Chad - Emergency Cotton Program : Credit 1716 - Credit Agreement - Conformed

OFFICIAL DOCUMENTS CREDIT NUMBER 1716 CD * Development Credit Agreement (Emergency Cotton Program) between REPUBLIC OF CHAD and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1986 CREDIT NUMBER 1716 CD DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated , 1986, between REPUBLIC OF CHAD (the Borr r) INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS (A) the Association has received a letter of sector policies dated May 21, 1986 from the Borrower describing a program of actions, objectives and policies designed to achieve an Emergency Rehabilitation Program of the Borrower's cotton sector (hereinafter called the Program), declaring the Borrower's commitment to the execution of the Program, and to the fea- sibility and priority of the Project described in Schedule 2 to this Agreement (hereinafter called the Project), and requesting assistance from the Association in the financing of urgently needed goods and services required during such execution; (B) the Project will be carried out by COTONTCHAD with the Borrower's assistance and, as part of such assistance, the Borrower will make available,to COTONTCHAD the pzoceeds of the Credit as provided in this Agreement; (C) the Borrower intends to contract from Caisse Centrale de Cooperation Economique (CCCE) two loans (the CCCE Loans) in an aggregate amount of FF 112,000,000 to assist in financing part of the Project on the terms and conditions set forth in the agreements to be entered into between the Borrower and CCCE; (D) the Borrower intends to contract from European Development Fund (EDF) a grant in an amount of ECU 5,000,000 under EDF V, and a grant in an amount of about ECU 18,000,000 under STABEX 1986 and 1987 (the EDF Grants) to assist in financing part of the Project on the terms and conditions set forth in the financing conventions to be entered into between the Borro,4 - and EDF; (E) the Borrower intends to .contract from Fonds d'Aide et de Coopfration (FAC) a grant (the FAC Grant) in an amount of about FF 4,640,000 to assist in financing part of the Project on the terms and conditions set forth in a convention to be entered into between the Borrower and FAC; (F) the Borrower intends to contract from The Netherlands (Netherlands) a grant (the Netherlands Grant) in an amount of Dutch Guilders 6,000,000 to assist in financing part of the if-2- Project on the terms and conditions set forth in an agreement (the Netherlands Grant Agreement) to be entered into between the Borrower and Netherlands; and (G) on the basis, inter alia, of the foregoing, the Asso- ciation has decided in support of the Project to provide such assistance to the Borrower by making the Credit upon the terms and conditions set forth in this Agreement and in the Project Agreement of even date herewith between the Bank and COTONTCHAD; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitiois Section 1.01. The "General Conitions Applicable to Develop- ment Credit Agreements" of the Association, dated January 1, 1985, with the last sentence of Secition 3.02 deleted (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 COTONTCHAD of even date herewith, as the same may be amended from time to time, and such term includes all schedules and agreements supplen.....tal to the Project Agreement; (b) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (c) "BTCD" means the Banque Tchadienne de Credit et de Depot; (d) "CFAF" means the currency of the Borrower; (e) "COTONTCHAD" means Societe Cotonniere du Tchad, a company established and operating under the laws of the Borrower and registered in the Registre du Commerce of the Borrower with number 12/B/72 on November 1, 1971; -3- (f) "Fiscal Year"' means COTONTCHAD's fiscal year starting November 1 and ending October 31; \(g) "IRCT" means Institut de Recherche sur le Coton et les Texttles exotiques; and ) "ONDR" means Office National de Developpement Rural. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Bor- rower, on the terms and conditions set forth or referced to in the Development Credit Agreement, an amount in various curren- cies equivalent to twelve million eight hundred thousand Special Drawing Rights (SDR 12,800,000). 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 CFAF a special account in BTCD 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 4 to this Agreement. Section 2.03. The, Closing Date shall be April 30, 1989 or such later date as the Association shall establish. The Association shall promptly notify the Borrower 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 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. 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 May 15 and November 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each May 15 and November 15 commencing November 15, 1996, and ending May 15, 2036. Each installment to and including the installment payable on May 15, 2006, 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 Condi- tions. Section 2.09. (a) COTONTCHAD 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 COTONTCHAD with responsibility for the preparation of withdrawal applications under the Credit and for the collection of the documents and other evidence to be furnished to the Association in support of such applications; such withdrawal applications shall to the extent practicable be consolidated so as to apply for withdrawal of aggregate amounts of not less than $500,000 equivalent. -5- 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 restric- tion upon any of its other obligations under the Development Credit Agreement, shall cause COTONTCHAD to perform in accordance with the provisions of the Project Agreement all the obligations of COTONTCHAD therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, ser- vices and other resources, necessary or appropriate to enable COTONTCHAD 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 upon the provisions of paragraph (a) of this Section, the Borrower shall make the proceeds of the Credit available to COTONTCHAD on a grant basis. Section 3.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of the Sched- ule 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 goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) shall be carried out by COTONTCHAD pursuant to Section 2.03 of the Project Agreement. Section 3.04. (a) The Borrower,, COTONTCHAD and the Association shall from time to time, at the request of either party, exchange views on the progress achieved in carrying out the Program and the Project and the actions specified in Sched- ule 4 to this Agreement. (b) Prior to each such exchange of views, the Borrower and COTONTCHAD shall furnish to the Association for its review and comment a report on the progress achieved in carrying out the Program and the Project, in such detail as the Association shall reasonably request. -6- Section 3.05. The Borrower shall recruit a Project Coordinator in accordance with procedures satisfactory to the Association, including international advertising, to exercise overall coordination in the carrying out of the Program and the Project and to report directly to COTONTCHAD's Director General, with responsibilities and powers satisFactory to the Association. 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) COTONTCHAD 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 COTONTCHAD will be able to perform its obligations under the Project Agreement. (c) Decree No. 631/PR/MEC/85 of -September 12, 1985 of the Borrower shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of COTONTCHAD 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 COTONTCHAD or for the suspension of its operations. (e) An event has occurred which shall make it improbable that the Program, or any significant part thereof, will be carried out. 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; and -7- (b) the events specified in paragraphs (c) and (d) of Section 4.01 of this Agreement shall occur. ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the Project Coordinator referred to under Section 3.05 of this Agreement has been selected, with qualification and experience satisfactory to the Association; and (b) COTONTCHAD's Financial Director and Chief Accountant have been selected, with qualifications and experiences satis- factory to the Association. Section 5.02. The following is specified as an 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, that the Project Agreement has been duly authorized or ratified by COTONTCHAD, and is legally binding upon COTONTCHAD in accordance with its terms. Section 5.03. The date sixty (60) days, after the date of this Agreement is hereby specified for the purposes of Sec- tion 12.04 of the General Conditions. ARTICLE VI Representative of the Borrower; Addresses Section 6,01. Except as provided in Section 2.09 of this Agreement, the Minister of the Borrower in charge of planning 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: Ministry of Planning N'Dj amena Republic of Chad -8- Cable address: Telex: MINPLAN 5201 KD N'Djamena 5307 KD For the Association: International De\velopment 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 CHAD By /S A A,& 4ctt Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION ByjAJ/>(P.7 O&J Regional Vice President Western Africa -9- 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 amovints of the Credit to each Category and the percentage of expenditures for items so to be financed in ea>h Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) Spare parts 1r190,000 70% (2) Agricultural 3,790,000 100% Inputs (3) Products petroleum 5,920,000 85% (4) Consultants' 710,000 100% services and technical assistance (5) Unallocated 1,190,000 TOTAL 12,800,000 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, except that withdrawals, in an aggregate amount not exceeding the equivalent of SDR 500,000, may be made on account of payments made for expenditures under Category (4) before that date but after June 1, 1986; and (b) no withdrawal shall be made and no commitment shall be entered into to pay amounts to the Borrower, COTONTCHAD or others in respect of expenditures to be financed out of the proceeds of - 10 - the Credit after the aggregate of the proceeds of the Credit withdrawn from the CredAt Account and the total amount of such commitments shall have ;eached the equivalent of SDR 8,510,000, unless the Association 3hall be satisfied, after an exchange of views as described in Section 3.04 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 3 to this Agreement have been taken, and are satisfactory to it. SCHEDULE 2 Description of the Project The objective of the Project is to assist the Borrower in implementing its Emergency Rehabilitation Program for the cotton sector, as described in the letter of sector policies, through the improvement of COTONTCHAD's administrative, financial and accounting management. 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: COTONTCHAD's Input Program Acquisition of spare parts, agricultural inputs and petro- leum products. Part B: Strengthening of COTONTCHAD's Management Upgrading COTONTCHAD's management and financial control through the preparation of detailed external audits, the employ- ment of a Project Coordinator, the training of management and financial staff, and studies to design a medium-term and long- term restructuring and development program. Part C: Support of the Cotton Sector Institutional strengthening for extension services (ONDR) and research activities (IRCT). The Project is expected to be completed by October 30, 1988. - 12 - SCHEDULE 3 Actions Referred to in Paragraph 2 (b) of Schedule 1 to this Agreement I. Completion of an audit of COTONTCHAD's accounts for Fiscal Year 1985-86. II. The Borrower has abolished subsidies on farm inputs for cotton production. III. Completion of the reorganization of COTONTCHAD's finan- cial and accounting operations and staffing, satisfac- tory to the Association. IV. All necessary measures have been taken by the Borrower to rationalize the number of cotton ginneries. V. The Borrower and COTONTCHAD have presented an amortiza- tion schedule for all outstanding payments of interest and principle on loans, satisfactory to the Association. - 13 - SCHEDULE 4 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1) through (4) 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 the eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to CFAF 720,000,000 to be withdrawn from the Credit Account and deposited in the Special Account pursuant to para- graph 3 (a) of this Schedule. 2. Except 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 it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals 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 - 14 - expenditures. All such deposits shall be withdrawn by the Asso- ciation from the Credit Account under the respective eligible Categories, 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 Borrover shall furnish to the Association, prior to or at the time of such request, such 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 Section 2.02 of this Agreement; or (ii) the total unwithdrawn amount of the Credit allo- cated to the eligible Categories, minus the amount 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 the eligible Categories 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. 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 - 15 - 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 further 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 International Development Association. FOR SECRETARY