Morocco - Industrial And Trade Policy Adjustment Loan : Loan 2377 - Loan Agreement - Conformed

OFFICIAL LOAN NUMBER 2377 MOR DOCUMENTS Loan Agreement (Industrial and Trade Policy Adjustment Loan) between KINGDOM OF MOROCCO and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated , 1984 LOAN NUMBER 2377 MOR LOAN AGREEMENT AGREEMENT, dated da , 1984, between KINGDOM OF MOROCCO (hereinafter called the Borrower) and INTER- NATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS (A) the Bank has received a letter dated Decem- ber 29, 1983 from the Borrower describing a program of actions, objectives and policies designed to achieve structural adjustment of the industrial and trade sectors of the Borrower's economy (hereinafter called the Program), declaring the Borrower's commitment to the execution of the Program, and requesting assistance from the Bank in the financing of urgently needed imports required during such execution; and (B) on the basis inter alia of the foregoing, the Bank has decided in support of the Program to provide such assistance to the Borrower by making the Loan in two tranches as hereinafter provided; 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 Loan and Guarantee Agreements of the Bank, dated Cctober 27, 1980, with the same force and effect as if they were fully set forth herein, subject, however, to the following modification thereof (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank, as so modified, being hereinafter called the General Conditions): Section 2.01, paragraph 11, shall be modified to read: "The term Project means the imports that may be financed out of the proceeds of the Loan pursuant to the provisions of Schedule 1 to the Loan Agreement." Section 102. 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: - 2 - (a) "Nomenclature of Brussels" means the Nomenclature for the Classification of Goods in Customs Tariffs published by the Customs Co-operation Council, Brussels, Belgium, Fifth Edition (1976); (b) "DH" and "dirham" mean the currency of the Borrower; (c) "Banque du Maroc" means the central bank of the Borrower; (d) "OCE" means the Borrower's establishment responsible for exports (Office de Commercialisation et d'Exportation); (e) "CC" means the Borrower's establishment responsible for compensation regarding certain products (Caisse de Compensation); (f) "ONICL" means the Borrower's establishment responsible for compensation regarding wheat and vegetables (Office National inter-professionel de Cereales et de Legumineuses); (g) "General Program of Imports" means the document issued from time to time by the Borrower's Ministry responsible for commerce, industry and tourism setting forth conditions for the import of goods into Morocco (Prraramme General des Importa- tions), including all amendments the o; and (h) "Circular" means the memorandum dated May 3, 1982 signed by the Direction des Affaires techniques de l'Administra- tion des Douanes et Imp8ts Indirects of the Borrower's ministry responsible for finance, listing in Annex 1 thereto the goods subject to export licensing requirements. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in this Agree- ment, an amount in various currencies equivalent to one hundred fifty million four hundred thousand dollars ($150,400,000). Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank. - 3 - (b) Withdrawal applications under the Loan shall to the extent practicable be consolidated so as to apply for withdrawal of aggregate amounts of not less than $1,000,000 equivalent. Each such application for withdrawals on the basis of statements of expenditures shall be submitted to the Bank with: (i) a statement certifying (A) payment of the amount claimed for withdrawal from the Loan Account and (B) eligibility of the goods, with respect to which such payment has been made, to be financed out of the proceeds of the Loan; and (ii) such other information as the Bank shall reasonably request. Section 203. Except as the Bank shall otherwise agree, the procurement of the goods to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 3 to this Agreement. Section 2.04. The Closing Date shall be June 30, 1985 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.05. (a) The Borrower shall pay to the Bank a fee equivalent to three hundred seventy-five thousand sixty-two dollars ($375,062). (b) On or promptly after the Effective Date, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and pay to itself the amount of the said fee in such currency or currencies as the Bank shall determine. Section 2.06. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.07. (a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time at a rate per annum for each Interest Period equal to one half per cent per annum above the Cost of Qualified Borrowings for the last Semester ending prior to the commencement of such Interest Period. (b) As soon as practicable after the end of each Semester, the Bank shall notify the Borrower of the Cost of Qualified Borrowings for such Semester. -4- (c) For purposes of this Section: (i) "Interest Period" means the six-month period commencing on each date specified in Section 2.08 of this Agreement, including the Interest Period in which this Agreement is signed. (ii) "Cost" of Qualified Borrowings means the cost, expressed as a percentage per annum, as reasonably determined by the Bank, provided that the amount of $8,520.5 million referred to in (iii) (B) hereunder shall be reckoned at a cost of 10.93% per annum. (iii) "Qualified Borrowings" means (A) outstanding borrowings of the Bank drawn down after June 30, 1982; and (B) until July 1, 1985, the amount of $8,520.5 million (representing borrowings of the Bank between July 1, 1981 and June 30, 1982) less any part thereof repaid earlier than July 1, 1985. (v) "Semester" *means the first six months or the second six months of a calendar year. Section 2.08. Interest and other charges shall be payable semiannually on March 15 and September 15 in each year. Section 2.09. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 2 to this Agreement. Section 2.10. (a) Banque du Maroc 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. (b). Without limitation or restriction to the foregoing, the Borrower hereby entrusts Banque du Maroc with responsibility for the preparation of withdrawal applications under the Loan and for the collection of the documents and other evidence to be furnished to the Bank in support of such applications. ARTICLE III Particular Covenants Section 3.01. The Borrower undertakes that adequate provi- sion will be made for the insurance of the imported goods to be -5- financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indem- nity shall be payable in a currency freely usable to replace or repair such goods. Section 3.02. Upon the award of any contract for goods to be firanced out of the proceeds of the Loan, the Bank may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. Section 3.03. (a) The Borrower and the Bank shall from time to time, at the request of either party, and in any event not later than July 15, 1984 or such later date as the Bank shall agree, exchange views on the progress achieved in carrying out the Program and the actions specified in Schedule 4 to this Agreement. (b) Without limitation on the generality of the provisions of paragraph (a) of this Section, the Borrower and the Bank shall, not later than January 15, 1985 or such later date as the Bank shall agree, again exchange views on the progress achieved in carrying out the Program. (c) Prior to each exchange of views described in paragraphs (a) and (b) of this Section, the Borrower shall furnish to the Bank for its review and comment a report on the progress achieved in carrying out the Program, in such detail as the Bank shall reasonably request. Section 3.04. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, special security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of foreign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchangi, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges, on, the Loan, and the Borrower, in creating or permitting the creation of sach lien, shall make -6- express provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or administrative subdivisions, the Borrower shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property or as security for the payment of debt incurred for the purpose of financing the purchase of such property; and (ii) any lien aris- ing in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means assets of the Borrower, of any political or administrative sub- division thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Borrower or any such subdivision, including gold and foreign exchange assets held by Banque du Maroc or any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Borrower. Section 3.05. (a) The Borrower shall maintain or cause to be maintained records and accounts adequate to reflect in accordance with consistently maintained sound accounting practices the expenditures financed out of the proceeds of the Loan, including the separate records and accounts referred to in paragraph (b) of this Section. (b) Without limitation on the foregoing, the Borrower shall: Ci) maintain or cause to be maintained separate records and accounts reflecting all expenditures on account of which withdrawals are requested from the Loan Account on the basis of statements of expenditures; (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 Loan Account on the basis of statements of expenditures; and (iii) enable the Bank's representatives to examine such records. (c) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) of this Section for each fiscal year -7- 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 six months after the end of each such year, a certified copy of the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested, including, without limitation to the foregoing, a separate opinion by said auditors in respect of the separate records and accounts referred -o in paragraph (b) of this Sec- tion as to whether the proceeas of the Loan withdrawn from the Loan Account on the basis of statements of expenditures have been used for the purpose for which they were provided; and (iii) furnish to the Bank such other information concerning said records and accounts and the audit thereof as the Bank shall from time to time reasonably request. Section 3.06. Not later than six months after the Closing Date or such later date as may be agreed between the Borrower and the Bank, the Borrower shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall rea- sonably request, on the execution of the Program, the performance by the Borrower and the Bank of their respective obligations under the Loan Agreement and the accomplishment of the purposes of the Loan. ARTICLE IV Additional Event of Suspension Section 4.01. For the purposes of Section 6.02 of the General Conditions, the following additional event is tipecified pursuant to paragraph (k) thereof, namely, that an event has occurred which shall make it improbable that the Program, or a significant part thereof, will be carried out. ARTICLE V Effective Date; Termination Section 5.01. The date 7/ .0, is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Minister responsible for finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. -8- Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministere des Finances Rabat Morocco Cable address: Telex: MINISTERE FINANCES 31936 M Rabat, Morocco 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) 9- 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. KINGDOM OF MOROCCO By Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT /SW /,C r#"i A By Regional Vice President Europe, Middle East and North Africa - 10 - SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. Subject to the provisions hereinafter set forth or referred to in this Schedule, the proceeds of the Loan may be withdrawn from the Loan Account for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods required dur;ng the execution of the Program and to be financed out of such proceeds and in respect of the fee specified in Section 2.05 of this Agreement. 2. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) expenditures for goods included in the chapters or sub-chapters of the Nomenclature of Brussels set forth in the Annex to this Schedule; (b) expenditures in the currency of the Borrower or for goods supplied from the territory of the Borrower; (c) payments made for expenditures prior to January 31, 1984; (d) payments for taxes levied by, or in the territory of, the Borrower on goods or on the importation, manufacture, procurement or supply thereof; (e) expenditures for goods procured under contracts costing less than $25,000 equivalent; (f) expenditures for goods supplied under a contract which any national or international financing institution or agency other than the Bank shall have financed or agreed to finance; (g) expenditures for goods intended for a military or para-military purpcse or for luxury consumption; and (h) expenditures in excess of an aggregate amount equiva- lent to $50,000,000 for petroleum products and foodstuffs. 3. No withdrawal shall be made and no commitment shall be entered into to pay amounts to the Borrower or others in respect of expenditures to be financed out of the proceeds of the Loan - 11 - after the aggregate of the proceeds of the Loan withdrawn from the Loan Account and the total amount of such commitments shall have reached the equivalent of $75,400,000, unless the Bank shall be satisfied, after an exchange of views as described in Section 3.03 (a) of this Agreement: (a) with the progress achieved by the Borrower in the carrying out of the Program, and (b) that the actions described in Schedule 4 to this Agreement have been taken. 4. If the Bank shall have reasonably determined that the procurement of any item to be financed out of the proceeds of the Loan is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as, in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of such proceeds. - 12 - ANNEX TO SCHEDULE 1 Chapters and Sub-Chapters of the Nomenclature of Brussels referred to in paragraph 2 (a) of Schedule 1 Chapter No. Sub-Chapter No. Description 22 22.03 Beer made from malt. (Beverages, spirits and vinegar) 22.04 Grape must, in fer- mentation or with fer- mentation arrested otherwise than by the addition of alcohol. 22.05 Wine of fresh grapes; grape must with fer- mentation arrested by the addition of alco- hol. 22.06 Vermouths and other wines of fresh grapes flavoured with aro- matic extracts 22.07 Other fermented beverages (for example cider, perry and mead). 22.09 Spirits (other than those of heading No. 22.08); liqueurs and other spirituous beverages; compound alcoholic preparations (known as "concen- trated extracts") for the manufacture of beverages. - 13 - Chapter No. Sub-Chapter No. Description 24 24.01 Unmanufactured to- (Tobacco) bacco; tobacco refuse. 24.02 Manufactured tobacco; tobacco extracts and essences. 71 71.01 Pearls, unworked (Pearls, precious or worked, but not and semi-precious mounted, set or stones, precious strung (except up- metals, rolled graded pearls tem- precious metals and porarily strung for articles thereof; convenience of trans- imitation jewelery; port). coin) 71.02 A,C,D,E Precious and semi- precious stones unworked, cut or otherwise worked but not mounted, set or strung (except ungraded stones temporarily strung for convenience of transport): A. Rough diamonds, unsorted. C. Sorted diamonds, other than industrial diamonds, rough or simply sawn, cleaved or bruted. D. Other diamonds. E. Other precious or semi-precious stones. - 14 - Chapter No. Sub-Chapter No. Description 71.03 Synthetic or recon- structed precious or semi-precious stones, unworked, cut or otherwise worked, but not mounted, set or strung (except ungraded stones tem- porarily strung for convenience of transport). 71.07A* Gold, including platinum-plated gold, unwrought or semi- manufactured: A. Non-monetary 71.08 Rolled gold on base metal or silver, unworked or semi- manufactured. 71.11A Goldsmiths', silver- smiths' and jewel- lers' sweepings, residue, lemel, and other waste and scrap, of precious metal: A. Of gold, excluding sweepings contain- ing other precious metals. 71.12 Articles of jewellery and parts thereof, of precious metal or rolled precious metal. - 15 - Chapter No. Sub-Chapter No. Description 71.13 Articles of gold- smiths' or silver- smiths' wares and parts thereof, or precious metal or rolled precious metal, other than goods falling with- in heading No. 71.12. 71.15 Articles consisting of, or incorporating, pearls, precious or semi-precious stones (natural, synthetic or reconstructed). 81 81.04A Other base metals, un- (Other base metals wrought or wrought, employed in metallurgy and articles thereof; and articles thereof) cermets, unwrought or wought, and articles thereof: A. Waste and scrap of uranium depleted in U 235 or of thorium; such metals, unwrought or wrought and un- wrought, and arti- cles thereof. 84 84.59A Machines and mechani- (Boilers, machinery cal appliances, having and mechanical appli- individual functions ances; parts thereof. not falling within any other heading of this Chapter: A. Nuclear reactors and parts thereof. - 16 - SCHEDULE 2 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each March 15 and September 15 Beginning September 15, 1988 Through September 15, 2000 5,785,000 On March 15, 2001 5,775,000 * The figures in this column represent dollar equivalents determined as of the respective dates of withdrawal; see General Conditions, Section 3.04. - 17 - Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.04 (b) of the General Conditions: Time of Prepayment Premium The interest rate (ex- pressed as a percentage per annum) applicable to the balance outstanding on the Loan on the day of prepayment multiplied by: Not more than three years 0.18 before maturity More than three years but 0.35 not more than six years before maturity More than six years but 0.65 not more than eleven years before maturity More than eleven years but not 0.88 more than fifteen years before maturity More than fifteen years before 1.00 maturity - 18 - SCHEDULE 3 Procurement 1. Except as provided in paragraph 2 of this Schedule, contracts for the procurement of goods shall be awarded through international competitive bidding in accordance with procedures consistent with those set forth in Part A of the current edition of the "Guidelines for Procurement under World Bank Loans and IDA Credits" dated March 1977 (hereinafter called the Guidelines), subject to the following modifications: (a) Paragraph 1.2 of the Guidelines is deleted and the following is substituted therefor: "1.2 Notification and Advertising The international community should be notified in a timely manner (see also para. 3.1) of the opportunity to bid. This will be done by advertising invitations to apply for inclusion in a bidder's invitation list, to apply for prequalification or to bid; such advertisements should be placed in at least one newspaper of general circulation in the Borrower's country and, in addition, in at least one of the following forms: (i) a notice in the United Nations publication, Development Forum, Business Edition; or (ii) an advertisement in a newspaper, periodical or technical journal of wide international circula- tion; or (iii) a notice to local representatives of countries and territories referred to in these Guidelines, that are potential suppliers of the goods required." (b) The following is added at the end of paragraph 2.9 of the Guidelines: "As an alternative, bidding documents may require the bidder to state the bid price in a single currency widely used in international trade and specified in the bidding documents." - 19 - (c) Sub-paragraphs (a) and (d) of paragraph 2.10 of the Guidelines are deleted and the following is substituted for sub- paragraph (a) of said paragraph 2.10: "(a) Payments under the contract will be made in the currency in which the price has been stated in the success- ful bid." (d) The third sub-paragraph of paragraph 3.8 of the Guide- lines is deleted and the following is substituted therefor: "Customs duties and import taxes should be excluded for the purpose of comparison among bids for the supply of goods." (e) Paragraph 3.9 of the Guidelines is deleted. 2. (a) Contracts for the procurement of goods estimated to cost the equivalent of less than $5,000,000 each shall be awarded on the basis of the normal procurement procedures of the purchaser of such goods. (b) Notwithstanding the provisions of sub-paragraph (a) of this paragraph, contracts for commonly traded commodities may be awarded on the basis of price quotations available for organized international commodity markets. 3. With respect to each contract referred to in paragraph 1 of this Schedule, the Borrower shall furnish to the Bank, prior to the submission to the Bank of the first application for with- drawal of funds from the Loan Account in respect of such con- tract, two conformed copies of such contract, together with the analysis of the respective bids and recommendations for award, a description of the advertising and tendering procedures followed and such other information as the Bank shall reasonably request. 4. With respect to each contract referred to in paragraph 2 of this Schedule, the Borrower shall furnish to the Bank, prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect thereof, such documentation and information as the Bank may reasonably request to support withdrawal applications in respect of such contract. 5. The Bank shall, if it determines that the award of a con- tract or the documentation received, as the case may be, was not consistent with the provisions of this Schedule, promptly inform the Borrower and state the reasons for such determination. - 20 - SCHEDbLE 4 Actions Referred to in Paragraph 3 (b) of Schedule 1 to this Agreement 1. The reduction of customs duties on goods imported into Morocco such that the maximum customs duty on each good imported into Morocco shall not exceed 60% of the c.i.f. (port of entry) price for such.good. 2. The elimination of all export licensing requirements for all goods listed in Annex 1 to the Circular except those listed in Part A of the Annex to this Schedule. 3. (a) The reduction in the number of goods subject to import licensing requirements by the transfer, from List B (goods subject to import licensing) and List C (goods prohibited from import) of the General Program of Imports, to List A (goods not subject to import licensing) thereof, of as many goods as shall be necessary to ensure that the designated goods in said List A shall henceforth represent at least 42% of the aggregate value as at December 31, 1982 (calculated in dirhams) of all goods listed in the General Program of Imports. (b) For purposes of this paragraph 3 "designated goods" shall mean all goods listed in the General Program of Imports, excluding those described in Part B of the Annex to this Schedule. - 21 - ANNEX TO SCHEDULE 4 A. Goods excepted under paragraph 2 of Schedule 4. 1. Mineral products specified in Annex 1 to the Circular which are listed under the following Chapters of the Nomenclature of Brussels: Chapter No.: 25, 26, 73, 74, 76, 78. 2. Basic food products subsidized by CC or ONICL. B. Goods excluded from the definition of "designated goods" under paragraph 3 (b) of Schedule 4. Nomenclature of Brussels Chapter No. Sub-Chapter No. Description 9 9.02 Tea (but only green tea). 10 10.01 Wheat and meslin. 17 17.01 Beet Sugar and cane sugar, in solid form. 27 27.09 Petroleum oils and oils obtained from bituminous minerals, crude. 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 L day of 1 6, 198 . FOR SECRETARY