Somalia - Livestock Health Services Project : Credit 1647 - Credit Agreement - Conformed

CREDIT NUMBER 1647 SO Development Credit Agreement (Livestock Health Services Project) between SOMALI DEMOCRATIC REPUBLIC and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1986 CREDIT NUMBER 1647 SO DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated - A, 1986, between the SOMALI DEMOCRATIC REPUBLIC (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) the Borrower intends to contract from International Fund for Agricultural Development (the Fund) a loan (the Fund Loan) in ao amount equivalent to five million nine hundred thousand Special Drawing Rights (SDR 5,900,000) to assist in financing the lroject on the terms and conditions set forth in an agreement (the Fund Loan Agreement) to be entered into between the Borrower &ad the Fund; (C) the Fund intends to appoint the Association as Cooperating Institution to administer the Fund Loan and the Association is prepared to accept such appointment; and WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, to extend the Credit to the Borrower upon the terms and conditions set forth in this Agreement; 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 with the last sentence of Section 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) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; -2- (b) "MLFR" means the Borrower's Ministry of Livestock, Forestry and Range; (c) "PMU" means the Project Management Unit; (d) "AHD" means the Animal Health Department in MLFR; (e) "Project Area" means the administrative regions of Galbeed, Awdal and Togdheer in northwest Somalia; and (f) "Project Preparation Advance" means the project preparation advance granted by the Association to the Borrower pursuant to an exchange of letters dated November 2, 1985 and December 24, 1985 between the Borrower and the Association. 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 one hundred thousand Special Drawing Rights (SDR 4,100,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule I to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Association, 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 described in Schedule 2 to this Agreement 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 dollars a Special Account in its Central 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 5 to this Agreement. (c) Promptly after the Effective Date, the Association shall, on behalf of the Borrower, withdraw from the Credit -3- Account and pay to itself the amount required to repay the principal amount of the Project Preparation Advance withdrawn and outstanding as of such date and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amount of the Project Preparation Advance shall thereupon be cancelled. Section 2.03. The Closing Date shall be June 30, 1993 or such later date as the Association shall establish. The Associa- tion 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 with- drawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agree- ment to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without restrictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. 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 1 and November 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each May 1 and November 1 commencing 'May 1, 1996 and ending November 1, 2035. Each installment to and including the installment payable on November 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 United States of America is hereby specified for the purposes of Section 4.02 of the Geneial Conditions. -4- ARTICLE III Execution of the Project Section 3.01. The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement and, to this end, shall carry out the Project through its MLFR with due diligence and efficiency and in conformity with appropriate animal health, scientific and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. Section 3.02. (a) Except as the Association shall otherwise agree, procurement of consultants' services required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agreement. (b) In order to assist the Borrower in carrying out the Project, the Borrower shall employ veterinary, agricultural and other consultants whose qualifications, experience and ter-as and conditions of employment shall be satisfactory to the Associa- tion. Section 3.03. Without limitation upon its obigations under Section 3.01 of this Agreement, the Borrower shall, for the purposes of the Project, open and thereafter maintain in the Central Bank of Somalia, a Project Account, depositing in such account an initial amount of Somali Shillings two million five hundred thousand and replenishing such account quarterly thereafter so as to maintain it at that level or such other level as the Association may reasonably request until completion of the Project. Section 3.04. (a) The Borrower shall establish and there- after maintain until the completion of the Project, a Proje,t Management Unit located at Hargeisa to be responsible for: (i) planning in detail and implementing a program of disease investi- gation and livestock health services planning leading to the formulation of a Disease Control Program in the Project Area; (ii) subsequent implementation of the Disease Control Program; (iii) drawing up plans for monitoring and evaluation of the Disease Control Program; (iv) establishing and maintaining a data base covering epidemiological, economic and other information on -5- disease investigation and livestock health services planning; and (v) planning and implementing project-related training programs. (b) PMU shall be headed by a Project Director whose quali- fications and experience shall be satisfactory to the Associa- tion. Section 3.05. The Borrower shall cause PMU to submit to the Association not later than September 30, 1989 a Report on its Disease Investigation and Livestock Health Services Planning activities. The Report shall cover subject matters and contain proposals specified in Schedule 4 to this Agreement. Section 3.06. The Borrower shall cause PMU to (a) submit to the Association not later than November 30, 1986 for review and comments a plan of action for the organization and involvement of livestock owners and traders in the Project Area in the execution of the Project; and (b) implement such plan of action taking into account the Association's views. Section 3.07. The Borrower shall cause PMU to submit to the Association quarterly progress reports in a format acceptable to the Association. Section 3.08. The Borrower shall cause PMU (a) not later than November 1 of each year to submit to the Association for its review and approval the detailed Annual Work Plan and Budget showing for each subsequent year details on work to be performed, a schedule of activities, equipment requirement, staff deploy- ment, training plans, capital and recurrent expenditures and a financing plan with cash flow projections; and (b) implement such Work Plan taking into account the Association's views. Section 3.09. (a) The Borrower shall establish a Project Committee within MLFR to be headed by either the Minister, Vice Minister or the Permanent Secretary of MLFR and whose other members shall include the Director of AHD and representatives from the Planning, Resear,:h and Training Department of MLFR, the National Range Agency, and other appropriate Agencies. (b) The Project Committee shall be responsible for supervising and monitoring PMU in Project implementation and shall review the quarterly progress reports prepared by PMU. - 6 - Section 3.10. (a) The Borrower shall, not later than September 30, 1986, establish an Inter-Regional Committee, headed by one of the Governors in the Project Area with the Project Director as the Committee's Secretary, and whose other members shall be the regional representatives of the National Range Agency, a representative of the Animal Production Department, MLFR, AHD's Regional Veterinary Officers in the Project Area, the Technical Director of PMU, and represenLatives of livestock owners and traders. (b) The Inter-Regional Committee shall be responsible for securing the cooperation of other government and non-government institutions represented in the Project Area in executing the Project. Section 3.11. The Borrower shall: (a) not later than December 31, 1989, carry out in consultation with the Association a Mid-Term Review of the progress of the Project taking into account the Report submitted to the Association pursuant to Section 3.05 of this Agreement; (b) formulate a detailed plan, including objectives, activities, costs and institutional arrangements for the implementation of a Disease CGntrol Program; and (c) implement the Disease Control Program as recommended under (b) above. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. (b) The Borrower shall: (i) have the accounts referred to in paragraph (a) of this Section including the Special Account for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; -7- (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 copy of 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 the said accounts and 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 from the Credit Account were made on the basis of statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, separate records and accounts reflecting such expenditures; (ii) retain, until at least one year after the completion of the audit for the fiscal year in which the last withdrawal from the Credit 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 are included in the annual audit referred to in paragraph (b) of this Section and that the report thereof contains, in respect of such separate accounts, a separate opinion by said auditors as to whether the proceeds of the Credit withdrawn in respect of such expenditures were used for the purposes for which they were provided. ARTICLE V Remedies of the Association Section 5.01. (a) Pursuant to Section 6.02 (h) of the General Conditions, the following additional event is specified, -8- namely, that subject to paragraph (b) of this Section: (i) the right of the Borrower to withdraw the proceeds of any 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 (ii) any such loan shall have become due and payable prior to the agreed maturity thereof. (b) Paragraph (a) of this Section shall not apply if the Borrower establishes to the satisfaction of the Association that: (i) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obligations under such agreement; and (ii) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement, Section 5.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional event is specified, namely, that the event specified in paragraph (a) (ii) of Section 5.01 of this Agreement shall occur, subject to the proviso of para- graph (b) of that Section. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as addi- tional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the Association shall have received satisfactory evidence that the Borrower has (i) established PMU in a manner specified in Section 3.04 (a) of this Agreement; (ii) appointed the Project Director referred to in Section 3.04 (b) of this Agreement; and (iii) entered into contractual agreement(s) for the employment of at least six consultants under the Project; (b) the Borrower shall have established the Project Committee as specified in Section 3.09 of this Agreement; - 9 - (c) the Borrower shall have opened a Project Account in the manner specified in Section 3.03 of this Agreement; (d) the Association shall have received satisfactory evidence that land has been allocated for the construction of the central laboratory and for housing for consultants; and (e) all conditions precedent to the effectiveness of the Fund Loan (other than the effectiveness of this Agreement) have been fulfilled. Section 6.02. The date one hundred fifty (150) days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Minister of the Borrower at the time responsible for Finance is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministry of Finance Government of Somali Democratic Republic Mogadishu Somalia Cable address: Telex: MINFIN 612 MINFIN Mogadishu Mogadishu For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America - 10 - 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. SOMALI DEMOCRATIC REPUBLIC By jt5ll tl Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By v Regional Vice President Eastern and Southern 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' 3,660,000 100% of foreign services under expenditures Part A of the Project (2) Training under 75,000 100% of foreign Part A of the expenditures Project (3) Refunding of 190,000 Amount due under Project Prepara- Section 2.02 (c) tion Advance of this Agreement (4) Unallocated 175,000 TOTAL 4,100,000 2. For the purposes of this Schedule, the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement. - 12 - SCHEDULE 2 Description of the Project The objectives of the Project are to assist the Borrower in establishing a comprehensive and economically justifiable Animal Disease Control Program in the Project Area, to test such a Program on an operational scale and to contribute towards the long-term reduction of economic losses in the livestock sector. 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: Disease Investigation and Livestock Health Services Planning 1. Laboratory Services Strengthening of AHD's veterinary laboratory services in the Project Area through: (a) the provision of a central laboratory at Hargeisa; (b) the rehabilitation of the laboratory at Burao; (c) financing of incremental local staff and other recurrent costs of laboratory services; and (d) the provision of technical assistance. 2. Field Services and Disease Investigations Strengthening of AHD's planning capability and ability to carry out veterinary disease investigations through the provision of: (a) vehicles; (b) equipment; (c) supplies (including drugs); (d) the strengthening of a limited number of veterinary field facilities; (e) financing of incremental staff costs; and (f) the provision of technical assistance. 3. Training Provision of overseas and local training to MLFR staff in veterinary science, economics, epidemiology and animal health planning. 4. Project Management Unit Provision of: (a) housing for internationally recruited experts; (b) offices and office equipment; (c) furniture; - 13 - (d) vehicles; (e) incremental local salaries for PMU staff; and (f) technical assistance, Part B: Disease Control Program The implementation of a Disease Control Program consisting of the strengthening of veterinary field services through the provision of vehicles and equipment, rehabilitation of veterinary field office buildings, technical assistance and financial support for the establishment of private sector, veterinary and drug distribution services, all to be carried out following the mid-term review. The Project is expected to be completed by December 31, 1992. - 14 - SCHEDULE 3 Employment of Consultants In order to assist the Borrower in carrying out the Project, the Borrower shall employ veterinary, agricultural and other consultants whose qualifications, experience and terms and condi- tions of employment shall be satisfactory to the Association. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Association on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. - 15 - SCHEDULE 4 The Report to be submitted to the Association pursuant to Section 3.05 of this Agreement shall cover subject matters and contain proposals for the following: (i) identification of animal diseases causing major economic losses to the sector, i.e. negative impacts on livestock production, incomes to live- stock owners and export earnings to the country; (ii) recommendations for cost effective delivery systems for veterinary services including drugs for controlling economically important diseases and for monitoring and evaluating the implementa- tion of such systems; (iii) proposals for an appropriate allocation of responsibilities between the public and private sector, including the livestock owners themselves, for implementing proposed delivery systems; (iv) preparation of a public investment program, including detailed cost estimates, to support AHD and private sector agents in the form of facilities, equipment, supplies, drugs, training, technical assistance and financial resources to enable them to implement the disease control strategy, identified under (ii) above; (v) recommendations for an appropriate system of cost recovery, given the public sector expenditure program proposed in (iv) above; (vi) recommendations for an appropriate organizational structure and staffing of AHD's veterinary services in the project area; and (vii) an economic and financial analysis of the invest- ment program proposed under (iv) above. - 16 - SCHEDULE 5 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1) and (2) 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 accor- dance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to US$50,000 to be withdrawn from the Credit Account and deposited in the Special Account pursuant to paragraph 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 expenditures. All such deposits shall be withdrawn by the - 17 - Association 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 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 expen- ditures. 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 accor- dance 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 Autborized 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 Associa- tion 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 - 18 - 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 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 Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the -Lday of 198 . FOR SECRETARY