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

Page 1 CONFORMED COPY LOAN NUMBER 2865 TUN (Fourth Agricultural Credit Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and NATIONAL BANK OF TUNISIA Dated July 22, 1987 LOAN AGREEMENT AGREEMENT, dated July 22, 1987, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) and NATIONAL BANK OF TUNISIA (the Borrower). WHEREAS (A) the Bank has received a letter dated May 8, 1987 from the Republic of Tunisia (the Guarantor) describing a program of objectives, policies and actions designed to improve the system of agricultural credit within the Guarantor's territory (the Program); (B) the Guarantor and the Borrower, having been satisfied as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, have requested the Bank to assist in the financing of the Project; (C) by an agreement (the Guarantee Agreement) of even date herewith between the Guarantor and the Bank, the Guarantor has agreed to guarantee the obligations of the Borrower in respect of the Loan and to undertake such other obligations as set forth in the Guarantee Agreement; and WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to extend the Loan to the Borrower upon the terms and conditions set forth in this Agreement; Page 2 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 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) "Sub-loan" means a loan made or proposed to be made by the Borrower out of the proceeds of the Loan to a Sub-borrower for an Investment Project; (b) "Sub-borrower" means a farmer, a cooperative, an agricultural or agro-industrial enterprise or a fisherman to which the Borrower proposes to make or has made a Sub-loan; (c) "Investment Project" means a specific development proj- ect to be carried out by a Sub-borrower utilizing the proceeds of a Sub-loan; (d) "BNT Statutes" means the statutes of the Borrower of 1959, as amended to the date of this Agreement; (e) "BNT Statement of Policy" means the statement of medium- term development policy and objectives approved by the President Directeur General of the Borrower on March 24, 1987, as amended to the date of this Agreement; (f) "Computer Managing Committee" means the Committee to be established and maintained by the Borrower pursuant to Schedule 4, Part B (b) (i) of this Agreement; (g) "Special Account" means the account referred to in Sec- tion 2.02 (b) of this Agreement; (h) "small and medium farmer" means a farmer cultivating land that provides an annual pre-investment net return to such farmer and his or her family of D 2,500 or less, based on 1987 agricultural prices; (i) "large farmer" means a farmer cultivating land that provides an annual pre-investment net return to such farmer and his or her family of over D 2,500, based on 1987 agricultural prices; (j) "D" or "dinar" means the currency of the Borrower; (k) "small fisherman" means a fisherman owning no more than two boats or a small trawler or a sardine boat or two fishing boats equipped with floodlights ("lamparos"); (l) "large fisherman" means any fisherman other than a small fisherman; (m) "Agricultural Credit Coordinating Committee" means the Committee to be established and maintained by the Guarantor pur- suant to Section 3.03 of the Guarantee Agreement; (n) "National Guarantee Fund" means the Fonds National de Garantie, established by Law 81-100 of December 31, 1981 of the Borrower, made operational by Decree 84-53 of January 27, 1984; Page 3 (o) "market rate" means an agricultural interest rate, covering average cost of funds, reasonable operating costs and reasonable lending risk of the Borrower; (p) "agricultural interest rate" means the interest rate charged by the Borrower on a loan to the agricultural sector; and (q) "small operators" means small and medium farmers, small fishermen and cooperatives. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Loan Agree- ment, an amount in various currencies equivalent to thirty million dollars ($30,000,000). Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Sched- ule 1 to this Agreement for: (i) amounts paid (or, if the Bank shall so agree, to be paid) by the Borrower on account of with- drawals made by a Sub-borrower under a Sub-loan to meet the reasonable cost of goods and services required for the Investment Project in respect of which the withdrawal from the Loan Account is requested; and (ii) for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for Part B of the Project and to be financed out of the proceeds of the Loan. (b) The Borrower shall, for the purposes of the Project, open and maintain in dollars a special account in the Central Bank of Tunisia on terms and conditions satisfactory to the Bank. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 6 to this Agreement. Section 2.03. The Closing Date shall be December 31, 1991, or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of such later date. Section 2.04. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.05. (a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time at a rate per annum for each Interest Period equal to one- half of one percent per annum above the Cost of Qualified Borrow- ings for the last Semester ending prior to the commencement of such Interest Period. (b) As soon as practicable after the end of each Semester, the Bank shall notify the Guarantor and the Borrower of the Cost of Qualified Borrowings for such Semester. (c) For purposes of this Section: (i) "Interest Period" means the six-month period com- mencing on each date specified in Section 2.06 of this Agreement, including the Interest Period in which this Agreement is signed. (ii) "Cost of Qualified Borrowings" means the cost of the outstanding borrowings of the Bank drawn down after June 30, 1982, expressed as a percentage per annum, as reasonably determined by the Bank. (iii) "Semester" means the first six months or the second six months of a calendar year. Page 4 Section 2.06. Interest and other charges shall be payable semi-annually on March 15 and September 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. ARTICLE III Execution of the Project; Management and Operations of the Borrower 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, shall carry out the Project and con- duct its operations and affairs, with due diligence and efficiency and in accordance with appropriate technical, administrative, banking and financial standards and practices, with qualified management and personnel, and in accordance with the Statutes and the Statement of Policy, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Bank shall otherwise agree, the Borrower shall carry out the Project in accordance with the Imple- mentation Program set forth in Schedule 5 to this Agreement. Section 3.02. (a) The Borrower undertakes that Sub-loans will be made to Sub-borrowers for Investment Projects on the basis of the criteria, procedures and terms and conditions set forth or referred to in Schedule 4 to this Agreement. (b) The Borrower shall exercise its rights in relation to each Investment Project in such manner as to: (i) protect the interests of the Bank and the Borrower; (ii) comply with its obli- gations under this Agreement; and (iii) achieve the purposes of the Project. Section 3.03. Except as the Bank shall otherwise agree, pro- curement of the goods and consultants' services required for Part B of the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 5 to this Agreement. ARTICLE IV Financial Covenants Section 4.01. The Borrower 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 bene- fits to be derived from it) and to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of the Borrower. Section 4.02. (a) The Borrower shall: (i) have the records referred to in Section 4.01 of this Agreement, its accounts and financial state- ments (balance sheets, statements of income and expenses and related statements) and the records and accounts for the Special Account for each fiscal year audited in accordance with sound audit- ing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank, as soon as available but in any case not later than six months after the end of each such year, (A) certified copies of said finan- cial statements for such year as so audited, and (B) the report of such audit by said auditors, of Page 5 such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concern- ing the said records, accounts and financial state- ments and the audit thereof as the Bank shall from time to time reasonably request. (b) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of statements of expenditure, the Borrower shall: (i) maintain, in accordance with Section 4.01 of this Agreement, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Bank has received the audit report for the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Bank's representatives to examine such records; and (iv) ensure that such records and accounts are included in the annual audit referred to in paragraph (a) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the proce- dures and internal controls involved in their prep- aration, can be relied upon to support the related withdrawals. Section 4.03. The Borrower shall: (a) furnish to the Bank, no later than July 31 of each year the Project is executed, income statements and an analysis of its agricultural credit operations for the preceding calendar year in a format acceptable to the Bank; (b) take such steps satisfactory to the Bank, including, without limitation, making requests for the amounts provided for in Section 3.02 (b) of the Guarantee Agreement, as shall be neces- sary to protect itself fully against the risk of loss on interest rate differential and exchange risk, referred to in said Section; and (c) maintain provisions necessary to protect itself fully against risk of default under its agricultural credit operations, as determined in the analysis referred to in paragraph (a) of this Section. ARTICLE V Remedies of the Bank Section 5.01. Pursuant to Section 6.02 (k) of the General Conditions, the following additional events are specified: (a) The BNT Statutes or the BNT Statement of Policy shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the operations or the financial condition of the Borrower or its ability to carry out the Project or to perform any of its obligations under this Agreement. (b) An event shall have occurred which shall make it improb- able that the Program, or a significant part thereof, will be carried out. Page 6 Section 5.02. Pursuant to Section 7.01 (h) of the General Conditions, the following additional event is specified, namely, the event specified in paragraph (a) of Section 5.O1 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following event is specified as an addi- tional condition to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions, namely, that the Borrower shall have increased the agricultural interest rate to at least 7.00% on short-term loans and to at least 7.50% on medium-term loans. Section 6.02. The date ninety (90) days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 6.03. The President Directeur General of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.04. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: 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) For the Borrower: Banque Nationale de Tunisie 19 avenue de Paris Tunis Republic of Tunisia Cable address: Telex: BANATU 13.220 TUNIS 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 BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Kemal Dervis Acting Regional Vice President Europe, Middle East and North Africa NATIONAL BANK OF TUNISIA Page 7 By /s/ Hedi Gharbi Authorized Representative SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expen- ditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Sub-loans, under Part A of the Project to: (a) small and medium 8,000,000 ) farmers ) ) (b) large farmers 8,000,000 ) ) (c) cooperatives 3,500,000 ) 75% of amounts ) paid by the (d) agricultural and 4,500,000 ) Borrower under agro-industrial ) such Sub-loans enterprises ) ) (e) fishermen 3,500,000 ) (2) Goods, consultants' 2,500,000 100% of foreign services and train- expenditures and ing under Part B of 70% of local ex- the Project penditures __________ TOTAL 30,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Guarantor for goods or services supplied from the territory of any country other than that of the Guarantor; and (b) the term "local expenditures" means expenditures in the currency of the Guarantor or for goods or services supplied from the territory of the Guarantor. 3. Notwithstanding the provisions of paragraph 1 above, no with- drawals shall be made: (a) in respect of a Sub-loan unless the Sub-loan has been made in accordance with the provisions set forth in Schedule 4 to this Agreement; and (b) in respect of payments made for expenditures prior to the date of this Agreement, except that withdrawals, in an aggre- gate amount not exceeding the equivalent of $3,000,000, may be made on account of payments made for expenditures before that date but after November 30, 1986. SCHEDULE 2 Page 8 Description of the Project The objectives of the Project are to: (a) assist in financing such productive facilities and resources in the Guarantor's terri- tory as will contribute to the growth of agricultural productivity and rural income in said territory; (b) improve the system, condi- tions and financial viability of agricultural credit within said territory and encourage rural savings; and (c) further develop the management and operations of the Borrower. The Project consists of the following Parts, subject to such modifications thereof as the Bank and the Borrower may agree upon from time to time to achieve such objectives: Part A: The financing of specific development projects through loans to private farmers, cooperatives, agricultural enterprises, agro- industrial enterprises and fishermen within the agricultural sector. Part B: Strengthening and improvement of the Borrower's management information and data processing systems, including the provision of staff training, technical assistance and computer software, the provision, utilization and initial maintenance of computer and office equipment, and encouragement of rural savings. * * * The Project is expected to be completed by December 31, 1990. SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each March 15 and September 15 beginning March 15, 1992 through March 15, 2004 1,155,000 On September 15, 2004 1,125,000