Guatemala - Highway Project : Loan 0124 - Loan Agreement - Conformed

LOAN NUMBER 124 GU Loan Agreement (Highway Project) BETWEEN REPUBLIC OF GUATEMALA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DE VELOPMENT DATED JULY 29, 1955 AGREEMENT, dated July 29, 1955, between the REPUB- LIC OF GUATEMALA (hereinafter called the Borrower) and IN- TERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). ARTICLE I Loan Regulations SECTION 1.01. The parties to this Loan Agreement accept all the provisions of Loan Regulations No. 3 of the Bank dated February 15, 1955 (said Loan Regulations No. 3 being hereinafter called the Loan Regulations), with the same force and effect as if they were fully set forth herein. ARTICLE II The Loan SECTION 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in this Agreement set forth or referred to, an amount in various currencies equiva- lent to eighteen million two hundred thousand dollars ($18,200,000). SECTION 2.02. The Bank shall open a Loan Account on its books in the name of the Borrower and shall credit to such Account the amount of the Loan. The amount of the Loan may be withdrawn from the Loan Account as provided in, and subject to the rights of cancellation and suspension set forth in, the Loan Regulations. SECTION 2.03. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 17) per annum on the principal amount of the Loan not so withdrawn from time to time. 4 SECTION 2.04. The Borrower shall pay interest at the rate of four and five-eighths per cent (45/s%) per annum on the principal amount of the Loan so withdrawn and out.- standing from time to time. SECTION 2.05. Except as the Borrower and the Bank shall otherwise agree, the charge payable for special coin- mitments entered into by the Bank at the request of the Borrower pursuant to Section 4.02 of the Loan Regulations shall be at the rate of one-half of one per cent (;/2 of 1o) per annum on the principal amount of any such special commitments outstanding from time to time. SECTION 2.06. Interest and other charges shall be pay- able semi-annually on February 1 and August 1 in each year. SECTION 2.07. The Borrower shall repay the principal of the Loan in accordance with the amortization schedule set forth in Schedule 1 to this Agreement. ARTICLE III Use of Proceeds of the Loan SECTION 3.01. The Borrower shall cause the proceeds of the Loan to be applied exclusively to financing the cost of goods required to carry out the Project described in Sched- ule 2 to this Agreement. The specific goods to be financed out of the proceeds of the Loan shall be determined by agreement between the Borrower and the Bank, subject to modification by further agreement between them. SECTION 3.02. Except as the Borrower and the Bank shall otherwise agree, the Borrower shall cause all goods financed out of the proceeds of the Loan to be used in the territories of the Borrower exclusively in the carrying out of the Project. SECTION 3.03. Except as the Borrower and the Bank shall otherwise agree: (i) all contracts entered into by the 5 Borrower. for the construction of the highways included in the Project or for the purchase of equipment and mate- rials to be used in carrying out the Project shall be awarded on the basis of international competitive bidding and such contracts shall be in form and substance satisfactory to the Bank; and (ii) any subcontract the amount of which is the equivalent of 100,000 quetzales or more shall also be in form and substance satisfactory to the Bank. ARTICLE IV Bonds SECTION 4.01. The Borrower shall execute and deliver Bonds representing the principal amount of the Loan as provided in the Loan Regulations. SECTION 4.02. The Ministro de Hacienda y Credito Puib- lico of the Borrower and such person or persons as he shall appoint in writing are designated as authorized representa- tives of the Borrower for the purposes of Section 6.12 of the Loan Regulations. ARTICLE V Particular Covenants SECTION 5.01. (a) The Borrower shall cause the Project to be carried out with due diligence and efficiency and in conformity with sound engineering and financial practices. (b) To assist it in the carrying out of the Project the Borrower shall employ competent and experienced techni- cal consultants mutually satisfactory to the Borrower and the Bank upon terms and conditions mutually satisfactory to the Borrower and the Bank. Contractors mutually satis- factory to the Borrower and the Bank shall, except as the Bank shall otherwise agree, be employed by the Borrower to construct the highways included in the Project. (c) The Borrower shall cause to be furnished to the Bank, promptly upon their preparation, the plans and speci- 6 fications for the Project and any material modifications subsequently made therein. (d) The Borrower shall maintain or cause to be main- tained records adequate to identify the goods financed out of the proceeds of the Loan, to disclose the use thereof in the Project, and to record the progress of the Project (in- cluding the cost thereof) and to reflect in accordance with consistently maintained sound accounting practices the financial condition and operations of the agency or agencies of the Borrower responsible for the construction or opera- tion of the Project or any part thereof; shall enable the Bank's representatives to inspect the Project, the goods and any relevant records and documents; and shall tarnish to the Bank all such information as the Bank shall reason- ably request concerning the expenditure of the proceeds of the Loan, the Project, and the goods, and the financial con- dition and operations of the agency or agencies of the Boriower responsible for the construction or operation of the Project or any part thereof. SECTION 5.02. (a) The Borrower and the Bank shall co- operate fully to assure that the purposes of the Loan will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reasonably re- quest with regard to the general status of the Loan. On the part of the Borrower, such information shall include in- formation with respect to financial and economic conditions in the territories of the Borrower and the international balance of payments position of the Borrower, (b) The Borrower and the Bank shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Loan and the maintenance of the service thereof. The Borrower shall promptly inform the Bank of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Loan or the maintenance of the service thereof. 7 (c) The Borrower shall afford all reasonable opportunity for accredited representatives of the Bank to visit any part of the teriitories of the Borrower for purposes related to the Loan. SECTION 5.03. It is the mutual intention of the Borrower and the Bank that no other external debt shall enjoy any priority over the Loan by way of a lien on governmental assets. To that end, the Borrower undertakes that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of the Borrower as security for any external debt, such lien will ipso facto equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan and the Bonds, and that in the creation of any such lien express provision will be made to that effect; provided, however, that the foregoing pro- visions of this Section shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property; (ii) any lien on commercial goods to secure a debt maturing not more than one year after the date on which it is originally incurred and to be paid out of the proceeds of sale of such commercial goods; or (iii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. The term "assets of the Borrower" as used in this Sec- tion includes assets of the Borrower or of any of its political subdivisions or of any agency of the Borrower or of any such political subdivision, including assets of the Banco de Guatemala. SECTION 5.04. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid without deduction for, and free from, any taxes or fees imposed under the laws of the Borrower or laws in effect in its terri- tories; provided, however, that the provisions of this Sec- tion shall not apply to taxation of, or fees upon, payments 8 under any Bond to a holder thereof other than the Bank when such Bond is beneficially owned by an individual or corporate resident of the Borrower. SECTION 5.05. (a) The Loan Agreement and the Bonds shall be free from any taxes or fees that shall be imposed under the laws of the Borrower or laws in effect in its territories on or in connection with the execution, issue, delivery or registration thereof. (b) The Borrower shall remit to the Bank, at the Bank's request, funds sufficient for the Bank to pay all taxes or fee,,, if any, imposed under the laws of the country or coun- tries in whose currency the Loan and the Bonds are payable or laws in effect in the territories of such country or coun- tries, on or in connection with the execution, issue, delivery or registration of the Loan Agreement and the Bonds. SECTION 5.06. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid free from all restrictions imposed under the laws of the Borrower 0r laws in effect in its territories. SECTION 5.07. The Borrower shall satisfy the Bank that adequate arrangements have been made to insure the goods financed with the proceeds of the Loan against risks incident to their purchase and importation into the territories of the Borrower. SECTION 5.08. (a) The Borrower shall cause all high- ways in its highway system to be adequately maintained and shall cause all necessary repairs thereof to be made, all in accordance with sound engineering practices. (b) The Borrower shall cause all its machinery and equipment for highway construction and maintenance to be adequately maintained and repaired, and shall cause suitable workshops to be maintained in suitable places for that purpose. 9 SECTION 5.09. As the Project and the Inter-American Highway have been assigned the highest priority in the highway construction program of the Borrower, the Bor- rower shall not, except as the Borrower and the Bank shall otherwise agree, undertake or permit to be undertaken, until the Project shall have been carried out, the construc- tion of new highways (other than the Project and the Inter- American Highway) the aggregate cost of which during any one fiscal year of the Borrower shall be more than 1,000,000 quetzales or equivalent. For purposes of this Section, a new highway shall be deemed to be one the con- struction work of which shall not have been started on August 1, 1955. SECTION 5.10. The Borrower agrees to take such steps as shall be necessary to provide promptly, as and when required to avoid delays in carrying out the Project in accordance with this Agreement, such funds as shall be necessary for that purpose. ARTICLE VI Remedies of the Bank SECTION 6.01. (i) If any event specified in paragraph (a) or paragraph (b) of Section 5.02 of the Loan Regula- tions shall occur and shall continue for a period of thirty days, or (ii) if any event specified in paragraph (c) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower, then at any subsequent time during the continuance thereof, the Bank, at its option, may declare the principal of the Loan and of all the Bonds then outstanding to be due and pay- able immediately, and upon any such declaration such principal shall become due and payable immediately, iny- thing in this Agreement or in the Bonds to the contrary notwithstanding. 10 ARTICLE VII Miscellaneous SECTION 7.01. The Closing Date shall be December 31, 1958. SECTION 7.02. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Borrower: Ministro do Hacienda y Credito Pi'blico Palacio Nacional Guatemala City Guatemala For the Bank: International Bank for Reconstruction and Development 1818 H Street, N. W. Washington 25, D. C. United States of America SECTION 7.03. A date ninety days after the date of this Agreement is hereby specified for the purposes of Section 9.04 of the Loan Regulations. SECTION 7.04. The Ministro de Hacienda y Credito Puib- lico of the Borrower is designated for the purposes of Section 8.03 of the Loan Regulations. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Loan Agreement to be signed in their respective 11 names and delivered in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF GUATEMALA By J. LITis CRUZ S. Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By EUGENE R. BLACK President 12 SCHEDULE 1 Amortization Schedule Principal Payment Amount Outstanding Date of Principal After Each Payment Payment Due (expressed in (expressed in dollars) * dollars) * August 1, 1958 $18,200,000 February 1, 1959 $576,000 17,624,000 August 1, 1959 589,000 17,035,000 February 1, 1960 603,000 16,432,000 August 1, 1960 617,000 15,815,000 February 1, 1961 631,000 15,184,000 August 1, 1961 646,000 14,538,000 February 1, 1962 660,000 13,878,000 August 1, 1962 676,000 13,202,000 February 1, 1963 691,000 12,511,000 August 1, 1963 707,000 11,804,000 February 1, 1964 724,000 11,080,000 August 1, 1964 740,000 10,340,000 February 1, 1965 758,000 9,582,000 August 1, 1965 775,000 8,807,000 February 1, 1966 793,000 8,014,000 August 1, 1966 811,000 7,203,000 February 1, 1967 830,000 6,373,000 August 1, 1967 849,000 5,524,000 February 1, 1968 869,000 4,655,000 August 1, 1968 889,000 3,766,000 February 1, 1969 910,000 2,856,000 August 1, 1969 930,000 1,926,000 February 1, 1970 952,000 974,000 August 1, 1970 974,000 * To the extent that any part of the Loan is repayable in a currency other than dollars (see Loan Regulations, Section 3.02), the figures in these columns represent dollar equivalents determined as for purposes of withdrawal. 13 Premiums on Prepayment and Redemption The folloiving percentages are specified as the premiums payable on repayment in advance of maturity of any part of the principal amount of the Loan pursuant to Section 2.05 (b) of the Loan Regulations or on the redemption of any Bond prior to its maturity pursuant to Section 6.16 of the Loan Regulations: Time of Prepayment or Redemption Premium Not more than 5 years before maturity. 1/2 of 1 More than 5 years but not more than 10 years before maturity ............... 1% More than 10 years before maturity ......... 2% 14 SCHEDULE 2 Description of the Project The project consists of : (a) The completion of a highway of about 300 km be- tween Guatemala City and Puerto Barrios, with a 5 km branch to Santo Tomais. The highway will be constructed as a two-lane, all-weather highway with asphaltic concrete paving and the necessary structures. A bridge across the Motagua River to connect with the side road to Zacapa will be con- structed. (b) The construction of a highway of about 75 km between Coatepeque and the Mexican border, and a highway of about 60 km between Taxisco and the Salvadorean border. Both highways will be con- structed as two-lane, all-weather highways with asphaltic concrete paving and the necessary struc- tures. (c) The execution of a three-year program for im- provement of the existing highways of the Bor- rower. The program includes the reorganization of the Maintenance Division of the Highway Depart- ment of the Borrower, in order to provide an establishment capable of effectively maintaining the entire highway system of the Borrower, having the necessary central and regional workshops, and the necessary road maintenance equipment. The program also includes the training abroad of per- sonnel of the Department.