Senegal - Irrigation Technical Assistance Project : Credit 1632 - Credit Agreement - Conformed

CREDIT NUMBER 1632 SE OFFICIAL DOCUMENTS Development Credit Agreement (Irrigation Technical Assistance Project) between REPUBLIC OF SENEGAL and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated 90^%AW"17, 198 CREDIT NUNBER 1632 SE DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated ._CQ14wLA 7 , 1986, between REPUBLIC OF SENEGAL (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS (A) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Association to assist in the financing of the Project; (B) Parts A, B and C of the Project will be carried out by SAED (as hereinafter defined) and Part D of the Project will be carried out by SOFISEDIT (as hereinafter defined) both with the Borrower's assistance and, as part of such assistance, the Bor- rower will make available to SAED and to SOFISEDIT the proceeds of the Credit as provided in this Agreement; (C) by agreement dated June 18, 1985 (the CCCE Loan Agreement), Caisse Centrale de Coopfration Economique (CCCE), an Agency of the French Republic, has agreed to make a loan (the CCCE Loan) to the Borrower in an aggregate principal amount equivalent to approximately $3,250,000 to assist in financing the Project on the terms and conditions set forth in the CCCE Loan Agreement; (D) the Borrower intends to contract from the United States Agency for International Development (USAID) a loan (the USAID Loan) in an amount of approximately $100,000 to assist in financing Part A (v) of the Project on the terms and conditions set forth in an agreement (the USAID Loan Agreement) to be entered into between the Borrower and USAID; (E) the Borrower intends to contract from the Fonds d'Aide A la Coopfration (FAC), an Agency of the French Republic, a loan (the FAC Loan) in an amount of approximately 30 million CFAF to assist in financing Part A of the Project on the terms and conditions set forth in an agreement (the FAC Loan Agreement) to be entered into between the Borrower and FAC; and WHEREAS the Association has agreed, on the basis inter alia, of the foregoing, to extend the Credit to the Borrower upon -2- the terms and conditions set forth in this Agreement and in the Project Agreement 62 even date herewith between the Association and SAED; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The General Conditions Applicable to Develop- ment Credit Agreements of the Association, dated January 1, 1985, (the General Conditions) constitute an integral part of this Agreement. Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Project Agreement" means the agreement between the Association and SAED of even date herewith, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the Project Agreement; (b) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (c) "Revolving Fund" means the account referred to in Section 3.01 of this Agreement; (d) "SAED" means "Socidtf Nationale d'AmGnagement et d'Exploitation des Terres du Delta du Fleuve 'galin et des VallGes du Fleuve S6nfgal et de la Falm", a "Socift6 nationale" of the Borrower established pursuant to Law No. 81-57 dated July 10, 1981, and operating pursuant to Decree No. 81-981 dated September 29, 1981; (e) "CFAF" means the currency of the Borrower; (f) "Resettlement Fund" means the Fund referred to in Section 3.01 (c)(ii) of this Agreement; -3- (g) "SOFISEDIT" means Socidta Financiare Sfangalaise Eour le Diveloppement de 1'Industrie at du Tourisme, a corporation established on March 14, 1974; and (h) "SOFISEDIT Subsidiary Loan Agreement" means the agree- ment to be entered into between the Borrower and SOFISEDIT pursuant to Section 3.01 (c)(ii) of this Agreement, as the same may be anmnded from time to time, and such term includes all schedules to the Subsidiary Loan Agreement. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Bor- rower, on the terms and conditions set forth or referred to in the Development Credit Agreement, an amount in various currencies equivalent to four million seven hundred thousand Special Drawing Rights (SDR 4,700,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit 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 Asso- ciation, for expenditures made (or, if the Association 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. (b) The Borrower shall, for the purposes of the Project, open and maintain in CFA Francs a special account in a commercial bank on terms and conditions satisfactory to the Association. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 3 to this Agreement. Section 2.03. The Closing Date shall be December 31, 1987 or such later date as the Association shall establish. The Asso- ciation shall promptly notify the Borrower and SAED of such later date. Section 2.04. (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 withdrawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agreement to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. -4- (b) The commitment charge shall b, 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 othet eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Commitment charges and service charges shall be payable semiannually on January 1 and July 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each January 1 and July 1 commencing January 1, 1996, and ending July 1, 2035. Each installment to and including the installment payable on July 1, 2005 shall be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter shall be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the French Republic is hereby specified for the purposes of Section 4.02 of the General Conditions. Section 2.09. SAED 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 in respect of Categories (1) through (3) of the table set forth in para- graph I of Schedule 1 to this Agreement; and SOFISEDIT is so designated in respect of Category (4). ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement and, to this end, without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, shall cause SAED to perform in accordance with the provisions of the Project Agreement all the obligations of SAED therein set forth,. shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable SAED to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) Without limitation or restriction upon the generality of the provisions of paragraphs (a) and (b) above, with regard to the provision of funds, the Borrower shall: (i) cause SAED to open and thereafter maintain the account referred to in Section 2.01 (b) of the Project Agreement; (ii) deposit into such account an initial amount of CFAF 1,335,000,000; and (iii) thereafter, deposit into said account an amount of CFAF 335,000,000 on January 1, 1986, and thereafter deposit into the same account, another amount of CFAF 750,000,000 on April 1, 1986. (c) The Borrower shall: (i) for purposes of Parto A, B, and C of the Project, make the proceeds of the Credit allocated from time to time to Categories (1) through (3) of the table set forth in paragraph (1) of Schedule 1 to this Agreement available to SAED as a grant; (ii) for purposes of Part D of the Project, open an account (the Resettlement Fund) and deposit therein amounts totalling $1,000,000 equivalent; and (iii) relend the proceeds of the Resettlement Fund and those of the Credit allocated from time to time to Category (4) to SOFISEDIT under a subsidiary loan agreement satisfactory to the Association to be entered into between the Borrower and SOFISEDIT. (d) The Borrower shall exercise its righta under the SOFISEDIT Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and of the Association and to accomplish the purposes of the Credit and, except as otherwise agreed by the Association, the Borrower shall not assign, amend, abrogate or waive the SOFISEDIT Subsidiary Loan Agreement or any provision thereof. Section 3.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services -6- required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 1 to the Project Agreement. Section 3.03. The Borrower and the Association hereby agree that the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of *the General Conditions (relating to in- surance, use of good-,and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) shall be carried out by SAED pursuant to Section 2.03 of the Project Agreement. Section 3.04. The Borrower shall cause SAED to: (i) take all necessary measures, including the preparation, no later than January 31, 1986, of an implementation program whose details shall be determined by mutual agreement between the Borrower and the Association, to relinquish progressively all activities re- lated to agricultural credit and input distribution, land prepa- ration, paddy processing and maintenance of agricultural equip- ment, except for the maintenance of the collective irrigation network infrastructure, and to restrict not later than a date to be determined in the action program, its corporate purpose exclusively to activities pertaining to planning and supervising agricultural development in the Senegal River Valley; (ii) charge farmers the actual cost of all inputs and agricultural services provided to them by SAED except for specific public services selected in agreement with the Association. The Borrower shall promptly provide to SAED funds sufficient to cover the part of the cost of such services not charged to the beneficiaries, (iii) charge farmers, as from July 1, 1987, the actual cost of services related to the operation and maintenance of the irrigation network operated by SAED; and (iv) make appropriate arrangements to settle, not later than March 31, 1986 all SAED arrears due to Government and to the other private creditors in accordance with details determined by mutual agreement between the Borrower and the Association. Section 3.05. Except for repairs deemed necessary to keep the Richard Toll and the Ross Bethio mills in operating condi- tion, the Borrower shall cause SAED to delay any major mainte- nance works for such mills until the results and recommendations of the study referred to under Part A (ii) of the Project have been agreed upon between the Borrower and the Association. -7- Section 3.06. The Borrower shall cause SAED: (i) to exchange views with the Association not later than April 30 of each year on the investment program that SAED envisages to implement over a two-year period of time commenc,ng as of the Effective Date of this Agreement; (ii) not to undertake any construction program or any rehabilitation works for the Richard Toll and the Ross Bethio mills until the results and recommendations of the study referred to under Part A (ii) of the Project have been agreed upon between the Borrower and the Association; and (iii) to prepare a third "contrat-plan", acceptable to the Association, to be entered into between SAED and the Borrower not later than June 30, 1987. ARTICLE IV Remedies of the Association Section 4.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional events are specified: (a) SAED shall have failed to perform any of its obligations under the Project Agreement. (b). As a result of events which have occurred after the date of the Development Credit Agreement, an extraordinary situation shall have arisen which shall make it improbable that SAED will be able to perform its obligations under the Project Agreement. (c) Law No. 81-57 dated July 10, 1981 and Decree No. 81-981 dated September 29, 1981 of the Borrower shall have been amended, suspended, abrogated, repealed or waived so as to affect mate- rially and adversely the ability of SAED to perform any of its obligations under the Project Agreement. (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of SAED or for the suspension of its operations. (e) Subject to subparagraph (ii) of this paragraph: (i) (A) the right of the Borrower to withdraw the proceeds of any loan or credit (including the -8- USAID Loan, the CCCE Loan and the FAC 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 or credit shall have become due and payable prior to the agreed maturity thereof. (ii) Subparagraph (i) of this paragrajh shall not apply if the Borrower establishes to thh 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 obliga- tions of the Borrower under this Agreement. (f) The Borrower shall have failed to deposit an amount equivalent to at least $500,000 into the Resettlement Fund by June 30, 1986. Section 4.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional events are specified: (a) the event specified in paragraph (a) of Section 4.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower; (b) the events specified in paragraphs (c) and (d) of Section 4.01 of this Agreement shall occur; and (c) the event specified in paragraph (e) (i) (B) of Sec- tion 4.01 of this Agreement shall occur subject to the proviso of paragraph (e) (ii) of said Section 4.01. -9- ARTICLE V Effective Date; Termination Section 5.01., The following events are specified as addi- tional conditiDns to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) all conditions precedent to the effectiveness of, or initial disbursements under, the CCCE Loan Agieement, the USAID Loan Agreement, and the FAC Loan Agreement have been ful- filled; (b) the Association has received a report by independent auditors satisfactory to the Association verifying that SAED has implemented the recommendations formulated by auditors in February 1985 to improve SAED's accounting procedures; and (c) the Revolving Fund referred to in Section 3.01 (b) of this Agree- ment has been opened and the initial deposit has been made. Section 5.02. The following is specified as additional matter, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association, namely, that the Project Agreement has been duly authorized or ratified by SAED, and is legally binding upon SAED in accordance with its terms. Section 5.03. The date 120 days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VI Representatives of the Borrower; Addresses Section 6.01. Except as provided in Section 2.09 of this Agreement, The Minister of the Borrower responsible for Finance is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministare de 1'Economie et des Finances Rue Charles Lain6 B.P. 4017 Dakar, Sdn6gal - 10 - Cable address: Telex: MINIFINANCES 3203 SG Dakar, S6n6gal 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 duly authorized representatives, 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 SENEGAL Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President Western Africa - 11 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) Consultants' 210,000 100% services and audit (2) Agricultural 840,000 80% machinery equip- ment and spare parts (3) Local staff 2,700,000 80% salaries, office supplies and equipment, and maintenance works under Part B of the Project (4) Goods and services 500,000 25% financed by Credit under Part D of the Project (5) Unallocated 450,000 TOTAL 4,700,000 - 12 - 2. Notwithstanding the provisions of paragraph 1 above: (a) no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement; (b) no withdrawals shall be made until the Association has received satisfactory evidence that none of the arrears referred to in Section 3.04 (iv) of this Agreement is more than six months outstanding; and (c) no withdrawals shall be made in respect of Category (4) until the Association has received evidence satisfactory to the Association that the Resettlement Fund has been established, an amount equivalent to at least $500,000 has been deposited therein and the SOFISEDIT Subsidiary Loan Agreement has been duly exe- cuted, all in accordance with Section 3.01 (c)(ii) and (iii) of this Agreement. - 13 - SCHEDULE 2 Description of the Project The objective-of the Project is to improve the institutional environment for agricultural development in the Senegal River Valley, through the reduction of SAED's functions and rehabilita- tion of SAED's financial condition. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Association may agree upon from time to time to achieve such objectives: Part A: Carrying out of studies: (i) to determine measures necessary to reduce the scope of SAED's corporate purpose. to planning and supervising agricultural development in the Senegal River Valley and maintaining collective irrigation network infrastructure; (ii) to assess and determine ways, means and incentives to induce private entrepreneurs to take over the activities to be relinquished by SAED; (iii) to assess the agricultural credit needs in the Senegal River Valley and to design a schedule, in cooperation with Caisse Nationale de Credit Agricole du Sgnfgal (CNCAS), dealing with the types of credit required, the terms and conditions of such credit and the timing for opening CNCAS branches in the Senegal River Valley; (iv) to evaluate the type of agricultural equipment most adjustable to the changing agricultural conditions in the Senegal River Valley; and (v) to prepare a master plan for the long-term de- velopment of irrigated agriculture in the Senegal River Valley. Part B: (i) Replacement of defective pumping stations; (ii) acquisition of spare parts for the Delta pumping stations; -14- (iii) overhaul and repair of agricultural equipment such as tractors, earthmoving and land preparation machinery; (iv) maintenance of the Ross Bethio and Richard Toll rice mills; and (v) maintenance of the irrigation network. Part C: Rehabilitation of SAED's financial condition. Part D: Provision of credit to former staff of rural development agencies selected under criteria to be approved by the Association, to assist them in setting up their own businesses. The Project is expected to be completed by June 30, 1987. - 15 - SCHEDULE 3 Special Account 1. For the purposes of this Schedule: (a) the term "Category" means a category of items to be financed out of the proceeds of the Credit as set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures.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 allocated from time to time to Categories (1) through (3) in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount- of five hundred thousand dollars to be withdrawn from the CredIt Account and deposited in the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Ercept as the Association shall otherwise agree, payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Association has received evidence satisfactory to the Association that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent with- drawals to replenish the Special Account may be made as follows: (a) On the basis of a request or requests by the Borrower for a deposit or deposits which add up to the aggregate amount of the Authorized Allocation, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) The Borrower shall furnish to the Association requests for replenishment of the Special Account at such intervals as the Association shall specify. On the basis of such requests, the Association shall withdraw from the Credit Account and deposit into the Special Account such amounts as shall be required to replenish the Special Account with amounts not exceeding the amount of payments made out of the Special Account for eligible - 16 - expenditures. Each such deposit shall be withdrawn by the Asso- ciation from the Credit Account under the respective Categories (1) through (3), and in the respective equivalent amounts, as shall have been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. 4. For each payment made by the Borrower out of the Special Account for which the Borrower requests replenishment pursuant to paragraph 3 (b) of this Schedule, the Borrower shall furnish to the Association, prior to or at the time of such request, such documents and other evidence as the Association shall reasonably request, showing that such payment was made for eligible expenditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into the Special Account shall be made by the Association when either of the following situations first arises: (i) the Association shall have determined that all further withdrawals should be made directly by the Borrower from the Credit Account in accordance with the provisions of paragraph (a) of Sec- tion 2.02 of this Agreement; or (ii) when the total unwithdrawn amount of the Credit allocated to Categories (1) through (3) for the Project, minus the amount of any outstanding qualified agreement to reimburse made by the Association and of any outstanding special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions with respect to the Project, shall be equal to the equivalent of twice the amount of the Authorized Allocation. (b) Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to Catego- ries (1) through (3) for the Project shall follow such procedures as the Association shall specify by notice to .the Borrower. Such further withdrawals shall be made only after and to the extent that the Association shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice have been or will be utilized in making payments for eligible expenditures. - 17 - 6. (a) If the Association shall have determined at any time that any payment out of the Special Account: (i) was made for any expenditure or in any amount not eligible pursuant to paragraph 2 of this Schedule, or (ii) was not justified by the evidence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Association, deposit into the Special Account (or, if the Association 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. No furtner deposit by the Association into the Special Account shall be made until the Borrower has made such deposit or refund. (b) 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 eligible expenditures, the Borrower shall, promptly upon notice from the Association, refund to the Association such outstanding amount for crediting to the Credit Account. 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/ I , 198F C FOR SECRETARY