Colombia - Road Project : Loan 0295 - Loan Agreement - Conformed

LOAN NUMBER 295 CO Loan Agreement (Road Project) BETWEEN REPUBLIC OF COLOMBIA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED AUGUST 28, 1961 S LOAN NUMBER 295 CO Loan Agreement (Road Project) BETWEEN REPUBLIC OF COLOMBIA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED AUGUST 28, 1961 S Enan Agreement AGREEMENT, dated August 28, 1961, between REPUBLIC OF COLOMBIA (hereinafter called the Borrower) and INTER- NATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS (A) the Borrower has requested the Bank to make a loan to it in an aggregate principal amount equiva- lent to $19,500,000 to assist the Borrower in financing the construction, betterment and maintenance of various roads forming a part of the national highway system of the Borrower; (B) the Borrower has also requested the International Development Association (hereinafter called the Associ- ation) to provide additional assistance towards financing the construction and betterment of such roads; (C) by an agreement of even date herewith between the Association and the Borrower, the Association is agreeing to provide such assistance in an aggregate principal amount equivalent to $19,500,000; (D) the Borrower, the Association, and the Bank intend to enter into an arrangement enabling the Bank to process applications for withdrawal of part of the proceeds of the financing to be provided severally by the Association and the Bank; and WHEREAS the Bank has agreed, upon the basis of the foregoing, to make a loan to the Borrower upon the terms and conditions hereinafter set forth; Now THEREFORE, it is hereby agreed as follows: ARTICLE I Loan Regulations SECTION 1.01. The parties to this Loan Agreement accept all the provisions of Loan Regulations No. 3 of 4 the Bank dated February 15, 1961 subject, however, to the modification thereof set forth in Section 2.04 of this Agreement (said Loan Regulations No. 3 as so modified being hereinafter called the Loan Regulations), with the same force and effect as if they were fully set forth herein. ARTICLE II The Loan SECTION 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in this Agreement set forth or referred to, an amount in various currencies equiva- lent to nineteen million five hundred thousand dollars ($19,500,000). SECTION 2.02. The Bank shall open a Loan Account on its books in the name of the Borrower and shall credit to such Account the amount of the Loan. The amount of the Loan may be withdrawn from the Loan Account as pro- vided in, and subject to the rights of cancellation and suspension set forth in, the Loan Regulations. SECTION 2.03. Except as the Borrower and the Bank shall otherwise agree: (a) The Borrower shall be entitled, subject to the pro- visions of this Agreement, to withdraw from the Loan Account (i) the equivalent of a percentage or percentages to be established from time to time by agreement between the Borrower and the Bank of such amounts as shall have been expended by the Borrower for the reasonable cost of goods required for carrying out Part A of the Project (such per- centage representing the approximate estimated amount of foreign currency component of such goods to be financed by the Bank); (ii) such amounts as shall have been otherwise expended for the reason- able foreign exchange cost of engineering services and equipment required for carrying out Part B of the Project and not covered under the Development S 5 Credit Agreement of even date herewith between the Borrower and the International Development Association; (iii) such amounts as shall have been expended for the reasonable foreign exchange cost of goods required for carrying out Parts C and D of the Project; and (iv) if the Bank shall so agree, such amounts as shall be required by the Borrower to meet payments to be made under any of the fore- going clauses. (b) Withdrawals under clause (i) of paragraph (a) of this Section shall be in dollars or such other cur- rency or currencies as the Bank shall from time to time reasonably select. (c) Notwithstanding the foregoing provisions of this Section, no withdrawals shall be made on account of expenditures prior to January 1, 1961 or expendi- tUirps made in the territories of any country (except Switzerland) which is not a member of the Bank or for goods produced in (including services supplied from) such territories. SECTION 2.04. Section 4.01 of the Loan Regulations is deleted. SECTION 2.05. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not so withdrawn from time to time. SECTION 2.06. The Borrower shall pay interest at the rate of five and three-fourths per cent (53/4%') per annum on the principal amount of the Loan so withdrawn and outstanding from time to time. SECTION 2.07. Except as the Borrower and the Bank shall otherwise agree, the charge payable for special com- mitments entered into by the Bank at the request of the Borrower pursuant to Section 4.02 of the Loan Regulations 6 shall be at the rate of one-half of one per cent (1 of 1%) per annum on the principal amount of any such special commitments outstanding from time to time. SECTION 2.08. Interest and other charges shall be pay- able semi-annually on March 15 and September 15 in each year. SECTION 2.09. The Borrower shall repay the principal of the Loan in accordance with the amortization schedule set forth in Schedule 1 to this Agreement. ARTICLE III Use of Proceeds of the Loan SECTION 3.01. The Borrower shall cause the proceeds of the Loan to be applied exclusively to financing the cost of goods required to carry out the Project described in Schedule 2 to this Agreement. The specific goods to be financed out of the proceeds of the Loan shall be deter- mined by agreement between the Borrower and the Bank, subject to modification by further agreement between them. SECTION 3.02. The Borrower shall cause all goods financed out of the proceeds of the Loan to be used in the territories of the Borrower exclusively in the carrying out of the Project. ARTICLE IV Bonds SECTION 4.01. The Borrower shall execute and deliver Bonds representing the principal amount of the Loan as provided in the Loan Regulations. SECTION 4.02. The Minister of Finance and Public Credit of the Borrower and such person or persons as he shall appoint in writing are designated as authorized repre- sentatives of the Borrower for the purposes of Section 6.12 of the Loan Regulations. S 7 ARTICLE V Particular Covenants SECTION 5.01. (a) The Borrower shall cause the Project to be carried out and maintained with due diligence and efficiency and in conformity with sound engineering and financial practices. (b) In carrying out the Project, the Borrower shall employ one or more competent and experienced firms of engineering consultants satisfactory to the Borrower and the Bank upon terms and conditions satisfactory to the Borrower and the Bank. (c) Except as the Bank shall otherwise agree, the roads and structures included in Parts A and B of the Project shall be constructed or improved by contractors satisfac- tory to the Borrower and the Bank, employed under con- tracts mutually satisfactory to the Borrower and the Bank. (d) The general design standards and the type of sur- facing (including pavement) to be used for the roads included in Parts A and B of the Project shall be as determined by agreement between the Borrower and the Bank, subject to modification by further agreement between them. (e) The Borrower shall cause to be furnished to the Bank, promptly upon their preparation, the plans, speci- fications, contracts and work schedules for the Project and any material modifications subsequently made therein, in such detail as the Bank shall request. (f) The list of roads to be included in Parts A and B of the Project shall be determined by agreement between the Borrower and the Bank, subject to modification by further agreement between them. SECTION 5.02. The Borrower shall maintain or cause to be maintained records adequate to identify the goods financed out of the proceeds of the Loan, to disclose the use thereof in the Project, to record the progress of the S 8 Project (including the cost thereof) and to reflect in accord- ance with consistently maintained sound accounting prac- tices the operations and financial condition of the agency or agencies of the Borrower responsible for the carrying out and operation of the Project or any part thereof; shall enable the Bank's representatives to inspect the Project, the goods and any relevant records and documents; and shall furnish or cause to be furnished to the Bank all such information as the Bank shall reasonably request concerning the expenditure of the proceeds of the Loan, the Project, and the goods, and the operations and financial condition of the agency or agencies of the Borrower respon- sible for the carrying out and operation of the Project or any part thereof. SECTION 5.03. (a) The Borrower and the Bank shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reason- ably request with regard to the general status of the Loan. On the part of the Borrower, such information shall include information with respect to financial and economic con- ditions in the territories of the Borrower and the inter- national balance of payments position of the Borrower. (b) The Borrower and the Bank shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Loan and the maintenance of the service thereof. The Borrower shall promptly inform the Bank of any condition which inter- feres with, or threatens to interfere with, the accomplish- ment of the purposes of the Loan or the maintenance of the service thereof. (c) The Borrower shall afford all reasonable opportu- nity for accredited representatives of the Bank to visit any part of the territories of the Borrower for purposes related to the Loan. 9 SECTION 5.04. It is the mutual intention of the Borrower and the Bank that no other external debt shall enjoy any priority over the Loan by way of a lien on governmental assets. To that end, the Borrower undertakes that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of the Borrower as security for any external debt, such lien will ipso facto equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan and the Bonds, and that in the creation of any such lien express provision will be made to that effect, provided, however, that the foregoing pro- visions of this Section shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property; (ii) any lien on commercial goods to secure a debt maturing not more than one year after the date on which it is originally incurred and to be paid out of the proceeds of sale of such commercial goods; or (iii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. As used in this Section, (a) the term "assets of the Borrower" includes assets of the Borrower or of any of its political subdivi- sions or of any Agency or of Banco de la Repiblica or any other institution acting as the central bank of the Borrower, and (b) the term "Agency" means any agency or instru- mentality of the Borrower or of any political sub- division of the Borrower and shall include any institution or organization which is owned or con- trolled directly or indirectly by the Borrower or by any political subdivision of the Borrower or the operations of which are conducted primarily in the interest of or for account of the Borrower or any political subdivision of the Borrower. 10 SECTION 5.05. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid without deduction for, and free from, any taxes or fees imposed under the laws of the Borrower or laws in effect in its territories; provided, however, that the provisions of this Section shall not apply to taxation of, or fees upon, pay- ments under any Bond to a holder thereof other than the Bank when such Bond is beneficially owned by an indi- vidual or corporate resident of the Borrower. SECTION 5,06. The Loan Agreement and the Bonds shall be free from any taxes or fees that shall be imposed under the laws of the Borrower or laws in effect in its territories on or in connection with the execution, issue, delivery or registration thereof and the Borrower shall pay all such taxes and fees, if any, imposed under the laws of the coun- try or countries in whose currency the Loan and the Bonds are payable or laws in effect in the territories of such country or countries. SECTION 5.07. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid free from all restrictions imposed under the laws of the Borrower or laws in effect in its territories. SECTION 5.08. The Borrower shall satisfy the Bank that adequate arrangements have been made to insure the goods financed out of the proceeds of the Loan against risks incident to their purchase and importation into the territories of the Borrower. SECTION 5.09. (a) The Borrower shall at all times make available, promptly as they are needed, all sums and resources which shall be required for the carrying out of the Project and the proper maintenance of its national highway system. (b) The Borrower shall consult with the Bank, until the Project shall have been completed, before undertaking any other major road construction works. 11 SECTION 5.10. (a) The Borrower shall cause all mainte- nance equipment and materials, and all spare parts, financed out of the proceeds of the Loan, to be used exclu- sively for the purposes of road maintenance. (b) The Borrower shall cause all its machinery and equipment for highway construction and maintenance to be adequately maintained and repaired, and shall cause suitable workshops to be maintained in suitable places for that purpose. (c) The Borrower shall cause its national highway sys- tem to be adequately maintained and shall cause all necessary repairs thereof to be made, all in accordance with sound engineering practices. ARTICLE VI Remedies of the Bank SECTION 6.01. (i) If any event specified in paragraph (a) or paragraph (b) of Section 5.02 of the Loan Regu- lations shall occur and shall continue for a period of thirty days, or (ii) if any event specified in paragraph (c) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower, or (iii) if any event specified in Section 6.02 (a), (b) and (c) of this Agreement shall occur and shall continue for a period of sixty days, then at any subsequent time during the continuance thereof, the Bank, at its option, may declare the principal of the Loan and of all the Bonds then out- standing to be due and payable immediately, and upon any such declaration such principal shall become due and pay- able immediately, anything in this Agreement or in the Bonds to the contrary notwithstanding. SECTION 6.02. The following are specified as additional events for the purposes of Section 5.02 (h) of the Loan Regulations: 9 12 (a) A default shall have occurred in the payment of principal or interest or any other payment required under any development credit agreement between the Borrower and the Association. (b) A default shall have occurred in the performance of any other covenant or agreement on the part of the Borrower under the Development Credit Agree- ment of even date herewith between the Borrower and the Association. (c) The outstanding principal amount of the Credit pro- vided for in the Development Credit Agreement of even date herewith between the Borrower and the Association shall have been declared, or become, due and payable in advance of the agreed maturity thereof; and (d) The Borrower shall have cancelled any part of the financing provided for in the Development Credit Agreement of even date herewith between the Bor- rower and the Association without a cancellation of a corresponding proportion of the Loan. ARTICLE VII Effective Date; Termination SECTION 7.01. The following event is specified as an addi- tional condition to the effectiveness of the Loan Agreement iwithin the meaning of Section 9.01 (b) of the Loan Regulations: That the Borrower and at least one firm of engineering consultants satisfactory to the Bank shall have entered into a contract, including work orders, upon terms and conditions satisfactory to the Bank. SECTION 7.02. A date 90 days after the date of this Agreement is hereby specified for the purposes of Section 9.04 of the Loan Regulations. 13 ARTICLE VIII Miscellaneous SECTION 8.01. The Closing Date shall be June 30, 1965. SECTION 8.02. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Borrower: Ministerio de Hacienda y Credito Publico Bogota' Colombia Alternative address for cablegrams and radiograms: Minhacienda Bogota' Colombia * For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington 25, D. C. United States of America Alternative address for cablegrams and radiograms: Intbafrad Washington, D. C. SECTION 8.03. The Minister of Finance and Public Credit or the Minister of Public Works of the Borrower is desig- nated for the purposes of Section 8.03 of the Loan Regulations. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Loan Agreement to be signed in their respective 14 names and delivered in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF COLOMBIA By M. PASTRANA BORRERO Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By J. BURKE KNAPP Vice-President 0 S 15 SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* September 15, 1965 $ 610,000 March 15, 1966 627,000 September 15, 1966 645,000 March 15, 1967 664,000 September 15, 1967 683,000 March 15, 1968 703,000 September 15, 1968 723,000 March 15, 1969 744,000 September 15, 1969 765,000 March 15, 1970 787,000 September 15, 1970 810,000 March 15, 1971 833,000 September 15, 1971 857,000 March 15, 1972 882,000 September 15, 1972 907,000 March 15, 1973 933,000 September 15, 1973 960,000 March 15, 1974 987,000 September 15, 1974 1,016,000 March 15, 1975 1,045,000 September 15, 1975 1,075,000 March 15, 1976 1,106,000 September 15, 1976 1,138,000 * To the extent that any part of the Loan is repayable in a currency other than dollars (see Loan Regulations, Section 3.03), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. 16 Premium on Prepayment and Redemption The following percentages are specified as the premiums payable on repayment in advance of maturity of any part of the principal amount of the Loan pursuant to Sec- tion 2.05 (b) of the Loan Regulations or on the redemption of any Bond prior to its maturity pursuant to Section 6.16 of the Loan Regulations: Time of Prepayment or Redemption Premium Not more than three years before m aturity .......................... . of1% More than three years but not more than six years before maturity ...... 2% More than six years but not more than eleven years before maturity... 3%o More than eleven years but not more than thirteen years before maturity.. 434% More than thirteen years before maturity 534% 17 SCHEDULE 2 Description of Project The Project consists of: Construction A. (i) The continuation of construction, reconstruction and betterment of about 725 kms. of roads and bridges included in the Plan Vial I Project previ- ously financed by the Bank; (ii) The construction, reconstruction and betterment of eight sections of roads and bridges totalling about 550 kms. B. Engineering services for (i) and (ii) above and for preparation of cost estimates, contract documents and final plans for approximately 500 kms. of roads, the general location of which will be determined only after the completion of the Transport Survey now being con- ducted in Colombia. Maintenance C. The preparation of a detailed report on the maintenance organization of the Borrower with special reference to the implementation of the recommendation of such Transport Survey. D. The procurement of maintenance equipment.