Conformed Copy - L2865 - Fourth Agricultural Credit Project - Guarantee Agreement

Page 1 CONFORMED COPY LOAN NUMBER 2865 TUN (Fourth Agricultural Credit Project) between REPUBLIC OF TUNISIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated July 22, 1987 GUARANTEE AGREEMENT AGREEMENT, dated July 22, 1987, between REPUBLIC OF TUNISIA (the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). WHEREAS (A) the Guarantor hereby declares its commitment to the execution of the program (the Program) referred to in Recital (A) of the Preamble to the loan agreement (the Loan Agreement) of even date herewith between the Bank and the National Bank of Tunisia (the Borrower); (B) the Guarantor and the Borrower, having been satisfied as to the feasibility and priority of the Project described in Schedule 2 to the Loan Agreement, have requested the Bank to assist in the financing of the Project; (C) by the Loan Agreement, the Bank has agreed to extend to the Borrower a loan in various currencies equivalent to thirty million dollars ($30,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guarantor agree to guarantee the obligations of the Borrower in respect of such loan and to undertake such other obligations as provided in this Agreement; and WHEREAS the Guarantor, in consideration of the Bank's support Page 2 of the Program and entering into the Loan Agreement with the Bor- rower, has agreed so to guarantee such obligations of the Borrower; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Loan and Guarantee Agreements" of the Bank, dated January 1, 1985, with the modifications set forth in Section 1.01 of the Loan Agreement (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 and Section 1.02 of the Loan Agreement have the respective meanings therein set forth. ARTICLE II Guarantee; Provision of Funds Section 2.01. The Guarantor declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Loan Agreement, and, to this end, without limitation or restriction upon any of its other obligations under the Guarantee Agreement, hereby unconditionally guarantees, as primary obligor and not as surety merely, the due and punctual payment of the principal of, and interest and other charges on, the Loan, and the premium, if any, on the prepayment of the Loan, and the punctual performance of all the other obligations of the Borrower, all as set forth in the Loan Agreement. Section 2.02. Without limitation or restriction upon the provisions of Section 2.01 of this Agreement, the Guarantor speci- fically undertakes, whenever there is reasonable cause to believe that the funds available to the Borrower will be inadequate to meet the estimated expenditures required for the carrying out of the Project, to make arrangements, satisfactory to the Bank, promptly to provide the Borrower or cause the Borrower to be pro- vided with such funds as are needed to meet such expenditures. ARTICLE III Other Covenants Section 3.01. The Guarantor shall make available, without charge to the Borrower: (a) through its Ministries of Agriculture and of Agricultural Production and Agroprocessing, all such support as the Borrower may request for the purposes of facilitating the proper planning, appraisal and execution of Investment Projects; and (b) through its Ministry of Planning and Finance, all such national, regional and local support as the Borrower may request for the purposes of stimulating and increasing collections of Sub-loans. Section 3.02. The Guarantor shall: (a) cause its National Guarantee Fund to underwrite credit risk on Sub-loans made by the Borrower to small operators; (b) continue to pay to the Borrower, by December 31 of each year, amounts equal to: (i) the difference between the interest and other charges paid by the Borrower to the Bank on the proceeds of the Loan utilized by the Borrower in the making of Sub-loans, and the interest received by the Borrower on such Sub-loans; and (ii) the exchange rate losses incurred by the Borrower on the Loan between the moment of withdrawal from the Loan Account and of repayment of, and payment of interest and other charges on, the Loan to the Bank; and Page 3 (c) each year, in accordance with the Program: (i) cause agricultural interest rates to be adjusted in consultation with the Bank, so that not later than 1991, agricultural interest rates shall equal at least market rates; and (ii) continue to reduce its budgetary allocations to agricultural credit financing. Section 3.03. In order to facilitate the proper coordination of the execution of the Program, the Guarantor shall not later than December 31, 1987 establish and thereafter maintain an Agricultural Credit Coordinating Committee with a membership of officials involved in agricultural credit, and with a mandate to make recommendations to the competent authorities and to monitor the application of agricultural credit reforms, especially the harmonization of terms and conditions of credit, the financial viability of credit operations, recovery discipline, and assistance to farmers who are not eligible for credit. Section 3.04. (a) The Guarantor and the Bank shall from time to time, at the request of either party, exchange views on the progress achieved in carrying out the Program. (b) Prior to each such exchange of views, the Guarantor shall furnish to the Bank for its review and comment a report on the progress achieved in carrying out the Program, in such detail as the Bank shall reasonably request. ARTICLE IV Representative of the Guarantor; Addresses Section 4.01. The Minister of Planning and Finance of the Guarantor is designated as representative of the Guarantor for the purposes of Section 11.03 of the General Conditions. Section 4.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Guarantor: Ministere du Plan et des Finances Place Ali Zouaoui Tunis Republic of Tunisia Telex: MIPLAN 15117 TUN For the Bank International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT), Washington, D.C. 248423 (RCA) or 64145 (WUI) 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 TUNISIA Page 4 By /s/ Hedi Gharbi Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Kemal Dervis Acting Regional Vice President Europe, Middle East and North Africa