Haiti - Second Rural Development Project : Credit 1410 - Credit Agreement - Conformed

i0'N TSCREDIT NUMBER 1410 HA Development Credit Agreement (Second Rural Development Project) between REPUBLIC OF HAITI and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1983 CREDIT NUMBER 1410 HA DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated , 1983, between the REPUBLIC OF TI (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 Borrower has applied to the International Fund for Agricultural Development (hereinafter called the Fund) for a loan (hereinafter called the Fund Loan) in an amount equivalent to four million seven hundred thousand Special Drawing Rights (SDR 4,700,000) to assist in financing Parts B, C, G, H and I of the Project on the terms and conditions set forth in an agreement (hereinafter called the Fund Loan Agreement) between the Borrower and the Fund; (C) the Fund intends to appoint the Association as Coopera- ting Institution to administer the Fund Loan and the Association is prepared to accept such appointment; (D) the Borrower intends to receive from the French Republic, acting through its Fonds d'Aide et de Coop&ration (hereinafter called the FAC) grants (hereinafter called the FAC Grants) in an aggregate amount of $1,200,000 equivalent to assist in financing part of the Project; (E) the Borrower intends to receive from the Federal Republic of Germany, acting through its Deutsche Gesellschaft fur Technische Zusammenarbeit GmbH (hereinafter called GTZ) grants (hereinafter called the GTZ Grants) in an aggregate amount of $2,200,000 equivalent to assist in financing part of the Project; and WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth; 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 Development Credit Agreements of the Association, dated June 30, 1980, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agree- ments of the Association being hereinafter called the General Conditions). 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 addi- tional terms have the following meanings: (a) "Fund Loan Account" means the loan account established under the Fund Loan Agreement; (b) "Special Account" means the account to be opened pur- suant to Section 2.03 (a) of this Agreement; (c) "ODN" means Organisme de Developpement du Nord, an agency for the development of the Borrower's northern region, an autonomous public agency of the Borrower established and organ- ized pursuant to the Borrower's Decree dated December 1, 1976, published in Le Moniteur December 6, 1976; (d) "Project Area" means the Northern and Northeastern Departments of the Borrower; (e) "BCA" means Bureau de Credit Agricole, a public agri- cultural credit agency of the Borrower established and organized pursuant to the Borrower's Law, dated September 17, 1963, pub- lished in Le Moniteur November 18, 1963; (f) "TPTC" means the Borrower's Ministry of Public Works, Transport and Communications; (g) "BRH" means Banque de la Republique d'Haiti, the cen- tral bank of the Borrower; (h) "DARNDR" means the Borrower's Ministry of Agriculture, Natural Resources and Rural Development; - 3 - (i) "SNEP" means Service National d'Eau Potable, the Bor- rower's national water supply service; (j) "SAC" means sociftE agricole de cr6dit, groups of small farmers organized with the assistance of BCA; (k) "Gourde" and "G" mean the currency of the Borrower; (1) "Working Agreements" means the agreements to be entered into between the Borrower and ODN pursuant to Section 4.01 (b) of this Agreement, and between ODN and BCA, TPTC, SNEP and DARNDR, respectively, pursuant to Section 4.01 (c) of this Agreement; and (m) "Rural Development Fund" means the Fund to be estab- lished under Part H of the Project. 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 curren- cies equivalent to seventeen million seven hundred thousand Special Drawing Rights (SDR 17,700,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Article III of this Agreement. Section 2.03. (a) The Borrower shall cause to be opened and thereafter maintained a Special Account in dollars in BRH on terms and conditions satisfactory to the Association. Withdrawals from the Special Account shall be made in Gourdes exclusively to pay the reasonable cost of goods and services required to carry out the Project and to be financed by the Association under this Agreement in accordance with the provisions of Section 2.02 and Schedule I hereto. BRH shall determine the amount in Gourdes of the respective withdrawal on the basis of the exchange between the dollar and the Gourde in effect at the time of the corresponding withdrawal. (b) The Association may, after the Effective Date and at the request of the Borrower, withdraw on behalf of the Borrower from the Credit Account and deposit in the Special Account the -4- proceeds of the Credit then allocated to Category (11) of the table set forth in paragraph 1 of Schedule 1 to this Agreement (such deposit and table hereinafter called the Initial Deposit and the Table, respectively). At the request of the Borrower, the Association shall further withdraw from the Credit Account and deposit in the Special Account in accordance with paragraph (c) of this Section such amounts as shall be required to replenish the Special Account with amounts equal to the withdrawals made by the Borrower from the Special Account for expenditures for the Project eligible for financing under this Agreement. Except as the Association shall otherwise determine, each withdrawal from the Credit Account to make deposits in the Special Account other than the Initial Deposit shall be made by the Association under the same Categories set forth in the Table, and in the same resp.-ctive amounts, as have been justified by the documentation for the request for such deposit furnished pursuant to paragraph (c) of this Section. (c) Prior to or at the time of each request for a deposit by the Asociation into the Special Account other than the Initial Deposit, the Borrower shall furnish to the Association in respect of each payment out of the Special Account such documents and other evidence as the Association shall reasonably request show- ing that such payment was made on account of the reasonable cost of goods or services required for the Project and to be financed out of the proceeds of the Credit in accordance with Section 2.02 of this Agreement. (d) If the Association shall have determined that any pay- ment out of the Special Account (i) was made for any expenditure or in any amount not eligible for financing by withdrawal from the Credit Account or (ii) was not justified by the documents and other evidence furnished pursuant to paragraph (c) of this Sec- tion, the Borrower shall, promptly upon notice from the Associa- tion and prior to any further deposit in the Special Account by the Association, deposit in the Special Account or, if the Asso- ciation 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. (e) Notwithstanding the provisions of paragraph (b) of this Section, no further deposit in the Special Account shall be made by the Association (i) when the Association shall have deter- mined, after consultation with the Borrower, that all further withdrawals from the Credit Account may be made directly by the -5- Borrower from the Credit Account pursuant to Section 2.02 of this Agreement or (ii) when the total unwithdrawn amount of the Credit less the amount of all qualified agreements to reimburse already entered into by the Association and of all special commitments already entered into by the Association pursuant to Section 5.02 of the General Conditions, shall be equal to the equivalent of twice the amount of the Initial Deposit, whichever shall be sooner. Withdrawal from the Credit Account of the remaining amount of the Credit for the Project shall follow such procedures as shall be agreed between the Borrower and the Association and shall be made only to the extent that the Association shall be satisfied by the evidence submitted in support of the applica- tions for such withdrawal that all withdrawals by the Borrower from the Special Account were made on account of the reasonable cost of goods or services required for the Project and to be financed out of the proceeds of the Credit in accordance with Section 2.02 of this Agreement. (f) 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 expenditures under the Project eligible for financing under the Credit, the Borrower shall promptly upon notice from the Association and unless other- wise agreed by the Associaiton, refund to the Association such outstanding amount. Section 2.04. The Closing Date shall be June 30, 1988 or such later date as the Association shall establish. The Associa- tion shall promptly notify the Borrower of such later date. Section 2.05. (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 this Agreement to the respec- tivc dates on which amounts shall be withdrawn by the Borrower fon 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. - 6 - Section 2.06. 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 2.07. Commitment charges and service charges shall be payable semiannually on June 15 and December 15 in each year. Section 2.08. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each June 15 and December 15 commencing December 15, 1993, and ending June 15, 2033, each installment to and including the installment payable on June 15, 2003, 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 2.09. The currency of the United States of Ameri a is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Allocation and Withdrawal of Proceeds of Credit and Fund Loan Section 3.01. Subject to the rights of suspension and can- cellation set forth in this Agreement and the Fund Loan Agree- ment, the amount of the Credit and the amount of the Fund Loan may be withdrawn from the Credit Account and the Fund Loan Account, respectively, in accordance with the provisions of this Agreement and with the allocation of the proceeds of the Credit and the Fund Loan set forth in Schedule 1 to this Agreement, as such allocation may be modified from time to time pursuant to the provisions of such Schedule or by further agreement between the Borrower, the Association and the Fund. Section 3.02. The Borrower shall be entitled to make with- drawals from the Credit Account and from the Fund Loan Account for expenditures made (or, if the Association and the Fund shall so agree, to be made) 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 and the Fund Loan. Section 3.03. (a) When the Borrower shall desire to withdraw any amount of the Credit or the Fund Loan, the Borrower shall -7,- deliver to the Association a written application in such form and containing such statements and agreements as the Association or the Fund shall reasonably request. Applications for withdrawal, with the necessary documentation as hereinafter provided, shall, except as the Borrower, the Association and the Fund shall other- wise agree, be made promptly in relation to expenditures for the Project. (b) The Borrower shall furnish to the Association such documents and other evidence in support of the application as the Association or the Fund shall reasonably request, whether before or after the Association shall have approved any withdrawal requested in the application. (c) Each application and the accompanying documents and other evidence must be sufficient in form and substance to satis- fy the Association or the Fund that the Borrower is entitled to withdraw from the Credit Account or the Fund Loan Account the amount applied for and that such amount is to be used only for the purposes of the Project. Section 3.04. Each such application by the Borrower for withdrawal shall be deemed to be a request to withdraw funds from the Credit Account and from the Fund Loan Account and the funds to be withdrawn pursuant to such application shall be apportioned by the Association, as nearly as practicable in the circum- stances, between the Credit and the Fund Loan in the ratio of 30:70, or such other ratio as shall be agreed between the Asso- ciation and the Fund; provided, however, that, if such applica- tion shall be made in respect of expenditures that shall be financed out of the proceeds of the Credit or the Fund Loan only, such application shall be deemed to be a request to withdraw funds from the Credit Account or the Fund Loan Account only. Section 3.05. When the Association shall have approved an application by the Borrower for withdrawal, the Association shall: (i) pay the amount, if any, which the Borrower is entitled to withdraw from the Credit Account to or on the order of the Borrower in accordance with the provisions of this Agreement; and/or (ii) promptly notify the Fund that it has received an application for withdrawal from the Fund Loan - 8 - Account in the aggregate amount specified in such notice, that it has approved payment of the portion, if any, to be withdrawn from the Credit Account in the amount set forth in such notice, and that the portion to be withdrawn from the Fund Loan Account in the amount set forth in such notice is eligible for payment by the Fund. Section 3.06. If at any time the amount of the Credit or the Fund Loan shall have been fully withdrawn or cancelled, applica- tions by the Borrower for further withdrawals shall be deemed to be requested for withdrawal of the full amount applied for from the Fund Loan Account or the Credit Account only, and the provisions of this Article III, except for Section 3.04 hereof, shall continue to apply mutatis mutandis until the full amount credited or to be credited to such Account shall have been withdrawn or cancelled. Section 3.07. Upon the Borrower's request and upon such terms as shall be agreed between the Borrower and the Associa- tion, the Association may, on behalf and for the account of the Fund, enter into special commitments to pay amounts, out of the proceeds of the Fund Loan, to the Borrower or others in respect of the cost of goods required by the Project, subject to the provisions of this Agreement concerning the allocation and apportionment of the proceeds of the Fund Loan. The Fund has advised the Association that any such special commitment shall, once it has been notified to the Fund, constitute an obligation on the part of the Fund to pay, notwithstanding any subsequent suspension or cancellation of the Fund Loan, the amount to be disbursed out of the proceeds of the Fund Loan in fulfillment of such special commitment. Section 3.08. Except as the Association and the Fund shall otherwise agree, procuremenz of the goods and civil works required for the Project and to be financed out of the proceeds of the Credit or the Fund Loan shall be governed by the pro- visions of Schedule 3 to this Agreement. ARTICLE IV Execution of the Project Section 4.01. (a) The Borrower shall carry out the Project through OPN, with the participation of TPTC, SNEP, BCA and -9- DARNDR, with due diligence and efficiency and in conformity with appropriate administrative, agricultural, financial and engineering practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) The Borrower shall enter into a working agreement with ODN, under terms and conditions satisfactory to the Association, such agreement to provide for the definition of the responsibili- ties of ODN in the carrying out of the Project. (c) The Borrower shall cause ODN to enter into working agreements with TPTC, SNEP, BCA and DARNDR, under terms and conditions satisfactory to the Association, each such agreement to provide for the definition of the responsibilities of ODN and of TPTC, SNEP, BCA and DARNDR, respectively, in the carrying out of the Project. (d) The Borrower shall make available to BCA as a grant the part of the proceeds of the Credit required for the carrying out of Part C of the Project. Section 4.02. (a) In order to assist the Borrower in the carrying out of the Project, the Borrower shall employ consul- tants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association, such consultants to 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 Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. (b) Without limitation to paragraph (a) of this Section, the Borrower shall cause ODN to employ, until the completion of the Project, a financial specialist, whose qualifications and experience shall be satisfactory to the Association. Section 4.03. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit or the Fund Loan 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 Borrower to replace or repair such goods. - 10 - (b) The Borrower shall cause all goods and services financed out of the proceeds of the Credit or the Fund Loan to be used exclusively for the purposes of the Project. Section 4.04. (a) The Borrower shall furnish to the Associa- tion and the Fund, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procure- ment schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower: (i) shall maintain records and procedures adequate to record and monitor the progress of the Project (in- cluding its cost and, where appropriate, the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Credit or the Fund Loan, and to disclose their use in the Project; (ii) shall enable the Association's and the Fund's representatives to visit the facilities and construc- tion sites included in the Project and to examine the goods financed out of the proceeds of the Credit or the Fund Loan and any relevant records and documents; and (iii) shall furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Credit and the Fund Loan and the goods and services financed out of such proceeds. (c) Upon the award by the Borrower of any contract for goods, works or services to be financed out of the proceeds of the Credit, the Association may publish a description 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 Borrower and the Association, the Borrower shall prepare and furnish to the Association and the Fund a report, of such scope and in such detail as the Association shall reasonably request, on the execu- tion and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Association of their respective obligations under this Agreement and the accomplishmment of the purposes of the Credit and the Fund Loan. - 11 - Section 4.05. The Borrower shall take or cause to be taken all such action as shall be necessary to acquire as and when needed all such land and rights in respect of land as shall be required for the construction (and operation) of the facilities included in the Project and shall furnish to the Association, promptly after such acquisition, evidence satisfactory to the Association that such land and rights in respect of land are available for purposes related to the Project. Section 4.06. The Borrower shall: (a) in carrying out Part C of the Project, cause BCA to follow the policies and procedures set forth in Schedule 4 to this Agreement; (b) (i) review once a year, with the Association, the adequacy of the interest rates referred to in paragraph C.1 of Schedule 4 to this Agreement, taking into consideration among other things the inflation rate, market conditions and operating costs; and (ii) if necessary, pursuant to the conclusions of such review, cause BCA to revise such interest rates in a manner satisfactory to the Association; and (c) starting not later than December 31, 1984, and once a year thereafte., review, with the Association, the carrying out of Part C of the Project, including the performance of BCA under such Part of the Project, the annual financial projections of BCA and the actions to be taken to strengthen, if necessary, the capabilities of BCA in the carrying out of Part C of the Project. Section 4.07. Unless the Association shall otherwise agree, the design standards for the construction and rehabilitation of the roads under Part D of the Project shall be as set forth in Schedule 5 to this Agreement. Section 4.08. The Borrower shall furnish to the Association, for its approval, as soon as available, the training programs and candidates proposed for the training abroad included in Part G.1 of the Project. Section 4.09. The Borrower shall cause ODN to carry out Part H of the Project in accordance with operating policies and proce- dures satisfactory to the Association, including that no grant in excess of $20,000 equivalent shall be made without the prior approval of the Association and the Fund. - 12 - Section 4.10. The Borrower shall exchange views with the Association in May of each year, starting in May of 1984, on the proposed budget allocations for the Project and prior to September of each year, starting prior to September 1984, on the adequacy thereof. ARTICLE V Other Covenants Section 5.01. (a) The Borrower shall maintain or cause to be maintained records and separate accounts adequate to reflect, in accordance with consistently maintained appropriate 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) Without limitation to the foregoing, the Borrower shall: (i) maintain or cause to be maintained separate accounts reflecting all expenditures on account of which withdrawals are requested from the Credit Account or the Fund Loan Account on the basis of statements of expenditure; (ii) retain, until one year after the Closing Date, all.records (contracts, orders, invoices, bills, receipts and other documents) evidencing the expenditures on account of which withdrawals are requested from the Credit Account or the Fund Loan Account on the basis of statements of expenditure; and (iii) enable the Association's and the Fund's representatives to examine such records. (c) The Borrower shall: (i) have the Special Account and the accounts referred to in paragraphs (a) and (b) of this Sec- tion 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 and the Fund, 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 such auditors, of such scope and in such detail as the Association shall have reasonably requested, including without limitation to the foregoing, a separate opinion by said auditors in respect of the expenditures and records referred to in paragraph (b) of this Section'as to whether the proceeds of the Credit withdrawn from the Credit Account and the proceeds of the Fund Loan withdrawn from the Fund Loan Account, on the basis of statements of expenditure have been used for the purpose for which they were provided; and (iii) - 13 - furnish to the Association such other information concerning said Special Account and separate accounts, records ind expenditures and the audit thereof as the Association shall f::om time to time reasonably request. (d) The Borrower shall cause ODN to: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles con- sistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association and the Fund 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 Association shall reasonably request; and (iii) furnish to the Association such other information concerning the accounts and financial statements of ODN and the audit thereof as the Associa- tion shall from time to time reasonably request. Section 5.02. The Borrower shall cause ODN: (a) to take out and maintain with responsible insurers, or to make other provision satisfactory to the Association for, insurance against such risks and in such amounts as shall be con- sistent with appropriate practice; (b) to carry on its operations and to conduct its affairs in accordance with sound administrative, financial, agricultural and engineering practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers; and (c) without limitation to paragraph (b) of this Section, employ until the completion of the Project a Director General and an Administrative and Financial Manager, whose qualifications and experience shall, at all times, be satisfactory to the Associa- tion. The Borrower shall consult with the Association prior to the appointment of any new person for such positions. Section 5.03. The Borrower shall, not later than six months after the Credit is declared effective, and once a year there- after, furnish to the Bank a report on the compliance by ODN and DARNDR of their respective obligations under the Working Agree- ment to be entered into between ODN and DARNDR, pursuant to Section 4.01 (c) of this Agreement. -14 - Section 5.04. Without in any way limiting its obligations under Section 4.01 of this Agreement, the Borrower shall make such allocations in its annual budget as shall be necessary for the adequate maintenance of: (a) all water supply systems located in the Project Area, including the lzrigation systems to be rehabilitated under Parts A.1 and A.2 of the Project; and (b) all roads located in the Project Area. Section 5.05. The Borrower shall: (a) not later than January 1, 1984, start the collection of reasonable water charges from the users of the irrigation systems referred to in Parts A.1 and A.2 of the Project; (b) not later than December 31, 1984, prepare and furnish to the Association, for comments, a study of an adequate system of irrigation water charges for the Project Area, such study to be carried out under terms of reference satisfactory to the Association; and (c) based on the recommendations of the study referred to in paragraph (b) of this Section and the comments of the Associa- tion thereon, put into effect, in consultation with the Associa- tion, not later than December 31, 1985, a system of irrigation water charges in the Project Area. Section 5.06. The Borrower shall, not later than June 30, 1985, establish and thereafter maintain a mechanism, satisfactory to the Association, for the operation and maintenance of the irrigation systems located in the Project Area. ARTICLE VI Remedies of the Association Section 6.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) the Borrower or any authority having jurisdiction shall have taken any action for the dissolution or transformation of ODN or for the suspension of its operations, unless the Borrower - 15 - shall have taken, to the satisfaction of the Association, such steps as shall be necessary to ensure the due carrying out of all obligations under this Agreement; and (b) (i) subject to subparagraph (ii) of this paragraph: (A) the right of the Borrower to withdraw the proceeds of any grant or loan (including the Fund Loan) made to the Borrower for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the agreement providing therefor, or (B) any such loan shall have become due and payable prior to the agreed maturity thereof; (ii) subparagraph (i) of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Association that: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obliga- tions under such agreement; and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obligat- ions of the Borrower under this Agreement. Section 6.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof, namely, any event specified in paragraphs (a) and (b) (i) (B) of Section 6.01 of this Agreement shall occur. ARTICLE VII Effective Date; Termination Section 7.01. The following events are specified as addi- tional conditions to the effectiveness of this Agreement within the meaning of Section 12.01 (b) of the General Conditions: - 16 - (a) the execution and delivery on behalf of the Borrower of the Fund Loan Agreement has been duly authorized or ratified by all necessary governmental action and all other conditions prece- dent to the effectiveness of the Fund Loan pursuant to the Fund Loan Agreement (other than the effectiveness of this Agreement) have been duly fulfilled; and the Fund has appointed the Asso- ciation as Cooperating Institution to administer the Fund Loan on terms and conditions acceptable to the Association; (b) the Association has been notified by the FAC and the GTZ that all conditions precedent to the first disbursement of the FAC Grants and the GTZ Grants, respectively (other than the effectiveness of this Agreement), have been fulfilled; (c) the Special Account has been opened; (d) the financial specialist referred to in Section 4.02 (b) of this Agreement has been employed; (e) the Working Agreement has been executed on behalf of the Borrower and ODN pursuant to Section 4.01 (b) of this Agree-. ment; (f) the Working Agreements have been executed on behalf of ODN and BCA, TPTC, SNEP and DARNDR, respectively, pursuant to Section 4.01 (c) of this Agreement; and (g) the Association has received evidence, satisfactory to the Association, that ODN has transferred to BCA the totality of its existing portfolio. Section 7.02. The date Decs (,6, A e3 , is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 7.03. The obligations of the Borrower under Article V of this Agreement shall cease and determine on the date on which this Agreement shall terminate or on a date fifteen years after the date of this Agreement, whichever shall be the earlier. Section 7.04. If (i) the Fund Loan Agreement shall have come into force and effect and the Development Credit Agreement shall have failed to come into force and effect by the date specified in Section 7.02 of this Agreement or a later date established by the Association for the purposes of Section 12.04 of the General - 17 - Conditions or (ii) the entire principal amount of the Credit withdrawn from the Credit Account and all charges which shall have accrued on the Credit shall have been paid before the Fund Loan Agreement shall have terminated, then, notwithstanding the provisions of Sections 12.04 and 12.05 of the General Conditions, this Agreement shall be deemed to be, or to remain, in force and effect but only to the extent required for the purpose of imple- menting the Fund Loan Agreement and of orderly settlement of matters of mutual interest to the parties thereunder, subject to such modifications of this Agreement as shall be agreed between the Borrower, the Association and the Fund for such purposes. Section 7.05. If (i) the Fund Loan Agreement shall terminate in accordance with its terms before this Agreement shall have terminated or (ii) the Association shall notify the Borrower that its appointment as Cooperating Institution under the Fund Loan Agreement has terminated, the provisions of this Agreement shall, to the extent that they relate to the Fund Loan, forthwith terminate; provided, however, that in the case described in the foregoing clause (ii) such termination shall apply only to the responsibilities of the Association as such Cooperating Institu- tion. ARTICLE VIII Representatives of the Borrower; Addresses Section 8.01. The Secretaire d'Etat des Finances et des Affaires Economiques of the Borrower is designated as representa- tive of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 8.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Secretairerie d'Etat des Finances et des Affaires Economiques Palais des Ministeres Port-au-Prince Haiti Telex: 3490083 - 18 - 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 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 HAITI By / Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION Be By /Director Country Programs I Department Latin America and the Caribbean Region - 19 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit and the Fund Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit and the Fund Loan, the allocation of the. amounts of the Credit and the Fund Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Amount of the Credit Allocated Fund Loan % of (Expressed Allocated Expenditures in SDR (Expressed in to be Category Equivalent) SDR Equivalent) Financed (1) Civil works: (a) for 6,970,000 100% Parts A, D and E of the Project (b) for 50,000 110,000 100% Parts B, C and G of the Project (2) Vehicles and equip- ment: (a) for 1,670,000 100% Parts A, D and E of the Project - 20 - Amount of the Amount of the Credit Allocated Fund Loan % of (Expressed Allocated Expenditures in SDR (Expressed in to be Category Equivalent) SDR Equivalent) Financed (b) for 170,000 410,000 100% Parts B, C, G and H of the Project (3) Consultants' services: (a) for 2,230,000 100% Parts A, D and E of the Project (b) for 160,000 590,000 100% ]?arts B.2, G and I of the Project (4) Local 690,000 730,000 60%* salaries for Parts B, C, G and H of the Project (5) Adminis- tration and vehicle operation: (a) for 1,060,000 100% Parts A.1, E and F of the Project - 21 - Amount of the Amount of the Credit Allocated Fund Loan % of (Expressed Allocated Expenditures in SDR (Expressed in to be Category Equivalent) SDR Equivalent) Financed (b) for 530,000 1,300,000 100% Parts B, C and G of the Project (6) Agricul- 90,000 240,000 100% tural credit under Part C of the Project (7) Main- 1,110,000 78% tenance of roads under Part D.2 of the Project (8) Main- 190,000 54% tenance of water works under Part E.3 of the Project (9) Rural 370,000 850,000 100% Develop- ment Fund - 22 - Amount of the Amount of the Credit Allocated Fund Loan % of (Expressed Allocated Expenditures in SDR (Expressed in to be Category Equivalent) SDR Equivalent) Financed (10) Civil works 280,000 100% and con- sultants' services for Pro- ject prep- aration works (11) Special 370,000 Amount due Account under Section 2.03 (b) of this Agree- ment** (12) Unallocated 1,760,000 470,000 TOTAL 17,700,000 4,700,000 2. The disbursement percentages have been calculated in com- pliance with the policies of the Association and the Fund that no proceeds of the Credit or the Fund Loan 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, manu- facture, 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 or the Fund Loan 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 policies of the Association and the Fund. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expen- ditures: * The respective percentages are 50% Credit and 50% Fund Loan. ** The respeetivez pe*ewatages arQ- 7 5~ % CdA- '4 d 25~ 4&und La - 23 - (a) prior to the date of this Agreement or the date of the Fund Loan Agreement, whichever shall be the later, except that withdrawals in an aggregate amount not exceeding the equivalent of $300,000 may be made in respect of Category (10) on account of payments made for such expenditures before that date but after January 1, 1983; (b) in respect of civil works for Part A.1 of the Project, until the Borrower has furnished to the Association a report on the technical and economic justification for such Part of the Project, to the satisfaction of the Association, such report to be based on the additional stream flow data available to the Borrower and the time of its preparation; and (c) in respect of civil works for Part A.2 of the Project, until the Association has reviewed the carrying out of Part A.3 (i) of the Project after the second year of execution of the Project and has found it satisfactory. 4. Notwithstanding the allocation of an amount of the Credit or the Fund Loan or the disbursement percentages set forth in the table in paragraph 1 above, and without limitation upon the provisions of Section 3.04 of this Agreement, if the Association has reasonably estimated that the amount of the Credit or the Fund Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Cate- gory, the Association may, by notice to the Borrower: (i) corres- pondingly reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit or the Fund Loan which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures; provided, however, that no such reallocation of proceeds of the Fund Loan shall be made to Categories 1 (a), 2 (a), 3 (a), (7), (8) and (10); and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disburse- ment percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 5. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expen- ditures for such item shall be financed out of the proceeds of the Credit and the Fund Loan and the Association may, without in any way restricting or limiting any other right, power or remedy - 24 - of the Association under this Agreement or of the Fund under the Fund Loan Agreement, by notice to the Borrower, cancel such amount of the Credit and/or the Fund Loan as, in. the Associa- tion's reasonable opinion, represents the amount of such expendi- tures which would otherwise have been eligible for financing out of the proceeds of the Credit and/or the Fund Loan. - 25 - SCHEDULE 2 Description of the Project The purpose of the Project is to increase the income of the rural population of the Borrower through the increase of the agricultural productivity in the Project Area, and, in general, to improve the standard of living of the population in the Project Area. The Project consists of the following Parts: Part A: Irrigation 1. Rehabilitation and, thereafter, operation and maintenance of the Grison Garde irrigation system covering an area of about 200 hectares. 2. Completion of the rehabilitation of the St. Raphadl irriga- tion system covering an area of about 260 hectares. 3. Operation and maintenance of the St. Raphael irrigation sys- tem covering an area of (i) about 460 hectares in the first two years of the execution of the Project, and (ii) about 260 hectares thereafter. 4. On-farm development of the areas rehabilitated under this Part of the Project. Part B: Agricultural Development 1. Carrying out intensive crop production programs on about 920 hectares of irrigated land and about 8,000 hectares of rainfed land in the Project Area, including agricultural extension and soil conservation. 2. Carrying out a research and development program including technical assistance for the improvement of sugar cane productivity, provision of equipment for a laboratory for cane quality control and development of improved on-farm irrigation practices. 3. Carrying out a seed multiplication program including produc- tion of fruit and timber tree seedlings and sugar cane cut- tings. - 26 - Part C: Agricultural Credit Frovision by BCA, as described in Schedule 4 to this Agree- ment, of (i) short-term credit to finance the acquisition by farmers of inputs and seasonal labor and (ii) medium-term credit to finance- the acquisition by farmers of equipment, expenses related to on-farm development and farm investments. Part D: Rural Roads 1. Rehabilitation and improvement of about 116 kilometers of rural roads. 2. Maintenance of about 200 kilometers of rural roads. Part E: Supply of Drinking Water 1. Construction of about 21 village drinking water supply systems. 2. Construction and rehabilitation of about 195 shallow wells. 3. Improvement of the maintenance of the drinking water supply systems. Part F: Institutional Development Strengthening of the operational capabilities of ODN and of other entities carrying out the Project, including monitoring and evaluation of the Project. Part G: Training 1. In-service training and training abroad for the staff of ODN and of other entities carrying out the Project. 2. Training of farmers and skilled labor (including plumbers, masons, carpenters and topographers) at the training center at Milot and elsewhere. Part H: Rural Development Fund Provision of grants to rural communities to support commu- nity development actions, out of a rural development fund to be established by the Borrower. - 27 - Part I: Studies Carrying out of: (i) a feasibility study for a dam for water storage at St. Raphadl, including watershed protection; (ii) a study of irrigation water charges for the Project Area; and (iii) studies on the strengthening of the accounting capabilities of the entities carrying out the Project. The Project is expected to be completed by December 31, 1987. - 28 - SCHEDULE 3 Procurement A. International Competitive Bidding 1. Except as provided in Parts D and F hereof, goods and civil works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in the current edition of the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. For goods and works to be procured on the basis of inter- national competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, the Borrower shall prepare and forward to the Association as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender or prequalification documents relating thereto, as the case may be, a general procurement notice, in such form and detail and containing such information as the Asso- ciation shall reasonably request; the Association will arrange for the publication of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods and works in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods or works remain to be procured on the basis of international competitive bidding. 3. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international com- petitive bidding: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for the imported goods, or the ex-factory price or off-the-shelf price of other goods, offered in such bid; (ii) customs duties and other import taxes levied in connection with the importation, or the sales and similar taxes levied in connection with the sale or delivery, pursuant to the bid, of the goods shall not be taken into account in the evaluation of the bids; and (iii) the cost of inland freight and other expenditures incidental to the delivery of the goods to the place of their use or installation shall be included. 4. Contracts for the purchase of vehicles, materials and equipment shall be grouped, to the extent practicable, to form biding packages estimated to cost at least $100,000 equivalent. - 29 - B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the proce- dures described in Part A of this Schedule, goods manufactured in Haiti may be granted a margin of preference in accordance with, and subject to, the following provisions: 1. All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. 2. After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Haiti if the bidder shall have established to the satis- faction of the Borrower and the Association that the manufacturing cost of such goods includes a value added in Haiti equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other domestic bids. (3) Group C: bids offering any other goods. 3. In order to determine the lowest evaluated bid of each group, all evaluated bids in each group shall first be compared among themselves, without taking into account customs duties and other import taxes levied in connection with the importation, and sales and similar taxes levied in connection with the sale or delivery, pursuant to the bids, of the goods. Such lowest eval- uated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. 4. If, as a result of the comparison under paragraph 3 above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the evaluated bid price of the imported goods offered in each group C bid, for the purpose of this further comparison only, an amount equal to: (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in - 30 - such group C bid; or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph 3 is the lowest evaluated bid shall be selected. C. Preference for Domestic Contractors With respect to the evaluation of bids for any contract for civil works included under Category (1) of the table set forth in Schedule 1 to this Agreement and to be procured in accordance with the procedures described in Part A of this Schedule, the Borrower may grant a margin of preference of 7-1/2% to domestic contractors, in accordance with, and subject to, the following provisions: 1. Contractors applying for such preference shall be asked to provide, as part of the data for qualification, such informa- tion, including details of ownership, as shall be required to determine whether, according to the classification established by the Borrower and accepted by the Association, a particular firm or group of firms qualifies for a domestic preference. The bid- ding documents shall clearly indicate the preference and the method that will be followed in the evaluation and comparison of bids to give effect to such preference. 2. After bids have been received and reviewed by the Borrower, responsive bids will be classified into the following groups: (i) bids offered by domestic contractors eligible for preference; and (ii) bids offered by other contractors. For the purpose of evaluation and comparison of bids an amount equal to 7-1/2% of the bid amount shall be added to bids received under group (ii) above. D. Other Procurement Procedures 1. Contracts for (i) civil works for Parts A and D of the Project estimated to cost more than $50,000 equivalent but less than $500,000 equivalent, and in the aggregate not to exceed - 31 - $600,000 equivalent and (ii) the purchase of vehicles, materials and equipment estimated to cost more than $50,000 equivalent but less %-han $100,000 equivalent, and in the aggregate not to exceed $200,000 equivalent, may be procured on the basis of competitive bidding advertised locally and in accordance with local procedures satisfactory to the Association. 2. Contracts for (i) civil works for Parts A and D of the Project, estimated to cost $50,000 equivalent, or less, and in the aggregate not to exceed $200,000 equivalent and (ii) the pur- chase of vehicles, materials and equipment estimated to cost $50,000 equivalent or less, and in the aggregate not to exceed $600,000 equivalent, may be procured through negotiated purchases from established and reliable suppliers, provided, however, that quotations from at least three of such suppliers are obtained. E. Review of Procurement Decisions by the Association 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts estimated to cost the equivalent of $100,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Association, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Borrower shall, before a final decision on the award is made, inform the Association of the name of the bidder to which it intends to award the contract and shall furnish to the Associa- tion, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, and such other information as the Association shall reasonably request. The Association shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determina- tion. - 32 - (c) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked or prequalification was invited. (d) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the submission to the Association of the first application for with- drawal of funds from the Credit Account or the Fund Loan Account in respect of such contract. 2. With respect to each contract not governed by the preceding paragraph, the Borrower shall furnish to the Association, prompt- ly after its execution and prior to the submission to the Asso- ciation of the first application for withdrawal of funds from the Credit Account or the Fund Loan Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award and such other information as the Association shall reasonably request. The Association shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. 3. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an extension of the stipulated time for performance of such contract, or issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 10% of the original price, the Borrower shall inform the Association of the proposed modification, waiver, extension or change order and the reasons therefor. The Association, if it determines that the proposal would be inconsistent with the provisions of this Agreement, shall promptly inform the Borrower and state the reasons for its determination. F. Procurement Without Contracting Irrigation works on the St. Raphail and the Grison Garde irrigation systems may be executed by use of force account. - 33 - SCHEDULE 4 Lending and Operating Policies and Procedures of BCA BCA shall follow the policies and procedures set forth in this Schedule in carrying out Part C of the Project. A. Purpose BCA shall make (i) short-term credits for expenditures related to seasonal inputs, fertilizer, pesticides and seasonal labor and (ii) medium-term credits for equipment and on-farm irrigation development, to individual farmers and SACs. B. Eligibity In order to be eligible to receive a credit, a farmer shall be (i) a member of a SAC or (ii) an individual farmer cultivating up to about 10 ha in the i'rrigated areas and up to about 25 ha in the rainfed areas. In both cases a farmer shall meet all criteria established by BCA and ODN. C. Terms and Conditions 1. BCA shall charge interest on its short-term and medium-term credits at the rate of 12% per annum and shall charge a commission at the rate of 2% of the amount of the credit. 2. In making medium-term credits, BCA shall take into account the farm plans, the financing requirement of farmers, the repayment capacity of farmers and the technical recommendations of the extension staff. 3. SACs shall not be required to contribute to the project costs, but under the present statutes governing SACs, 5% of the amount lent to them will be withheld by BCA as a guarantee deposit on which an interest rate equivalent to the onlending rate shall be paid. 4. For medium-term credits to individual farmers, the benefi- ciary shall be required to provide at least 10% of the total cost of the inputs financed under the credit. 5. Short-term credits shall be repaid over periods of up to one year. -34- 6. Medium-term credits shall be repaid in equal installments over periods of up to five years, including two years of grace, the exact period being determined in each case on the basis of financial cash flow. 7. SACs shall guarantee collectively the repayment of credit granted to their individual members. - 35 - SCHEDULE 5 Design Standards for the Roads under the Project Terrain Type Standard Surface Granular Dez:.gn Speed (k/h) Flat 40 Rolling 30 Minimum Radius (m) Flat 45 Rolling 30 Maximum Gradient (m) Flat 8 Rolling 10 Right of Way (m) - 15 Minimum Platform (m) - 6.0 Width of Roadway (m) - 5.0 Minimum Ditch Width (m) - 0.5 Design Live Road - H 15-44* * American Association of the State Highway Officials' standard. 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 FOR SECRETARY