Nicaragua - Municipal Development Project : Loan 2086 - JRM Project Agreement - Conformed

OFFICIAL LOAN NUMBER 2086 NI LDOCUMENTS JRM Project Agreement (Municipal Development Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and JUNTA DE RECONSTRUCCION DE MANAGUA Dated ,1982 LOAN NUMBER 2086 NI JRM PROJECT AGREEMENT AGREEMENT, dated Arv . , 1982, between INTERNATIONAL BANK FOR RECONSTRWTION AND DEVELOPMENT (hereinafter called the Bank) and JUNTA DE RECONSTRUCCION DE MANAGUA (herein- after called JRM). WHEREAS (A) by the Loan Agreement of even date herewith between the Republic of Nicaragua (hereinafter called the Bor- rower) and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to sixteen million dollars ($16,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that JRM agree to undertake such obligations toward the Bank as are herein- after set forth; (B) by a subsidiary loan agreement to be entered into between the Borrower and JRM, part of the proceeds of the loan provided for under the Loan Agreement will be made available to JRM on the terms and conditions therein set forth; and WHEREAS JRM, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Loan Agreement, the Preamble to this Agreement and the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. (a) JRM shall carry out Parts A and C (i) of the Project, described in Schedule 2 to the Loan Agreement, with -2- due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and municipal management practices. (b) JRM shall carry out Part A of the Project in such low-income neighborhoods of Managua as the Bank and JRM shall agree. Section 2.02. (a) In order to assist JRM in strengthening its financial management capabilities and in carrying out Part C (i) of the Project, JRM shall employ consultants whose qualifica- tions, experience and terms and conditions of employment shall be satisfactory to the Bank. (b) JRM shall: (i) furnish to the Bank, for comment, not later than June 30, 1982, the report of such consultants, including 'their recommendations; and (ii) carry out Part C (i) of the Project in a timely manner satisfactory to the Bank, taking into account the above mentioned recommendations and comments. Section 2.03. Except as the Bank shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Loan, shall be governed by the provisions of Schedule 4 to the Loan Agreement. Section 2.04. (a) JRM undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan made available to it by the Borrower against hazards incident to the acquisition, transporta- tion 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 JRM to replace or repair such goods. (b) Except as the Bank may otherwise agree, JRM shall cause all goods and services financed out of the proceeds of the Loan made available to it by the Borrower to be used exclusively for the Project. Section 2.05. (a) JRM shall furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. - 3- (b) JRM shall: (i) maintain records and procedures adequate to record and monitor the progress of Parts A and C (i) of the Project (including their cost and the benefits to be derived from them), to identify the goods and services financed out of the proceeds of the Loan, and to disclose their use in Parts A and C (i) of the Project; (ii) enable the Bank's accredited representa- tives to visit the facilities and construction sites included in Parts A and C (i) of the Project and to examine the goods financed out of the proceeds of the Loan made available to it by the Borrower and any relevant records and documents; and (iii) furnish to the Bank at regular intervals all such information as the Bank shall reasonably request concerning Parts A and C (i) of the Project, their cost and, where appropriate, the benefits to be derived from them, the expenditure of the proceeds of the Loan made available to it by the Borrower and the goods and services financed out of such proceeds. (c) Upon the award by JRM of any contract for goods, works or services to be financed out of the proceeds of the Loan made available to it by the Borrower, the Bank may publish a descrip- tion thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (d) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Bank and JRM,. JRM shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reasonably request, on the execution and initial operation of Parts A and C (i) of the Project, their cost and the benefits derived and to be derived from them, the performance by JRM and the Bank of their respective obligations under the Project Agreement and the accomplishment of the purposes of the Loan. (e) JRM shall enable the Bank's representatives to examine all sites, works, and records and documents of JRM relevant to the Project. Section 2.06. JRM shall duly perform all its obligations under the JRM Subsidiary Loan Agreement. Except as the Bank shall otherwise agree, JRM shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the JRM Subsidiary Loan Agreement or any provision thereof. Section 2.07. (a) JRM shall, at the request of the Bank, exchange views with the Bank with regard to the progress of Parts A and C (i) of the Project, the performance of its obliga- tions under this Agreement and under the JRM Subsidiary Loan Agreement, and other matters relating to the purposes of the Loan. (b) JRM shall promptly inform the Bank of any condition which interferes or threatens to interfere with the progress of Parts A and C (i) of the Project, the accomplishment of the purposes of the Loan, or the performance by JRM of its obligations under this Agreement and under the JRM Subsidiary Loan Agreement. Section 2.08. JRM shall: (i) by June 30, 1982, carry out a study on how the private construction industry of Nicaragua may participate in the carrying out of Part A of the Project; and (ii) promptly upon its completion, furnish to the Bank, for comment, the recommendations of such study. Section 2.09. JRM shall furnish to the Bank, not later than December 15, 1981, and by December 15 in each year thereafter until Parts A and C (i) of the Project have been completed, its updated Investment Plan for the following three-year period. ARTICLE III Management and Operations of JRM Section 3.01. JRM shall at all times manage its affairs, maintain its financial position, plan its future expansion and conduct its business and undertaking, all in accordance with sound business and financial practices, and under the supervision of experienced and competent management assisted by adequate and competent staff. Section 3.02. JRM shall, during the execution of the Project, before undertaking investments in excess of $8,000,000 equivalent in 1981 and $2,000,000 equivalent in each year thereafter, over and above the investments included in Parts A and C (i) of the Project, demonstrate to the satisfaction of the Bank that such additional investments are within its implementing capacity and that sufficient funds are available to carry out such additional investments without adversely affecting the carrying out of Parts A and C (i) of the Project. -5- Section 3.03. JRM shall take out and maintain with respon- sible insurers, or make other provisions satisfactory to the Bank for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. ARTICLE IV Financial Covenants Section 4.01. (a) JRM shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. (b) JRM shall maintain or cause to be maintained separate accounts, including separate accounts in respect of expenditures on account of which withdrawals were requested from the Loan Account on the basis of certificates of expenditures, adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations, resources and expenditures of JRM in respect of Parts A and C (i) of the Project. (c) JRM shall retain, until one year after the Closing Date, all records (orders, invoices, bills, receipts and other docu- ments) evidencing expenditures for Parts A and C (i) of the Project on account of which withdrawals were requested from the Loan Account on the basis of certificates of expenditures, and shall enable the Bank's accredited representatives to examine such records. Section 4.02. JRM shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements), including the Special Account and the sepa- rate accounts referred to in Section 4.01 (b) of this Agreement, for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than four 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 Bank shall have reasonably requested, including, without limita- tion to the foregoing, a separate opinion by said auditors as to whether the proceeds of the Loan withdrawn from the Loan Account on the basis of certificates of expenditures have been used to - 6 - make payments for goods received, or works or services performed, and that such goods, works and services were eligible for financ- ing under this Agreement and were used in the carrying out of Parts A and C (i) of the Project; and (iii) furnish to the Bank such other information concerning the accounts and financial statements of JRM and the audit thereof as the Bank shall from time to time reasonably request. Section 4.03. Unless the Bank shall otherwise agree, JRM shall, until the Project has been completed: (i) take all action, including the revision of the rates of municipal taxes and fees, necessary to ensure that its total revenues from such taxes and fees in any fiscal year of JRM are not less than the sum of expenditures for administration, opera- tion and maintenance of its services and properties (excluding depreciation and other non-cash charges), service of its debts (including interest and other financial charges as well as any payments or principal not refunded by a new borrowing incurred expressly for such purpose) and the expenditures for Part A of the Project (other than those financed from the Loan), incurred in such fiscal year; (ii) not later than three months after the end of each such fiscal year, furnish to the Bank a report showing its revenues, expenditures and debt service for the fiscal year just ended, which shall include a forecast for the next succeeding fiscal year; and (iii) if such forecast indicates that the revenues will not be sufficient for the purposes provided in paragraph (i) above, indicate, together with the report referred to in such paragraph, the actions it proposes to meet such expenditures. 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 Loan Agreement becomes effective. -7- Section 5.02. This Agreement and all obligations of the Bank and of JRM thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms, and the Bank shall promptly so notify JRM thereof. 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 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) For Junta de Reconstrucci6n de Managua: Junta de Reconstrucci6n de Managua Apartado Postal 141 Complejo C1vico Camilo Ortega Saavedra Managua, Nicaragua Telex: JRMANAUA 1421 -8 - 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 JRM may be taken or executed by Ministro de la Junta de Reconstrucci6n de Managua or such other person or persons as Ministro de la Junta de Reconstrucci6n de Managua shall designate in writing, and JRM shall furnish to the Bank 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 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. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ByN. A^"*, $34*t4 ByI Regional Vice President Latin America and the Caribbean JUNTA DE RECONSTRUCCION DE MANAGUA By Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this day of , 1984. FOR SECRETARY