Mozambique - Rehabilitation Program : Credit 1610 - Credit Agreement - Conformed

0UFF1CZ'[l 0<CU MENT8cREDIT NUBER 1610 MOZ Development Credit Agreement (Rehabilitation Program) between PEOPLE'S REPUBLIC OF MOZAMBIQUE and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1985 CREDIT NUMBER 1610 MOZ DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated , 1985, between PEOPLE'S REPUBLIC OF MOZAMBIQUE (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS 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; WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, to extend the Credi,t to the Borrower upon 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 Association, dated January 1, 1985, (the General Conditions) constitute an integral part of this Agreement. Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Special Account" means the account referred to in Sec- tion 2.02 (b) of this Agreement; (b) "Project Preparation Advance" means the project preparation advance granted by the Association to the Borrower pursuant to an exchange of letters dated May 22, 1985 and June 6, 1985 between the Borrower and the Association; (c) "BDM" means Banco de Mocambique, the Central Bank of the Borrower; (d) "Metical" and the plural "Meticais" mean the currency of the Borrower; -2- (e) "Economic Action Program" means the Borrower's Economic Action Program for 19814-1986, as the same may be amended or supplemented from time to time; and (f) "Eligible Enterprise" means an enterprise which has been agreed by the Borrower and the Association as being eligible to utilize the proceeds of the Credit. ARTICLE 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-five million five hundred thousand Special Drawing Rights (SDR 45,500,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordaace with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between 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 described in Schedule 2 to this Agreement 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 in the name of BDM on terms and conditions satisfactory to the Association. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 5 to this Agreement. (c) Promptly after the Effective Date, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and pay to itself the amount required to repay the principal amount of the Project Preparation Advance withdrawn and outstanding as of such date and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amount of the Project Preparation Advance shall thereupon be cancelled, Section 2.03. The Closing Date shall be March 31, 1988 or such later date as the Association shall establish. The Asso- ciation shall promptly notify the Borrower of such later date. -3- 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 with- drawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agree- ment 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 restrictions 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 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 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 semiannually on May 15 and November 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each May 15 and November 15 commencing November 15, 1995, and ending May 15, 2035. Each installment to and including the installment payable on May 15, 2005 shall be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter shall be one and 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. (a) BDM 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. (b) Without limitation or restriction to the foregoing, the Borrower hereby entrusts BDM with responsibility for the prepara- tion of withdrawal applications under the Credit and for the -4- collection of the documents and other evidence to be furnished to the Association in support of applications; such withdrawal applications shal to the extent practicable be consolidated so as to apply for withdrawal of aggregate amounts of not less than $500,000 equivalent. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end, shall carry out the Project with diligence and efficiency and :"n conformity with appropriate administrative and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section, the Borrower shall: (i) carry out the Project in accordance with the Implementation Program set forth in Schedule 4 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Association; (ii) take all such action as may be required to ensure that such financial and administrative measures are adopted and implemented as are necessary to ensure that all eligible goods and services financed out of the proceeds of the Credit are utilized for the purpose for which they were procured; (iii) cause loans in Meticais to be made to Eligible Enterprises when required, subject to normal procedures, for the purposes of the Credit. Section 3.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agreement. -5- ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. (b) The Borrower shall: (i) have the accounts referred to in paragraph (a) of this Section including the 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 four months after the end of each such year, a certified copy of the report of such audit by the 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 the said accounts and the audit thereof and said records as the Association shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals are requested from the Credit Account 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, separate records and accounts reflecting such expenditures; (ii) retain, until one year after the Closing Date, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; -6- (iii) enable the Association's representatives to examine such records; and (iv) ensure that such separate accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report thereof contains, in respect of such separate accounts, a separate opinion by the said auditors as to whether the proceeds of the Credit withdrawn in respect of such expenditures have been used for the purpose for which they were provided. Section 4.02. In order to assist in ensuring the financial viability of Eligible Enterprises in the Industry Sector, except as the Association shall otherwise agree, the Borrower shall take all necessary measures to ensure that prices for goods produced by such Eligible Enterprises are established at levels which are at least equal to actual production costs, including an appropriate allocation for administration, interest payments, adequate maintenance and depreciation. ARTICLE V Effective Date; Tcrmination Section 5.01. The following event is specified as an addi- tional condition to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions, namely, that the Procurement Unit referred to in paragraph 3 of Schedule 4 to this Agreement has been established and the procurement, accounting and logistics advisers to assist the Unit have been duly employed. Section 5.02. The date 90 days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VI Representatives of the Borrower; Addresses Section 6.01. Except as provided in Section 2.09 of this Agreement, the Minister of Finance of the Borrower is designated -7- as representative of the Borrower for the purposes of Sec- tion 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: Banco de Mocambique Avenida 25 de Setembro 1695 P.O. Box 423 Maputo People's Republic of Mozambique Cable address: Telex: MOBANCO 6355/7 BMMO Maputo For the Association: 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) -8- 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 StaLes of America, as of the day and year first above written. PEOPLE'S REPUBLIC OF MOZAMBIQUE By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President Eastern and Southern Africa -9- SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed 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) Raw materials, 27,800,000 100% of foreign equipment, in- expenditures cluding installa- tion costs and spare parts for the Industry Sector (2) Raw materials, 9,050,000 100% of foreign spare parts, tools expenditures and workshop equip- ment for the Transport Sector (3) Seeds, agricultural 5,060,000 100% of foreign implements, produce expenditures bags, irrigation pumps and spare parts for pumps and other irrigation equipment for the Agriculture Sector (4) Office equipment, furni- 50,000 100% ture and vehicles for Project Implementation (5) Consultants' 100% services for: (a) Project 460,000 Management - 10 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (b) Industry 1,920,000 Sector (c) Transport 560,000 Sector (d) Studies 200,000 (6) Refunding of 400,000 Amount due pur- Project Prepara- suant to Section tion Advance 2.02 (c) of this Agreement TOTAL 45,500,000 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 prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding the equivalent of SDR 1,720,000, may be made in respect of the purchase of seeds under Category (3), on account of payments made for expenditures before that date but after February 1,1985; and (b) expenditures for goods supplied under a contract which any national or international financing institution or agency other than the Association shall have financed or agreed to finance. - 11 - SCHEDULE 2 Description of the Project The purpose of the Project is to assist the Borrower in its efforts towards economic recovery, particularly through the rehabilitation of its industry, transport and agriculture sec- tors, and to support the policy and institutional reforms included in the Economic Action Program. It consists of (i) a program for the provision of the requi- site foreign exchange for the importation into the territory of the Borrower of part of the essential raw materials, intermediate goods, spare parts, equipment, implements, and seeds for the high priority sectors of the Borrower's economy, consistent with its Economic Action Program; (ii) strengthening the administrative, technical and managerial capacities of Eligible Enterprises; and (iii) carrying out of sector and other studies. The Project is expected to be completed by June 30, 1987. - 12 - SCHEDULE 3 Procurement and Consultants' Services Section I. Procurement of Goods Part A: Modified International Competitive Bidding 1. Individual supply contracts for goods estimated to cost the equivalent of $1,000,000 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 August 1984 (hereinafter called 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, to apply for prequalification, or 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 Business; 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 cur- rency widely used in international trade and specified in the bidding documents." - 13 - (c) Paragraphs 2.55 and 2.56 of the Guidelines are deleted. Part B: Other Procurement Procedures 1. Items or groups of items estimated to cost more than the equivalent of $250,000 but less than $1,000,000 per contract may be procured through limited international bidding procedures on the basis of evaluation and comparison of bids invited from a list of at least three qualified suppliers eligible under the Guidelines and in accordance with the procedures set forth in Sections I and II of the Guidelines (excluding paragraphs 2.8, 2.9, 2.55 and 2.56 thereof). 2. Items or groups of items estimated to cost less than the equivalent of $250,000 per contract, may be procured under contracts awarded on the basis of evaluation and comparison of bids invited from a list of at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Association. 3. Contracts for proprietary spare parts and equipment, and seeds shall be procured on a negotiated basis from the original manufacturers or authorized representatives, on terms satisfac- tory to the Association and such contracts which are estimated to cost more than the equivalent of $250,000 shall be awarded only after the approval of the Association. 4. Vehicles, furniture and office equipment for Project implementation may be procured under contracts awarded on the basis of evaluation and comparison of bids invited from at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Association. Part C: Review by the Association of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract estimated to cost the equivalent of $250,000 or more, the procedures set forth in paragraph 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the -14 Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Association pursuant to said paragraph 2 (d) shall be furnished to the Association prior to the making of the first payment out of the Special Account in respect of such contract. (b) With respect to each contract not governed by the pre- ceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract together with the other information required to be furnished to the Association pursuant to said paragraph 3 shall be furnished to the Association as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 5 (the Special Account Schedule) to this Agreement. (c) The provisions of the preceding subparagraphs (a) and (b) shall not apply to contracts on account of which the Associa- tion has authorized withdrawals from the Credit Account on the basis of statements of expenditures. Such contracts shall be retained in accordance with Section 4.01 (c) (ii) of this Agree- ment. 3. The figure of 15% is hereby specified for purposes of para- graph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants In order to assist the Borrower in (i) the procurement of goods under the Project, (ii) the carrying out of pre-investment studies under the Project and (iii) the strengthening of the administrative, technical and managerial capacities of Eligible Enterprises, the Borrower shall employ experts or consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Such experts or consultants shall be selected in accordance with principles and procedures satisfactory to the Association on the basis of the "Guidelines for the Use of Consultants by World Bank Bor- rowers and by the World Bank as Executing Agency" published by the Bank in August 1981. - 15 - SCHEDULE 4 Implementation Program 1. BDM shall, subject to the provisions of this Agreement, be responsible for the overall coordination, monitoring and super- vision of activities under the Project. In order to assist BDM in performing its duties, BDM shall at all times during the imple- mentation of the Project assign or appoint a program manager (the Program Manager) whose qualifications and experience and terms of reference shall be satisfactory to the Association. 2. The Borrower shall cause its Minist6rios da Agricultura, dos Portos, Caminhos de Ferro e Marinha Mercante, da Industria e Energia, da Construcao e Aguas and do Com6rcio Externo and its Secretaria de Estado dos Transportes Rodoviarios and de Estado da Industria Ligeira e Alimentar to nominate designated officials to serve as liaison persons with BDM and, in particular, with the Program Manager for the purpose of the monitoring of the Project. The Program Manager may, if necessary, convene meetings of all designated officials to review the implementation of the Project. 3. In order to assist the Borrower in the carrying out of the Project, the Borrower shall establish a Procurement Unit within its Ministerio do Comercio Externo (hereinafter called the PU) which shall include professional and other staff assigned from the Borrower's trading corporations and an adequate number of support staff. In addition, the PU shall be assisted by a procurement adviser, an accounting adviser and a logistics adviser, to be employed in accordance with the provisions of Section II of Schedule 3 to this Agreement. 4. The PU shall be responsible for, inter alia; review and approval of (i) lists and specifications of goods, (ii) technical services, (iii) methods to be used in procuring such goods and services and (iv) methods for the distribution of such goods, included in the requests submitted by state trading corporations on behalf of Eligible Enterprises which procure goods and ser- vices through them or by Eligible Enterprises which are author- ized to procure goods and services directly. 5. Requests for utilization of the proceeds of the Credit shall be made in appropriate form to the PU by state trading corpora- tions on behalf of Eligible Enterprises which procure goods and -16 - services through them or by Eligible Enterprises which are autho- rized to procure goods and services directly. Each request shall contain such information as the PU shall require and shall include at least, the list of goods or services required, their proposed utilization and the procurement procedures intended to be utilized to procure such goods or services and the arrange- ments for the payment to BDM of the Metical equivalent of the foreign exchange required. The request shall also include the text of the invitations to bid and the advertising procedures to be followed for the bidding. 6. Upon approval by the PU of a request, the following steps shall be followed: (i) modifications in the documents or procedures required by paragraph 5 shall be made as the PU shall require; (ii) after bids have been received and evaluated, the Eligible Enterprise or the state trading corpora- tion responsible for procurement shall, before a final decision on the award is made, inform the PU of the bidder to which it intends to award the contract, including the justification therefor, so that the PU may review the same with a view to concurring or rejecting the proposed award; and (iii) the terms and conditions of the contract with the winning bidder shall be submitted to the PU, for its review, prior to the execution thereof. - 17 - SCHEDULE 5 Special Account 1. For the purposes of this Schedule: (a) the term "Category" means a category of items to be financed out of the proceeds of the Credit as 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 to be financed out of the proceeds of the Credit allocated from time to time to Categories (1) through (5) in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount of $5,000,000 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 the Association that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdra- wals 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 - 18 - expenditures. Each such deposit shall be withdrawn by the Asso- ciation from the Credit Account under the respective Categories (1) through (5), 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 Sched- ule. 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 documents and other evidence as the Association shall reasonably request, showing that such payment was made for eligible expen- ditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into the Special Account shall be made by the Association when either of the following situations first 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) when the total unwithdrawn amount of the Credit allocated to Categories (1) through (5) for the Project, minus the amount of any outstanding qualified agreement to reimburse made by the Asso- ciation and of any outstanding special commitment entered into by the Association pursuant to Sec- tion 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 Cate- gories (1) through (5) for the Project 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. - 19 - 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 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. 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 74 day of 198O . FOR SECRETARY