Conformed Copy - C1941 - Public Sector Adjustment Credit - Agreement

Page 1 AGREEMENT RELATED TO CREDIT NUMBER 1941 MAG Agreement for the Administration of Certain Funds to be made available by the GOVERNMENT OF THE KINGDOM OF NORWAY in Conjunction with Public Sector Adjustment Credit in the DEMOCRATIC REPUBLIC OF MADAGASCAR Dated December 14, 1988 AGREEMENT RELATED TO CREDIT NUMBER 1941 MAG AGREEMENT AGREEMENT, dated December 14, 1988, between the GOVERNMENT OF THE KINGDOM OF NORWAY (Norway) and the INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) to provide for the administration, by the Association, of certain funds to be made available by Norway to the Democratic Republic of Madagascar (Madagascar). WHEREAS: (A) the agreement, dated October 2, 1986, between the Kingdom of Norway, the International Bank for Reconstruction and Development, and the International Development Association provides the framework for cofinancing of development projects by the parties thereto; (B) Norway wishes to make available to Madagascar a grant not exceeding twenty million Norwegian kroner (NKr 20,000,000) (the Grant) to assist Madagascar in financing the imports needed during the execution of the program of actions, objectives and policies designed to improve the efficiency of the public and financial sector (the Program) referred to in the Development Credit Agreement (Credit Number 1941 MAG), dated July 18, 1988, between Madagascar and the Association (the Development Credit Agreement); (C) Norway wishes that the proceeds of the Grant should be incremental to the Development Credit, extended for the same purposes by the Association pursuant to the Development Credit Agreement; and WHEREAS the Association has agreed, on the basis, Page 2 inter alia, of the foregoing, to administer the Grant upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Section 1.01. The Association, as Administrator on behalf of Norway, shall enter into such agreement or agreements with Madagascar, as it may deem appropriate but consistent with the terms and conditions of the Development Credit Agreement (excluding the debt service provisions thereof) for the purpose of assisting in the financing of the Program. Such agreements with Madagascar shall, inter alia, provide that: (a) the proceeds of the Grant may be withdrawn by Madagascar to finance the reasonable costs of goods required during the execution of the Program in accordance with the provisions of Schedule 1 to the Development Credit Agreement; and (b) the amounts to be withdrawn need not be repaid and shall bear no interest or other charges. A copy of each such agreement shall be furnished by the Association to Norway. Section 1.02. The Association, as Administrator on behalf of Norway, shall have the sole responsibility for the supervision of the Program. Section 1.03. The administration and enforcement of any provisions of any agreement entered into between Madagascar and the Association, for the purposes of this Agreement, shall be handled solely by the Association, and the Association specifically reserves the right, at its discretion and without notice to Norway, to exercise, refrain from exercising or waive any rights under such agreement or to modify any provision thereof, provided, however, that, before suspending the right of Madagascar to make withdrawals of funds under such agreement, the Association shall inform Norway and afford Norway a reasonable opportunity for consultation with the Association. Section 1.04. The Association shall exercise the same care in the discharge of its functions under this Agreement as it exercises with respect to the administration and management of its own affairs and shall have no further responsibility to Norway in respect thereof. ARTICLE II Section 2.01. (a) For the purpose of this Agreement, Norway shall deposit an amount of twenty million Norwegian kroner (NKr 20,000,000) in one tranche in a general account with Norges Bank in the name of the Association (the T-Account). (b) The funds in the T-Account shall be freely exchangeable by the Association with other currencies as may facilitate their administration. Section 2.02. The Association shall disburse from the T-Account such amounts as from time to time shall be needed to meet the reasonable costs of goods financed, or to be financed, pursuant to Section 1.01 of this Agreement. Such disbursement shall be effected on the basis of withdrawal applications for eligible expenditures submitted by Madagascar to the Association, in accordance with the Association's normal procedures for withdrawal of proceeds of credits made by the Association. Page 3 Section 2.03. In order to assist in defraying the costs of administration and other expenses incurred by the Association under this Agreement, the Association may invest and reinvest the funds in the T-Account, pending their disbursement to Madagascar, and may retain for its own account the income from any such investment or reinvestment. ARTICLE III Section 3.01. (a) The Association shall: (i) maintain separate records and accounts in respect of the funds in the T-Account disbursed by the Association pursuant to the provisions of this Agreement; and (ii) semiannually, promptly after the end of each calendar year and after June 30, furnish to Norway a statement of account on such records and accounts. (b) Promptly after all funds made available under this Agreement have been disbursed from the T-Account to Madagascar, or upon termination of this Agreement, the Association shall cause such records and accounts to be audited and certified by the Association's external auditors and shall furnish the report of such audit by said auditors to Norway. ARTICLE IV Section 4.01. Norway and the Association shall consult from time to time at the request of each other on all matters arising out of this Agreement. Section 4.02. The Association shall keep Norway informed of the progress of the Program. To that end, the Association shall furnish to Norway all relevant progress, performance and assessment reports relating to the Program. Section 4.03. The Association shall inform Norway of any forthcoming major missions and meetings in connection with the Program and shall afford representatives of Norway the opportunity to participate in such missions and meetings. Section 4.04. The Association shall inform Norway of any proposed significant modification to the Development Credit Agreement and shall afford Norway a reasonable opportunity to exchange views with the Association before effecting any such modification. ARTICLE V Section 5.01. This Agreement shall become effective as of the date first above written and, subject to the provisions of this Article, shall continue in effect until all funds made available under this Agreement have been disbursed from the T-Account to Madagascar. Section 5.02. If at any time it appears to either party that the purposes of this Agreement can no longer effectively or appropriately be carried out, this Agreement may be terminated at the initiative of such party on ninety (90) days' notice in writing. Section 5.03. Upon termination of this Agreement, unless the parties agree on another course of action, any agreement or portion thereof entered into by the Association, as Administrator on behalf of Norway, shall be transferred to Norway, and any funds or other property of Norway held hereunder by the Association shall be returned to Norway, and the Association's administration Page 4 shall be considered terminated. Section 5.04. Promptly after all funds made available under this Agreement have been disbursed from the T-Account to Madagascar, or upon termination of this Agreement, the Association shall furnish to Norway a final report and a financial statement on the funds disbursed by the Association from the T-Account pursuant to the provisions of this Agreement, together with the auditor's report referred to in Section 3.01 (b) of this Agreement. ARTICLE VI Section 6.01. This Agreement may be amended only by written agreement of the parties hereto. Section 6.02. 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, mail, telegram, cable or telex to the party to which it is required or permitted to be given or made at such party's address hereinafter 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 Norway: The Royal Ministry of Development Cooperation P.O. Box 8142, Oslo Dep. 0033 Oslo 1 Norway Cable address: Telex: NORAD-N 74256 NORAD-N Oslo 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) IN WITNESS WHEREOF, the undersigned duly authorized thereto, have signed this Agreement. GOVERNMENT OF THE KINGDOM OF NORWAY By /s/ Kjell Eliassen Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION Page 5 By /s/ Silvio Capaluongo Acting Director South-Central and Indian Ocean Department