Nicaragua - Preinvestment Fund Project : Credit 1081 - Credit Agreement - Conformed

OFI= IAL CREDIT NUMBER 1081 NI DOCUMENTS Development Credit Agreement (Preinvestment Fund Project) between REPUBLIC OF NICARAGUA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated 2>4CA"AAe,- 1 ,1980 CREDIT NUMBER 1081 NI DEVELOPMENT CREDIT AGREEMENT A.REEMENT, dated CA^W- 44- , 1980, between REPUBLIC OF NICARAGUA (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) The Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) the Project will be carried out by Financiera de Preinversion (hereinafter called FINAPRI), with the Borrower's assistance, and as part of such assistance, the Borrower will make available to FINAPRI the proceeds of the Credit as hereinafter provided; and (C) the Association is willing to make the Credit available upon the terms and conditions set forth hereinafter and in the Project Agreement of even date herewith between the Association and FINAPRI; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated June 30, 1980, with the same force and effect ,s if they were fully set forth herein, subject, however, to the following modifications thereof (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified, being hereinafter called the General Conditions): (a) The following subparagraph is added to Section 2.01: "13. The term 'Project Agreement' has the meaning set forth in paragraph (a) of Section 1.02 of the Development Credit Agreement." (b) The words "Sub-projects" are substituted for the words "the Project" at the end of Section 5.03. -2- (c) Section 6.03 is deleted and replaced by the following new Section: "Section 6.03. Cancellation by the Association. If (a) the right of the Borrower to make withdrawals from the Credit Account shall have been suspended with respect to any amount of the Credit for a continuous period of thirty days or (b) by the date specified in Section 2.05 (d) of the Project Agreement no applications for approval or requests for authorization to withdraw from the Credit Account in respect of any portion of the Credit shall have been received by the Association, or having been so received, shall have bcn denied or (c) after the Closing Date an amount of the Credit shall remain unwithdiawn from the Credit Account, the Association may, by notice to the Borrower, terminate the right to request such approvals and authorizations or to make withdrawals from the Credit Account, as the case may be, with respect to such aidount or portion of the Credit. Upon the giving of such notice such amount or portion of the Credit shall be cancelled." (d) The words "and the Project Agreement" are added after the words "the Development Credit Agreement" La Section 6.06; and (e) The words "or the Project Agreement" are added after the words "the Development Credit Agreement" in Section 10.02. Section 1.02. Wherever used in this Agreement, 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) "Project Agreement" means the agreement between the Association and FINAPRI of even date herewith, as the same may be amended from time to time; (b) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and FINAPRI pursuant to Section 3.01 (b) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement; -3- (c) "FIR" means "Fondo Internacional para la Reconstruccion de Nicaragua" of the Borrower, established by Decree No. 46 of the Borrower, dated September 12, 1979, as ameaded; (d) "Sub-loan"' means a loan made or proposed to be made by FINAPRI, for the purposes of the Project, to a Sub-borrower for a Sub-project and to be financed out of the proceeds of the Credit; and "Free-limit Sub-loan" means a Sub-loan as so defined in an amount which shall not exceed the sum of (i) $150,000 equivalent, when added to any other outstanding amounts to be financed out of the proceeds of the Credit, for the Sub-project in question, or (ii) $2,000,000 equivalent, when added to all other Free-limit Sub-loans financed or proposed to be financed out of the proceeds of the Credit; (e) "Sub-borrower" means the person or entity to which FINAPRI proposes to make or has made a Sub-loan; (f) "Sub-project" means a particular study included in the Project, approved by the Ministry of Planning of the Borrower, after consultation with the Investment Committee, and to be carried out by a Sub-borrower utilizing the proceeds of a Sub- loan; (g) "Manual" means FINAPRI's operating manual, which in- cludes the lending and procurement procedures to be applied in the carrying out of Sub-projects; (h) "Statutes" means the statutes of FINAPRI as set forth in Decreto No. 322, dated February 28, 1980, of the Borrower; and (i) "Investment Committee" means the committee chaired by the Ministry of Planning of the Borrower, having as members respresentatives of FINAPRI, FIR and the Borrower's Ministry of Finance. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equiv- alent to three million, nine hundred thousand Special Drawing Rights (SDR 3,900,000). -4- Section 2.02. The amount of the Credit allocated may be withdrawn from the Credit Account in accordance with the provi- sions 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 amounts paid (or, if the Association shall so agree, for amounts to be paid) by FINAPRI on account of (i) withdrawals made by a Sub-borrower under a Sub-loan to meet the reasonable cost of goods and services required for the Sub- project in respect of which the withdrawal is requested; pro- vided, however, that no withdrawal shall be made in respect of a Sub-loan unless; (A) the Sub-loan shall have been approved by the Association, or (B) the Sub-loan shall be a Free-limit Sub-loan for which the Association shall have authorized with- drawnls from the Credit Account; and (ii) withdrawals made by FINAPRI to meet the cost of the technical assistance services for Part 2 of the Project. Section 2.03. FINAPRI 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. Section 2.04. The Closing Date shall be June 30, 1985 or such later date as the Association shall establish. The Association shall promptly notify the Borrower and FINAPRI of such later date. 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. Service charges shall be payable semi-annually on February 1 and August 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each Febru- ary 1 and August 1 commencing February 1, 1991, and ending 1.gust 1, 2030, each installment to and including the installment payable on August 1, 2000, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to 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. -5- ARTICLE III Execution of the Project Section 3.01. (a) Without any limitation or restriction upon any of its other obligations under the Credit Agreement, the Borrower shall cause FINAPRI to perform, in accordance with the provisions of the Project Agreement and the Subsidiary Loan Agreement, all the obligations therein set forth, and shall take or cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable FINAPRI to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall make the proceeds of the Credit available to FINAPRI under a Subsidiary Loan Agreement to be entered into between the Borrower and FINAPRI, under terms and conditions satisfactory to the Association, including a provision that any loss incurred by FINAPRI in connection with the payment of interest or other charges on, or the repayment of principal of, the Credit resulting from changes in the rate of exchange between the currencies in which payments or repayments are to be made will be borne by the Borrower. The Borrower shall not change or fail to enforce any provision of such arrangements. (c) The Borrower shall exercise its rights under the Sub- sidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purpose of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, nor amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. Section 3.02. The Borrower shall take all necessary steps to cause the Sub-borrowers, which depend on allocations from the Borrower's budget, to make punctually all payments of principal of, and interest and other charges on, the Sub-loans. ARTICLE IV Remedies of the Association Section 4.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: -6- (a) FINAPRI, or any successor thereto, shall have failed to perform any of its obligations under the Project Agreement or Subsidiary Loan Agreement; (b) unless the Association shall otherwise agree, the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of FINAPRI or for the suspension of its operations adversely affecting the execution of the Project; and (c) unless the Association shall otherwise agree, Decree No. 322 dated February 28, 1980, of the Borrower or any provision thereof, shall have been amended, suspended or abrogated, or new legislation shall have been adopted by the Borrower so as to materially and adversely affect the management or operation of FINAPRI in respect of the Project or the carrying out of the Project. Section 4.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) any event specified in paragraph (a) of Section 4.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower and FINAPRI; and (b) any event specified in paragraphs (b) or (c) of Section 4.01 of this Agreement shall occur. ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) that the Subsidiary Loan Agreement has been executed and delivered on behalf of the Borrower and FINAPRI; (b) that the Project Agreement has been executed and delivered on behalf of FINAPRI; and -7- (c) that the Manual has been emended in order to cover the procurement procedures for individual consultants to be employed therein, in a manner satisfactory to the Association. Section 5.02. The following are specified as additional matters, within the meaning of 3ection 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) that the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, FINAPRI, and constitutes a valid and binding obligation of FINAPRI in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of the Borrower and FINAPRI, and constitutes a valid and binding obligation of, the Borrower and FINAPRI in accordance with its terms. Section 5.03; The date M44-% is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.04. The provisions of paragraphs (a) through (d) of Section 4.01 of this Agreement and those of paragraphs (a) and (b) of Section 4.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date eight years after the date of this Agreement, whichever shall be the earlier. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. Subject to the provisions of Section 2.03 of this Agreement, the Minister Director of FIR 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: Fondo Internacional para la Reconstruccion de Nicaragua Plaza Espafia Managua, Nicaragua -8- Telex: 1367-FIR 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) IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment 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 NICARAGUA By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By 4 Regional Vice President Latin America and the Caribbean 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 Expenditures in SDR's to be C2tegory Equivalent) Financed (1) Sub-loans under 3,800,000 80% of amounts Part 1 of the expended under description Sub-projects of the Project (2) Technical 100,000 100% assistance to FINAPRI under Part 2 of the description of the Project TOTAL 3,900,000 2. The disbursement percentages have been calculated in com- pliance with the policy of the Association that no proceeds of the Credit shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Association. - 10 - 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expendi- tures: (a) prior to the date of this Agreement; (b) by a Sub-borrower on account of Category (1), until a standard form of an agreement to be entered into between each Sub-borrower and the consultants is presented to the Association, in a form satisfactory to the Association; and (c) unless the Association shall otherwise agree, by a Sub-borrower on account of Category (1) in respect of a Sub-loan subject to the Association's approval if such expenditures shall have been made prior to the date on which the Association shall have received in respect of such Sub-loan the application and information required by Section 2.05 (b) of the Project Agreement or, in respect of a Free-limit Sub-loan prior to the date on which the Association shall have received in respect of such Free-limit Sub-loan the request and information required by Section 2.05 (c) of the Project Agreement. 4. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in para- graph 1 above, and without limitation upon the provisions of this Agreement, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. - 11 - SCHEDULE 2 Description of the Project The Project consists of the following: 1. Making of Sub-loans by FINAPRI for purposes of financing pre-investment studies, including general sectoral and regional studies, designed to identify and prepare high-priority investment projects in the transport, agricultural, energy, education, agro-industry, industries, fishery, forestry, mining, public utilities and other economic and social sectors in Nicaragua. 2. Provision of technical assistance to strengthen FIN- APRI's capabilities in the preparation of terms of reference and in the selection and supervision of consultants. The Project is expected to be completed by December 31, 1984. 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 day of ____-_ , 198 LL. FOR SECRETARY