Conformed Copy - C1919 - Second Structural Adjustment Credit - Japanese Grant Agreement

Page 1 CONFORMED COPY JAPANESE GRANT RELATED TO CREDIT NUMBER 1919 BU Japanese Grant Agreement (Second Structural Adjustment Credit) between REPUBLIC OF BURUNDI and INTERNATIONAL DEVELOPMENT ASSOCIATION as ADMINISTRATOR of the Japanese Funds within the framework of the SPECIAL FACILITY for SUB-SAHARAN AFRICA Dated June 29, 1988 JAPANESE GRANT RELATED TO CREDIT NUMBER 1919 BU JAPANESE GRANT AGREEMENT AGREEMENT, dated June 29, 1988, between REPUBLIC OF BURUNDI (the "Beneficiary") and INTERNATIONAL DEVELOPMENT ASSOCIATION as Administrator of the Japanese Funds within the framework of the Special Facility for Sub-Saharan Africa (the "Administrator"). WHEREAS (A) the Executive Directors of the International Development Association ("IDA") have established by their Resolution No. IDA 85-1 of May 21, 1985, (the "Resolution"), a Special Facility for Sub-Saharan Africa (the "African Facility") constituted by the funds contributed by the International Bank for Reconstruction and Development (the "Bank") and other donors and administered by IDA, acting as Administrator of the African Facility, for the purpose of, and in accordance with, the provisions of the Resolution; (B) pursuant to Section F of the Resolution, the Government of Japan ("Japan") has agreed to provide Japanese funds in the form of a contribution (the "SJF Contribution") in support of programs of structural change, policy reform and institutional improvement in countries which are eligible for financing from the African Facility's resources and, by the agreement described in the exchange of notes dated November 20, 1985 and August 19, 1986, and in the further exchange of letters, both dated July 21, 1987, between Japan and IDA concerning the SJF Contribution, Japan and IDA have agreed that IDA will act as Administrator of the SJF Contribution; (C) the Administrator has received a letter dated April 25, 1988 from the Beneficiary describing a program of actions, objectives and policies designed to Page 2 achieve structural adjustment of the Beneficiary's economy (the "Program") and declaring, inter alia, the Beneficiary's commitment to the execution of the same Program; (D) the Beneficiary has requested Japanese funds from the Administrator for the financing of urgently needed imports required during execution of the Program and the Administrator has determined that the provision of such funds in an amount of seven hundred million Japanese Yen (Y 700,000,000) (the "Japanese Grant") would be in accordance with the provisions of the Resolution; (E) by an agreement of even date hereof between the beneficiary and IDA (the "Development Credit Agreement"), IDA is agreeing to provide additional assistance in the financing of the Project (as hereinafter defined) in an amount of sixty four million nine hundred thousand Special Drawing Rights (SDR 64,900,000) (the "Development Credit"); (F) the Beneficiary intends to obtain from the Japan Overseas Economic Cooperation Fund ("OECF") a loan (the "OECF Loan") in an amount of one thousand seven hundred million Japanese Yen (Y 1,700,000,000), to assist in the financing of the Project (as hereinafter defined) under the terms and conditions set forth in an agreement (the "OECF Loan Agreement") to be entered into between the Beneficiary and OECF; (G) the Beneficiary has contracted from the Saudi Fund for Development a loan (the "Saudi Loan") in an amount of eleven million Saudi Rials (SR 11,000,000) to assist in the financing of the Project (as hereinafter defined) on terms and conditions set forth in an agreement (the "Saudi Loan Agreement") dated February 7, 1987 between the Beneficiary and the Saudi Fund for Development; and WHEREAS the Administrator has agreed, on the basis inter alia of the foregoing, to extend the Japanese Grant to the Beneficiary 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 Development Credit Agreements" of IDA, dated January 1, 1985, with the modifications set forth below (the "General Conditions") constitute an integral part of this Agreement: (a) the term "Association", when used in the General Conditions, means the Administrator, except in the phrase "member of the Association" in Sections 2.01 (5) and 6.02 (e) thereof; (b) the terms "Development Credit Agreement", "Credit" and "Credit Account", when used in the General Conditions, are amended to read "Japanese Grant Agreement', 'Japanese Grant" and "Japanese Grant Account", respectively; (c) Sections 3.02, 3.03, 3.04, 3.05, 4.02, 4.03, 4.06, 6.05, 7.01, 8.01 (a), 12.02 and 12.05 and the second sentence of Section 5.01 are deleted; (d) in Section 6.02, the term "Association" shall also include IDA acting in its own capacity; (e) in Section 2.01, paragraph 9 is amended to read: "'Project' means the imports and other activities that may be financed out of the proceeds of the Japanese Grant pursuant to the provisions of Schedule 1 to the Japanese Grant Agreement"; (f) the term "Borrower", wherever used in the General Conditions, means the Beneficiary; (g) the term "SITC" means the United Nations Standard International Trade Classification, Revised, Statistical Papers, Series M, No. 34/Rev. 3 (1986); and Page 3 (h) the term "Special Account" means the account referred to in Section 2.02 (c) of this Agreement. Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions, in the Preamble to this Agreement and in the Development Credit Agreement have the respective meanings therein set forth. ARTICLE II The Japanese Grant Section 2.01. The Administrator agrees to extend to the Beneficiary, on the terms and conditions set forth or referred to in this Agreement, an amount in various currencies equivalent to seven hundred million Japanese Yen (Y 700,000,000). Section 2.02. (a) The amount of the Japanese Grant may be withdrawn from the Japanese Grant Account in accordance with the provisions of Schedule 1 to this Agreement, for expenditures made (or, if the Administrator shall so agree, to be made) in respect of the Project and to be financed out of the proceeds of the Japanese Grant. (b) Withdrawals shall be made only on account o\1a expenditures for goods and services produced in the territories of: (i) any Part II member of IDA; and (ii) any country designated by IDA, acting as Administrator of the African Facility, as meeting the provisions set forth in paragraphs 4 (f) (ii) and (iii) of the Resolution. (c) The Beneficiary shall for the purpose of the Project, open and maintain in Dollars a special account in BRB on terms and conditions satisfactory to the Administrator. Deposits into, and payments out of the Special Account shall be made in accordance with the provisions of Schedule 2 to this Agreement. (d) Notwithstanding the provisions of subparagraph (a) above, the Administrator shall, at the request of Japan, suspend the Beneficiary's right to make withdrawals under this Agreement if an event shall have occurred which would have entitled the Administrator to suspend the Beneficiary's right to make withdrawals under the Development Credit Agreement (whether or not the full amount of the Development Credit has then been withdrawn), provided however that, notwithstanding any such request from Japan, the Administrator may in its discretion permit withdrawals under this Agreement in respect of expenditures for which the Administrator has entered into special commitments pursuant to Section 5.02 of the General Conditions. Section 2.03. The Closing Date shall be June 30, 1990 or such later date as the Administrator shall establish. The Administrator shall promptly notify the Beneficiary of such later date. Section 2.04. Except as the Administrator shall otherwise agree, procurement of goods and works to be financed out of the proceeds of the Japanese Grant shall be governed by the provisions of Schedule 2 to the Development Credit Agreement. Section 2.05. (a) BRB is designated as representative of the Beneficiary for the purposes of taking any action required or permitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions. (b) Without limitation or restriction to the foregoing, the Beneficiary hereby entrusts BRB with responsibility for the preparation of withdrawal applications under the Japanese Grant and for the collection of the documents and other evidence to be furnished to the Administrator in support of such applications; such withdrawal applications shall to the extent practicable be consolidated so as to apply for withdrawal of aggregate amounts of not less than $500,000 equivalent. ARTICLE III Execution of the Project Section 3.01. Except as otherwise expressly provided herein, Articles III and IV Page 4 of the Development Credit Agreement are hereby incorporated into this Agreement with the same force and effect as if they were fully set forth herein, it being understood that all references in said Articles to "the Association" shall be deemed to be references to the Administrator of the Japanese Grant under this Agreement, all references to the "Credit" shall be deemed to be references to the Japanese Grant, and all references to the "Borrower" shall be deemed to be references to the Beneficiary. ARTICLE IV Effective Date; Termination Section 4.01. The following event is specified as an additional condition to the effectiveness of this Agreement within the meaning of Section 12.01 (b) of the General Conditions, namely that all conditions precedent to the effectiveness of the Development Credit Agreement, except for the effectiveness of this Agreement. have been fulfilled. Section 4.02. This Agreement and all obligations of the Beneficiary and of the Administrator thereunder shall terminate on December 31, 1990 or on the date of the disbursement of the balance of the proceeds of the Japanese Grant, whichever shall be the earlier. Section 4.03. 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. ARTICLE V Representatives of the Beneficiary; Addresses Section 5.01. Except as provided in Section 2.05 of this Agreement, the Minister of the Beneficiary responsible for planning is designated as representative of the Beneficiary for the purposes of Section 11.03 of the General Conditions. Section 5.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Beneficiary: Ministere du Plan B.P. 224 Bujumbura Republic of Burundi Cable address: Telex: MINIPLAN 5036 PRESIBU BDI Bujumbura For the Administrator: Administrator of the Japanese Funds (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 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. Page 5 REPUBLIC OF BURUNDI By /s/ Edouard Kadigiri Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION as ADMINISTRATOR of the Japanese funds within the framework of the SPECIAL FACILITY FOR SUB-SAHARAN AFRICA By /s/ Edward V.K. Jaycox Regional Vice President Africa SCHEDULE 1 Withdrawal of the Proceeds of the Japanese Grant 1. Subject to the provisions set forth or referred to in this Schedule, the proceeds of the Japanese Grant may be withdrawn from the Japanese Grant Account for expenditures made (or, if the Administrator shall so agree, to be made) in respect of the reasonable cost of goods and services required during the execution of the Program and to be financed out of such proceeds. 2. Notwithstanding the provisions of paragraph 1 above, no, withdrawals shall be made in respect of: (a) expenditures for goods included in the following SITC, groups or sub-groups or any successor groups at sub-groups under future revisions to the SITC, as designated by the Administrator by notice to the Beneficiary: Group Sub-group Description of Items 112 - Alcoholic beverages 121 - Tobacco, unmanufactured tobacco refuse 122 - Tobacco, manufactured (whether or not containing tobacco substitute) 525 - Radio-active and associated materials 667 - Pearls, precious and semi-precious stones, unworked or worked 718 718.7 Nuclear reactors, and parts thereof, fuel elements (cartridges), non- irradiated, for nuclear reactors 897 897.3 Jewelry of gold, silver or platinum group metals (except watches and watch cases) and goldsmiths' wares (including set gems) 971 - Gold, non-monetary (excluding gold ores and concentrates) (b) expenditures in the currency of the Beneficiary or for goods or services Page 6 supplied from the territory of the Beneficiary; (c) payments made for expenditures prior to the date of this Agreement except that withdrawals from the Japanese Grant Account in an aggregate amount not exceeding the equivalent of one hundred million Japanese Yen (Y 100,000,000) may be made on account of payments made for such expenditures before that date but after April 1, 1988; (d) expenditures for goods and services procured under contracts costing less than ten thousand Dollars ($10,000) equivalent; (e) expenditures for goods and services supplied under a contract which any national or international financing institution or agency other than IDA shall have financed or agreed to finance; (f) expenditures for goods intended for a military or paramilitary purpose or for luxury consumption; and (g) expenditures for petroleum products and foodstuffs to be financed out of the proceeds of the Japanese Grant after the aggregate of the proceeds of the Japanese Grant withdrawn from the Japanese Grant Account are in excess of an aggregate amount equivalent to one hundred seventy-five million Japanese Yen (Y 175,000,000). 3. No withdrawal shall be made and not commitment shall be entered into to pay amounts to the Beneficiary or others in respect of expenditures to be financed out of the proceeds of the Japanese Grant after the aggregate of the proceeds of the Japanese Grant withdrawn from the Japanese Grant Account and the total amount of such commitments shall have reached the equivalent of three hundred and fifty million Japanese Yen (Y 350,000,000), unless the Administrator shall be satisfied, after an exchange of views as described in Section 3.01 of the Development Credit Agreement: (i) with the progress achieved by the Beneficiary in the carrying out of the Program; and (ii) that the actions described in Part A of Schedule 3 to the Development Credit Agreement have been taken. 4. If, after such exchange of views described in paragraph 3 above, the Administrator shall have given notice to the Beneficiary that the progress achieved and actions taken are not satisfactory and, within 90 days after such notice, the Beneficiary shall not have achieved progress and taken actions satisfactory to the Administrator, then the Administrator may, by notice to the Beneficiary, cancel the unwithdrawn amount of the Japanese Grant or any part thereof. SCHEDULE 2 Special Account 1. For the purposes of this Schedule: (a) 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 Japanese Grant in accordance with the provisions of Schedule 1 to this Agreement; and (b) the term "Authorized Allocation" means an amount equivalent to two hundred fifty million Japanese Yen (Y 250,000,000) to be withdrawn from the Japanese Grant and deposited into the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Except as the Administrator 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 Administrator 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 Beneficiary for a deposit or Page 7 deposits which add up to the aggregate amount of the Authorized Allocation, the Administrator shall, on behalf of the Beneficiary, withdraw from the Japanese Grant Account and deposit into the Special Account such amount or amounts as the Beneficiary shall have requested. (b) The Beneficiary shall furnish to the Administrator requests for replenishment of the Special Account at such intervals as the Administrator shall specify. On the basis of such requests, the Administrator shall withdraw from the Japanese Grant 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 Administrator from the Japanese Grant Account 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 Beneficiary out of the Special Account for which the Borrower requests replenishment pursuant to paragraph 3 (b) of this Schedule, the Beneficiary shall furnish to the Administrator, prior to or at the time of such request, such documents and other evidence as the Administrator shall reasonably request, showing that such payment was made for eligible expenditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into the Special Account shall be made by the Administrator when either of the following situations first arises: (i) the Administrator shall have determined that all further withdrawals should be made by the Beneficiary directly from the Japanese Grant Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (ii) the total unwithdrawn amount of the Japanese Grant minus the amount of any outstanding special commitment entered into by the Administrator 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 Authorized Allocation. (b) Thereafter, withdrawal from the Japanese Grant Account of the remaining unwithdrawn amount of the Japanese Grant shall follow such procedures as the Administrator shall specify by notice to the Beneficiary. Such further withdrawals shall be made only after and to the extent that the Administrator shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice will be utilized in making payments for eligible expenditures. 6. (a) If the Administrator shall have determined at any time that any payment out of the Special Account: (i) was made for any expenditure or in any amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished to the Administrator, the Beneficiary shall, promptly upon notice from the Administrator, deposit into the Special Account (or, if the Administrator shall so request, refund to the Administrator) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. No further deposit by the Administrator into the Special Account shall be made until the Beneficiary has made such deposit or refund. (b) If the Administrator 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 Beneficiary shall, promptly upon notice from the Administrator, refund to the Administrator such outstanding amount for crediting to the Japanese Grant Account.