Philippines - Fourth Rural Credit Project : Loan 1399 - Guarantee Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1399 PH GUARANTEE AGREEMENT (Fourth Rural Credit Project) between REPUBLIC OF THE PHILIPPINES and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated April 11, 1977 GUARANTEE AGREEMENT AGREEMENT, dated April 11, 1977, between REPUBLIC OF THE PHILIPPINES (hereinafter called the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS by the Loan Agreement of even date herewith between the Bank and Central Bank of the Philippines (hereinafter called the Borrower) the Bank has agreed to make to the Borrower a loan in various currencies equivalent to thirty-six million five hundred thousand dollars ($36,500,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guarantor agree to guarantee the obligations of the Borrower in respect of such loan as hereinafter provided; and WHEREAS the Guarantor, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed so to guarantee such obligations of the Borrower; NOW THEREFORE the parties hereto hereby agree as follows: -2- ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agreements being hereinafter called the General Conditiotis). Section 1.02. Wherever used in th Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in Section 1.02 of the Loan Agreement have the respective meanings therein set forth. -3- ARTICLE II Guarantee; Provision of Funds Section 2.01. Without limitation or restriction upon any of its other obligations under the Guarantee Agreement, the Guarantor hereby unconditionally guarantees, as primary obligor and not as surety merely, the due and punctual payment of the principal of, and interest and other charges on, the Loan, and the premium, if any, on the prepayment of the Loan and the punctual performance of all the other obligations of the Borrower, all as set forth in the Loan Agreement. Section 2.02. Without limitation or restriction upon the provisions of Section 2.01 of this Agreement, the Guarantor specifically undertakes, whenever there is reasonable cause to believe that the funds available to the Borrower will be inadequate to meet the estimated expenditures required for the carrying out of Parts A, B, C or D of the Project, to make arrangements, satisfactory to the Bank, promptly to provide the Borrower or cause the Borrower to be provided with such funds as are needed to meet such expenditures. 1 -4- ARTICLE III Execution of Part E of the Project Section 3.01. The Guarantor shall carry out, or cause to be carried out, Part E of the Project with due diligence and efficiency and in conformity with appropriate technical, administrative and financial practices and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.02. Except as the Bank shall otherwise agree, contracts for the purchase of goods or for civil works required for Part E of the Project and to be financed out of the proceeds of the Loan shall be procured in accordance with the provisions of Part B of Schedule 4 to the Loan Agreement. Section 3.03. The Guarantor shall not later than March 31, 1978, or such other date as the Bank shall agree, establish, and thereafter maintain in the University of the Philippines at Los BaTios an Agricultural Machinery Testing, Evaluation and Standardization Project with organization, staff and facilities acceptable to the Bank and shall furnish to the Bank not later than October 31, 1977 or such other date as the Bank shall agree, draft plans and specifications for the said facilities. -5- Section 3.04. (a) The Guarantor undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan under Part E of the Project against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Guarantor to replace or repair such goods. (b) Except as the Bank shall otherwise agree, the Guarantor shall cause all goods and services financed out of the proceeds of the Loan under Part E of the Project to be used exclusively for the Project. Section 3.05. (a) The Guarantor shall furnish to the Bank, promptly upon their preparation, the plans, specifications, contract documents and construction and procurement schedules for Part E of the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Guarantor: (i) shall maintain records adequate to record the progress of Part E of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Loan under the said Part E, and to disclose the use thereof in the Project; (ii) shall enable the Bank's accredited representatives to visit the facilities and construction -6- sites included in Part E of the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) shall furnish to the Bank all such information as the Bank shall reasonably request concerning Part E of the Project, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. - 7 - ARTICLE IV Other Covenants Section 4.01. (a) It is the mutual intention of the Guarantor and the Bank that no other external debt shall enjoy any priority over the Loan by way of a lien on governmental assets. (b) To that end the Guarantor: (i) represents that at the date of this Agreement no lien exists on any governmental assets as security for any external debt except as otherwise disclosed in writing by the Guarantor to the Bank; and (ii) undertakes that, except as the Bank shall otherwise agree, if any such lien shall be created, it will ipso facto equally and ratably, and at no cost to the Bank, secure the payment of the principal of, and interest and other charges on, the Loan and in the creation of any such lien express provision will be made to that effect. The Guarantor shall promptly inform the Bank of the creation of any such lien. (c) The foregoing representation and undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. -8- (d) As used in this Section, the term "governmental assets" means assets of the Guarantor or of any agency of the Guarantor including the Central Bank of the Philippines or any institution performing the functions of a central bank for the Guarantor. (e) The Guarantor further undertakes that, within the limits of the laws in force in its territories, it will make the foregoing undertaking effective with respect to liens on the assets of its political subdivisions and their agencies, and to the extent that the Guarantor is unable within the limits of the laws in force in its territories to make this undertaking effective, the Guarantor will give to the Bank an equivalent lien satisfactory to the Bank. Section 4.02. The Guarantor shall prepare or cause to be prepared a study of the causes of arrears in rural banks and savings and loan associations and of measures to be taken to reduce such arrears and shall furnish the said study to the Bank together with a plan of action for reduction of such arrears not later than December 31, 1977 or such other date as the Bank shall agree, for the Bank's comments. - 9 - ARTICLE V Representative of the Guarantor; Addresses Section 5.01. The Secretary of Finance of the Guarantor is designated as representative of the Guarantor for the purposes of Section 11.03 of the General Conditions. Section 5.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Guarantor: Secretary of Finance Department of Finance Manila, Philippines Cable address: Telex: SECFINANCE 727550 Manila For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) - 10 - IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, 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 THE PHILIPPINES By /s/ Eduardo Z. Romualdez Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By // Gregory B. Votaw Acting Regional Vice President East Asia and Pacific