Conformed Copy - C2497 - Financial Institutions Development Technical Assistance Project - Project Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 2497 MAG Project Agreement (Financial Institutions Development Technical Assistance Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and BANQUE CENTRALE DE LA REPUBLIQUE MALGACHE Dated September 20, 1993 CREDIT NUMBER 2497 MAG PROJECT AGREEMENT AGREEMENT, dated September 20, 1993, between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and BANQUE CENTRALE DE LA REPUBLIQUE MALGACHE (BCRM). WHEREAS (A) by the Development Credit Agreement of even date herewith between Republic of Madagascar (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to four million six hundred thousand Special Drawing Rights (SDR 4,600,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that BCRM agree to undertake such obligations toward the Association as are set forth in this Agreement; (B) by a subsidiary credit agreement to be entered into between the Borrower and BCRM, a portion of the proceeds of the credit provided for under the Development Credit Agreement will be made available to BCRM on the terms and conditions set forth in said Subsidiary Credit Agreement; and WHEREAS BCRM, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Page 2 Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. (a) BCRM declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Development Credit Agreement and, to this end, shall carry out Part A of the Project and, in cooperation with CCBEF, Part B of the Project, with due diligence and efficiency and in conformity with appropriate administrative, financial and banking practices, and the BCRM and CCBEF Strategic Development Plans, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for Parts A and B of the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Association and BCRM shall otherwise agree, BCRM shall carry out Parts A and B of the Project in accordance with the Implementation Program set forth in the Schedule to this Agreement. Section 2.02. Except as the Association shall otherwise agree, procurement of the goods and consultants' services required for Parts A and B of the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to the Development Credit Agreement. Section 2.03. BCRM shall carry out 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 aquisi- tion, respectively) in respect of the Project Agreement and Parts A and B of the Project. Section 2.04. BCRM shall duly perform all its obligations under the Subsidiary Credit Agreement. Except as the Association shall otherwise agree, BCRM shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Credit Agreement or any provision thereof. Section 2.05. (a) BCRM shall, at the request of the Association, exchange views with the Association with regard to the progress of Parts A and B of the Project, the performance of its obligations under this Agreement and under the Subsidiary Credit Agreement, and other matters relating to the purposes of the Credit. (b) BCRM shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of Parts A and B of the Project, the accomplishment of the purposes of the Credit, or the performance by BCRM of its obligations under this Agreement and under the Subsidiary Credit Agreement. ARTICLE III Management and Operations of BCRM Section 3.01. BCRM shall carry on its operations and conduct its affairs in accordance with sound administrative, financial and banking practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. BCRM shall at all times operate and maintain its machinery, equipment and other property, and from time to time, Page 3 promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound engineering and financial practices. Section 3.03. BCRM shall take out and maintain with responsible insurers, or make other provision satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. ARTICLE IV Financial Covenants Section 4.01. (a) BCRM shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition, including separate records and accounts in respect of Parts A and B of the Project. (b) BCRM shall: (i) have its records, accounts and financial statements (balance sheets, statements of income and expenses and related statements) and records and accounts for the BCRM Special Account, for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than six months after the end of each such year, (A) certified copies of its financial statements for such year as so audited, and (B) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning said records, accounts and financial statements as well as the audit thereof, as the Association shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of statements of expenditure, BCRM 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 Association has received the audit report for the fiscal year in which the last withdrawal from the Credit Account or payment out of the BCRM Special Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Association's representatives to examine such records; and (iv) ensure that such records and accounts are included in the audit referred to in paragraph (b) (i) 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. Page 4 ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 5.02. (a) This Agreement and all obligations of the Association and of BCRM thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) the date fifteen years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify BCRM of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 248423 (RCA) Washington, D.C. 82987 (FTCC) 64145 (WUI) or 197688 (TRT) For BCRM: Banque Centrale de la Republique Malgache B.P. 550 Antananarivo Madagascar Cable address: Telex: BACEREMA 22-266 BCRM-MG Antananarivo Page 5 Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of BCRM, or by BCRM on behalf of the Borrower under the Development Credit Agreement, may be taken or executed by the Governor or such other person or persons as the Governor shall designate in writing, and BCRM shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. 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. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Edward V.K. Jaycox Regional Vice President Africa BANQUE CENTRALE DE LA REPUBLIQUE MALGACHE By /s/ Gaston Ravelojaona Authorized Representative SCHEDULE Implementation Program 1. Project Coordination BCRM shall maintain in functions, at all times, a Project coordinator with responsibilities, qualifications and experience satisfactory to the Association. Said coordinator shall be responsible for the overall coordination and monitoring of Project activities, including the employment of consultants and the procurement of equipment, vehicles and supplies, in cooperation with the Project coordinating officers in the Borrower's Ministries responsible for budget and finance and CCBEF. BCRM shall ensure that the Project coordinating officer in CCBEF shall be maintained in functions at all times, with responsibilities, qualifications and experience satisfactory to the Association. 2. Project Review (a) Not later than September 30 of each year, the Borrower and BCRM shall furnish to the Association for its review and approval, in respect of the forthcoming year, detailed work programs (including detailed training programs) and budgets for each Part of the Project within its jurisdiction. In addition, the Borrower and BCRM shall furnish to the Association an evaluation report of Project activities undertaken during the previous twelve-month period between September 1 and August 31. Said programs, budgets and report shall be prepared by the Project coordinator and coordinating officers, referred to in paragraph 1 above, in respect of each Part of the Project which the Borrower or BCRM is responsible for carrying out. (b) The Borrower and BCRM shall, not later than Septem- ber 30, 1994, carry out jointly with the Association and CCBEF a midterm review of the Project and, soon thereafter, shall implement Page 6 the recommendations of such a review. In order to facilitate this review, BCRM shall prepare and furnish to the Association, not later than four weeks before the scheduled date of this review, a report of Project activities of such scope and in such detail as the Association shall have reasonably requested. The review shall cover, inter alia: (i) overall Project performance against established and agreed key performance indicators; (ii) an evaluation of progress under Part C of the Project and of progress up to the point of sale of state banks under Part D of the Project; (iii) an assessment of Project sustainability; (iv) an evaluation of consultants' per- formance; and (v) a review of the organizational changes in BCRM and CCBEF and streamlining of departmental functions.