SCHEDULE 2 Procurement 1. Contracts for the procurement of goods, estimated to cost the equivalent of two million dollars ($2,000,000) or more each, shall be awarded through international competitive bidding in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits", published by the Bank in May 1985 (the Guidelines), subject to the following modifications: (a) Paragraph 2.8 of the Guidelines is deleted and the following is substituted therefor: "2.8 Notification and Advertising The international community should be notified in a timely manner of the opportunity to bid. This will be done by advertising invitations to apply for inclusion in a bidder's invitation list, invitations to apply for prequalification or invitations to bid. Such advertisements should be placed in at least one newspaper of general circulation in the Borrower's country and, in addition, in at least one of the following forms: (i) a notice in the United Nations publication, Development Forum, Business Edition; or (ii) an advertisement in a newspaper, periodical or technical journal of wide international circula- tion; or (iii) a notice to local representatives of countries and territories referred to in the Guidelines, that are potential suppliers of the goods required." (b) The following is added at the end of paragraph 2.21 of the Guidelines: "As a further alternative, bidding documents may require the bidder to state the bid price in a single currency widely used in international trade and specified in the bidding documents." (c) Paragraphs 2.55 and 2.56 of the Guidelines are deleted. - 14 - (d) All references in the Guidelines to the Bank and to loans shall be deemed to be references to the Administrator and the African Facility Credit, respectively. 2. (a) Contracts for goods, estimated to cost the equivalent of less than two million dollars ($2,000,000) to be procured by private entities and contractors, shall be awarded on the basis of the normal procurement procedures of the purchaser of such goods. (b) Contracts for goods to be procured by the Borrower, its political subdivisions or state-owned enterprises, estimated to cost the equivalent of less than two million dollars ($2,000,000), may be awarded on the basis of the normal procurement procedures of the purchaser of such goods, and such procedures shall be satisfactory to the Administrator. 3. With respect to each contract referred to in paragraph 1 of this Schedule, the Borrower shall furnish to the Administrator, prior to the submission to the Administrator of the first applica- tion for withdrawal of funds from the African Facility Credit Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids and recommendations for award, a description of the advertising and tendering procedures followed, and such other information as the Administrator shall reasonably request. 4. With respect to each contract referred to in paragraph 2 of this Schedule, the Borrower shall furnish to the Administrator, prior to the submission to the Administrator of the first applica- tion for withdrawal of funds from the African Facility Credit Account in respect thereof, such documentation and information as the Administrator may reasonably request to support withdrawal applications in respect of such contract. 5. Notwithstanding the provisions of paragraphs 3 and 4 of this Schedule, where payments under a contract are to be made out of the proceeds of the Special Account, the copies of such contract or documentation and information to be furnished to the Association pursuant to the provisions of paragraph 3 or paragraph 4 of this Schedule, as the case may be, shall be furnished to the Administrator as part of the evidence required under paragraph 4 of Schedule 4 to this Agreement. - 15 - 6. The provisions of the preceding paragraphs 3, 4 and 5 shall not apply to contracts on account of which the Administrator has authorized withdrawals from the African Facility Credit Account on the basis of statements of expenditure. Such contracts shall be retained in accordance with Section 3.03 (c) (ii) of this Agreement. - 16 - SCHEDULE 3 Actions Referred to in Paragraph 3 (b) of Schedule 1 to this Agreement 1. The Borrower has prepared and adopted a public investment program satisfactory to the Administrator for its 1988/90-1990/91 fiscal years. 2. The Borrower has consulted with the Administrator on its proposals based on a methodology, satisfactory to the Administrator, for the revision of its May 1987 producer prices for export crops. 3. The Borrower has adopted: (a) an open general licensing system giving eligible producers in priority industries access to foreign exchange upon request for the importation of eligible imports; and (b) following a review of the implementation of the system, a plan of action, satisfactory to the Administrator, for expanding its coverage. 4. The Borrower has finalized an action plan for restructuring the public enterprise (industrial and non-industrial) sector, including a classification of enterprises to be maintained in the Borrower's portfolio, liquidated, or wholly or partly privatized. 5. The Borrower's Verification Committee has completed the verification of the ownership of a significant number of industrial enterprises and the Borrower has submitted a plan of action, satisfactory to the Administrator, for the completion of the verification and valuation of all properties and enterprises subject to the Expropriated Properties Act, and for the return to former owners or sale of such properties and enterprises. - 17 - SCHEDULE 4 Special Account 1. For the purposes of this Schedule: (a) the term "Eligible Expenditures" means expenditures in respect of the reasonable cost of goods required during the execu- tion of the Program and to be financed out of the proceeds of the African Facility Credit in accordance with the provisions of Schedule 1 to this Agreement; and (b) the term "Authorized Allocation" means an amount of $10,000,000 to be withdrawn from the African Facility Credit Account and deposited into the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Except as the Administrator 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 Administrator has rec-,.ived satisfactory evidence 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 Administrator shall, on behalf of the Borrower, withdraw from the African Facility Credit Account and deposit into the Special Account such amount or amounts as the Borrower shall have requested. (b) The Borrower shall furnish to the Administrator requests for replenishment of the Special Account at such intervals as the Administrator shall specify. On the basis of such requests, the Administrator shall withdraw from the African Facility 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 Expenditures. Each such deposit shall be withdrawn by the Administrator from the African Facility Credit Account 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. - 18 - 4. For each payment made by the Borrower out of the Special Account for which the Borrover requests replenishment pursuant to paragraph 3 (b) of this Schedule, the Borrower shall furnish to the Administrator, prior to or at the time of such request, such documents and other evidence as the Administrator shall reasonably request, showing that such payment was made for Eligible Expenditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into the Special Account shall be made by the Administrator when either of the following situations first arises: (i) the Administrator shall have determined that all further withdrawals can be made by the Borrower directly from the African Facility Credit Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (ii) the total unwithdrawn amount of the African Facility Credit, minus the amount of any outstanding special commitment entered into by the Administrator pursuant to Section 5.02 of the General Conditions with respect to the Program, shall be equal to the equivalent of twice the amount of the Authorized Allocation. (b) Thereafter, withdrawal from the African Facilitv Credit Account of the remaining unwithdrawn amount of the African Facility Credit shall follow such procedures as the Administrator shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Administrator shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice will be utilized in making payments for Eligible Expenditures. 6. (a) If the Administrator 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 of this Schedule; or (ii) was not justified by the evidence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, prom')tly upon notice from the Administrator, deposit into the Special Account (or, if the Administrator shall so request, refund to the Administrator) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. No further deposit by the Administrator into the Special Account shall be made until the Borrower has made such deposit or refund. - 19 - (b) If the Administrator 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 Administrator, refund to the Administrator such outstanding amount for crediting to the African Facility Credit Account. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Development Association. FOR SECRETARY