Rwanda - Fourth BRD Project : Credit 1650 - Project Agreement - Conformed

CREDIT NUMBER 1650 RW Project Agreement (Fourth BRD Project) between INTERNATIONAL DEVELOIMENT ASSOCIATION and BANQUE RWANDAISE DE DEVELOPPEMENT Dated , 1986 CREDIT NUMBER 1650 RW PROJECT AGREEMENT AGREEMENT, dated e40Maco t) , 1986, between the INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and BANQUE RWANDAISE DE DEVELOPPEMENT (BRD). WHEREAS (A) by the Development Credit Agreement of even date herewith between the Rwandese Republic (the Borrower) and the Association, the Association has agreed to lend to the Borrower an amount in various currencies equivalent to eight million five hundred thousand Special Drawing Rights (SDR 8,500,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that BRD agree to undertake such obligations toward the Association as are set forth in this Agreement; and (B) by a Subsidiary Loan Agreement to be entered into between tae Borrower and BRD, the proceeds of the credit provided for under the Development Credit Agreement will be made available to BRD on the terms and conditions set forth in said Subsidiary Loan Agreement; and WHEREAS BRD, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations set forth in this Agreement; NOW THEREFORE-the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project; Management and Operations of BRD Section 2.01. BRD declares its commitment to the objec- tives of the Project as set forth in Section 3.01 (a) of the -2- Development Credit Agreement and, to this end, shall carry out the Project and conduct its operations and affairs with due dili- gence and efficiency, in conformity with appropriate economic, financial and investment standards and practices, with qualified and experienced management and in accordance with its Statutes and Statement of Policy, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the Project. Section 2.02. (a) In accordance with and subject to the provisions of the Development Credit Agreement, BRD shall submit Investment Projects to the Association for approval or for autho- rization for withdrawals to be made from the Credit Account or for payments to be made out of the Special Account. (b) When presenting a Sub-loan (other than a free-limit Sub-loan), or an Investment, to the Association for approval, BRD shall furnish to the Association an application, in form satis- factory to the Association, together with a description of the Investment Enterprise and an appraisal of the Investment Project (such appraisal to include a calculation of the internal finan- cial rate of return and in cases of non-service sector Investment Projects above the free-limit stipulated in Section 2.02 (b) of the Credit Agreement, an evaluation of the economic rate of return in accordance with guidelines acceptable to the Associa- tion), a description of the expenditures proposed to be financed out of the proceeds of the Credit, the proposed terms and condi- tions of the Sub-loan or Investment, including the schedule of amortization of the Sub-loan, and such other information as the Association shall reasonably request. (c) Each request by BRD for authorization to make with- drawals from the Credit Account or payments out of the Special Account in respect of a free-limit Sub-loan shall contain: (i) a summary description of the Investment Enterprise and the Invest- ment Project, including a description of the expenditures pro- posed to be financed out of the proceeds of the Credit; and (ii) the terms and conditions of the Sub-loan, including the schedule of amortization therefor. (d) Except as the Association and BRD shall otherwise agree, applications and requests made pursuant to the provisions of paragraphs (b) or (c) of this Section shall be presented to the Association on or before December 31, 1988. - 3 - Section 2.03. (a) BRD undertakes that unless the Association shall otherwise agree, any Sub-loan or Investment will be made on terms whereby BRD shall obtain, by written agreement or other appropriate legal means, rights adequate to protect the interests of the Association and of BRD, including, in the case of any such Sub-loan and to the extent that it shall be appropriate in the case of any such Investment, the rights set forth in the Schedule to this Agreement. (b) BRD shall exercise its rights in relation to each Investment Project in such manner as to (i) protect the interests of the Association and those of BRD; (ii) comply with its obliga- tions under this Agreement and the Subsidiary Loan Agreement; and (iii) achieve the purposes of the Project. Section 2.04. During execution of the Project, BRD shall annually review with the Association the interest rates charged by -BRD in its lending operations and shall make such adjustments therein as shall be required to maintain positive rates in real terms and to ensure a spread sufficient to maintain the financial soundness of BRD. Section 2.05. BRD shall carry out the obligations set forth 4a Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition) in respect of the Project Agreement. Section 2.06. BRD shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, BRD shall not take or concur in any action which would have the effect of assigning, amending, abrogating or waiving the Subsidiary Loan Agreement or any provision thereof. Section 2.07. (a) BRD shall, at the request of the Asso- ciation, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement and under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Credit. (b) BRD shall furnish to the Association all such informa- tion as the Association shall reasonably request concerning the -4- expenditure of the proceeds of the Sub-loans, the Investments, the Project, the Investment Enterprises, the Investment Projects, and the administration, operations and financial condition of BRD. (c) BRD shall promptly inform the Association of any condi- tion which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Credit, or the performance by BRD of its obligations under this Agreement and under the Subsidiary Loan Agreement. Section 2.08. BRD shall duly perform all its obligations in agreements under which funds have been lent or otherwise put at the disposal of BRD by the Borrower or its agencies or others for relending, investment or management. BRD shall promptly inform the Association of any action which would have the effect of assigning, or of amending, abrogating or waiving any material provision of, any such agreement. Section 2.09. BRD shall cause each of its Subsidiaries (if any) to observe and perform the obligations of BRD under this Agreement to the extent to which such obligations may be made applicable thereto as though such obligations were binding upon each of such Subsidiaries. Section 2.10. BRD shall not amend its Statement of Policy except in agreement with the Association and shall exchange views with the Association on any proposal to modify its Statutes. Section 2.,*1. Except as the Association and BRD shall other- wise agree, BRD: (i) shall not sell, lease, transfer or otherwise dispose of any of its property or assets, except in the ordinary course of business; and (ii) shall take all action necessary to maintain its corporate existence and right to carry on its opera- tions and to acquire, maintain and renew all rights, powers, privileges and franchises necessary or useful in the conduct of its business. Section 2.12. BRD shall not participate in the financing of any Investment Project with a projected economic rate of return of less than 10%. -5- Article III Financial Covenants Section 3.01. (a) BRD shall maintain procedures and records adequate to monitor and record the progress of the Project and of each Investment Project (including its cost and the benefits to be derived from it) and to reflect in accordance with consis- tently maintained sound accounting practices the operations and financial condition of BRD and shall enable the Association's representatives to examine such records. (b) BRD shall: (i) have its accounts and financial statements (balance sheets, statements of income and ex- penses and related statements), including the Special Account, audited for each fiscal year in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association, as soon as available but in any case not later than six 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 have reasonably requested; and (iii) furnish to the Association such other information concerning said accounts and financial statements as well as the audit thereof and said records as the Association shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals are made from the Credit Account or payments are made out of the Special Account on the basis of statements of expenditure, BRD shall: (i) maintain, in accordance with paragraph (a) of this Section, separate records and accounts reflecting such expenditures; - 6 (ii) retain, until one year after the Association has received the audit report for the fiscal year in which the last withdrawal from the Credit Account or last payment out of the Special Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Association's representatives to examine such records; and (iv) ensure that such separate accounts be included in the annual audit referred to in paragraph (b) of this Section and that the report thereof contain, in respect of such separate accounts, a separate opinion by the said auditors as to whether the proceeds of the Credit withdrawn in respect of such expenditures have been used for the purpose for which they were provided. Section 3.02. (a) Except as the Association shall otherwise agree, BRD shall not incur or permit any Subsidiary to incur any debt if, after the incurring of such debt, the consolidated debt of BRD and all its Subsidiaries then incurred and outstanding would exceed three times the consolidated capital and surplus of BRD and all its Subsidiaries. (b) For the purposes of this Section: (i) The term "debt" means any debt incurred by BRD or any Subsidiary maturing more than one year after the date on which it is originally incurred, including debt assumed or guaranteed by BRD or by a Subsidiary. (ii) Debt shall be deemed to be incurred: (A) under a loan contract or agreement or other instrument providing for such debt or for the modification of its terms of payment, on the date, and to the extent, the amount of such debt has become out- standing pursuant to such contract, agreement or instrument; and (B) under a guarantee agreement, on the date the agreement providing for such guarantee has been entered into but only to the extent the guaranteed debt is outstanding. -7- (iii) The term "consolidated debt of BRD and Lii its Subsidiaries" means the total amount of debt of BRD and all its Subsidiaries excluding: (A) debt owed by BRD to any Subsidiary or by any Subsidiary to BRD or to any other Subsidiary; and (B) debt referred to in sub-paragraph (iv) (B) and (C) of this Section. (iv) The term "consolidated capital and surplus of BRD and all its Subsidiaries" means the aggregate of (A) the total unimpaired paid-in-capital, sur- plus and free reserves of BRD and of all its Sub- sidiaries after excluding therefrom such amounts as shall represent equity interests of BRD in any Subsidiary, or of any such Subsidiary in BRD or in any other Subsidiary, (B) the amount of the BRD Loans and (C) such amount of any other loan which the Association may determine to be included in the consolidated capital and surplus of BRD. (v) Whenever for purposes of this Section it shall be necessary to value in terms of BRD's debt payable in another currency, such valuation shall be made on the basis of the prevailing lawful rate of exchange at which such other currency is, at the time of such valuation, obtainable for the pur- poses of servicing such debt or, in the absence of such rate, on the basis of a rate of exchange acceptable to the Association. Section 3.03. Except as the Association shall otherwise agree, BRD shall not make any repayment in advance of maturity in respect of any of its debt which, in the judgment of the Associa- tion, would materially affect BRD's ability to meet its financial obligations. Section 3.04. BRD shall take such steps satisfactory to the Association as shall be necessary to protect itself against risk of loss resulting from changes in the rates of exchange between the various currencies (including Rwandese francs) used in its operations. Section 3.05. BRD shall take all measures necessary to ensure that it will progressively reach and maintain a collection ratio of 100%, specifically by reaching at least 95% in 1985, -8- 100% in 1986, 102% in 1987 and 105% in 1988 and thereafter, such ratios to be calculated on a quarterly basis by relating the total amount of payments on BRD's portfolio collected (including payments in arrears) during any such quarter to the total amount falling due during such quarter. ARTICLE IV Effective Date; Termination Cancellation and Suspension Section 4.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 4.02. (a) This Agreement and all obligations of the Association and of BRD thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate; or (ii) a date sixteen years after the date of this Agree- ment. (b) If the Development Credit Agreement terminates before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify BRD of this event. Section 4.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancella- tion or suspension under the General Conditions. ARTICLE V Miscellaneous Provisions Section 5.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, k:elex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter -9- specified or at such other addresses as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For the 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) For BRD: Banque Rwandaise de Dveloppement Botte Postale 1341 Kigali Rwanda Cable address Telex: Banque Rwandaise de 563 DEVELBANK D6veloppement Kigali Section 5.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of BRD or by BRD on behalf of the Borrower under the Development Credit Agreement, may be taken or executed by its Director General, or by such other person or persons as BRD shall designate in writing, and BRD shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 5.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. - 10 - 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. INTERNATIONAL DEVELOPMENT ASSOCIATION By By *Sg egional Vice President Eastern and Southern Africa BANQUE RWANDAISE DE DEVELOPPEMENT IS/ By Authorized Representative - 11 - SCHEDULE Terms and Conditions of Sub-loans and Investments 1. Except as the Association shall otherwise agree, BRD shall obtain, inter alia, in respect of Sub-loans, and to the extent appropriate, of Investments, the right to: (a) require the Investment Enterprise to carry out and operate the Investment Project with due diligence and efficiency and in accordance with sound technical, financial and managerial standards and to maintain adequate records; (b) require that: (i) the goods and services to be financed out of the proceeds of the Credit made available to BRD be pur- chased at a reasonable price, account being taken also of other relevant factors such as time of delivery and efficiency and reliability of the goods and availability of maintenance facili- ties and spare parts therefor, and, in the case of services, of their quality and the competence of the parties rendering them; and (ii) such goods and services be used exclusively in the carrying out of the Investment Project; (c) inspect, by itself or jointly with representatives of the Association if the Association shall so request, such goods, works, plants and construction included in the Investment Project, the operation thereof, and any relevant records and documents; (d) require that: (i) the Investment Enterprise take out and maintain with responsible insurers such insurance, against such risks and in such amounts, as shall be consistent with sound business practice; and (ii) without any limitation upon the fore- going, such insurance cover hazards incident to the acquisition, transportation and delivery of goods financed out of the proceeds of the Credit to the place of use or installation, any indemnity thereunder to be made payable in a currency freely usable by the Investment Enterprise to replace or repair such goods; (e) obtain all such information as the Association or the Borrower shall reasonably request relating to the foregoing and to the administration, operations and financial condition of the Investment Enterprise and to the benefits to be derived from the Investment Project; and - 12 - (f) suspend or terminate the right of the Investment Enter- prise to the use of the proceeds of the Credit upon failure by such Investment Enterprise to perform its obligations under its contract with BRD. 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 30th day of January, 198 .. FOR SECRETARY