Conformed Copy - L3424 - Economic and Financial Reforms Support Loan - Loan Agreement

Page 1 CONFORMED COPY LOAN NUMBER 3424 TUN (Economic and Financial Reforms Support Loan) between REPUBLIC OF TUNISIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated December 13, 1991 LOAN NUMBER 3424 TUN LOAN AGREEMENT AGREEMENT, dated December 13, 1991, between REPUBLIC OF TUNISIA (the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). WHEREAS: (A) The Bank has received a letter dated November 20, 1991, from the Borrower describing a program of actions, objectives and policies designed to achieve the Borrower's economic and financial reforms (hereinafter called the Program), declaring the Borrower's commitment to the execution of the Program, and request- ing assistance from the Bank in the financing of urgently needed imports and services required during such execution; and WHEREAS: (B) On the basis, inter alia, of the foregoing, the Bank has decided in support of the Program to provide such assis- tance to the Borrower by making the Loan in three (3) tranches as hereinafter provided. NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Page 2 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 thereof set forth below (the General Conditions) constitute an integral part of this Agreement: (a) Section 2.01, paragraph 11, shall be modified to read: "'Project' means the imports and other activities that may be financed out of the proceeds of the Loan pursuant to the provisions of Schedule 1 to the Loan Agreement."; (b) The last sentence of Section 3.02 is deleted; (c) In Section 6.02, sub-paragraph (k) is re-lettered as sub-paragraph (l), and a new sub-paragraph (k) is added to read: "(k) An extraordinary situation shall have arisen under which any further withdrawals under the Loan would be inconsistent with the provisions of Article III, Section 3 of the Bank's Articles of Agreement."; and (d) Section 9.07 (c) shall be modified to read: "(c) Not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Bank, the Borrower shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reasonably request, on the execution of the program referred to in the Preamble to the Loan Agreement, the performance by the Borrower and the Bank of their respective obligations under the Loan Agreement and the accomplishment of the purposes of the Loan.". 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) "Dinar" means the Borrower's unit of currency; (b) "Central Bank" means the Borrower's Central Bank (Banque Centrale de Tunisie), established and operating pursuant to the Borrower's Law No. 58-90, dated September 19, 1958; (c) "Domestic Absorption" means the Dinar value in calendar year 1989 of the sum of the Borrower's Domestic Production (as such term defined hereinafter) and imports less its export products, per item 0111 to item 6414 in the NAP Classifications (as such term is defined hereinafter); (d) "Domestic Production" means the Dinar value in calendar year 1989 of the Borrower's output of products, per items 0111 to 6414 in the NAP Classification (as such term is defined hereinafter) in respect of production prices and distribution margins, and per item 0111 to item 6632 in the said Classification in respect of foreign trade; (e) "Fiscal Year" means the twelve (12) month period corresponding to any of the Borrower's fiscal years, which period commences on January 1 and ends on December 31 in each calendar year; (f) "Money Market Rate" means the Borrower's annual inter- bank rate of interest, as established by the Central Bank's Circular No. 86-42, dated December 1, 1986; (g) "NAP Classification" means the Borrower's nomenclature for activities and products (Nomenclature des Activites et Produits), as established and published by the Borrower's National Institute of Statistics ; Page 3 (h) "Preferential Interest Rate" means a lending interest rate which is below the Money Market Rate prevailing on the day of the approval of the respective loan by the lender; (i) "Rediscounted Preferential Credit" means credits extended by banking/financial institutions operating within the Borrower's territory and rediscounted at the Central Bank at interest rates below the Money Market Rate; (j) "Special Resources Credit" means the credits extended by banking/financial institutions operating within the Borrower's territory on resources derived from the Borrower's external or budgetary funds and allocated to financing specific investment projects; and (k) "SITC" means the Standard International Trade Clas- sification, Revision 3 (SITC, Rev. 3), published by the United Nations in Statistical Papers, Series M, No. 343 (1986). 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 this Agreement, various currencies that shall have an aggregate value equivalent to the amount of two hundred and fifty million dollars ($250,000,000), being the sum of withdrawals of the proceeds of the Loan, with each withdrawal valued by the Bank as of the date of such withdrawal. Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement. Section 2.03. The Closing Date shall be December 31, 1994, or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower 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 for each Interest Period equal to the Cost of Qualified Borrowings determined in respect of the preceding Semester, plus one-half of one percent (1/2 of 1%). On each of the dates specified in Section 2.06 of this Agreement, the Borrower shall pay interest accrued on the principal amount outstanding during the preceding Interest Period, calculated at the rate applicable during such Interest Period. (b) As soon as practicable after the end of each Semester, the Bank shall notify the Borrower of the Cost of Qualified Borrowings determined in respect of such Semester. (c) For the purposes of this Section: (i) "Interest Period" means a six-month period ending on the date immediately preceding each date specified in Section 2.06 of this Agreement, beginning with the Interest Period in which this Agreement is signed. (ii) "Cost of Qualified Borrowings" means the cost, as reasonably determined by the Bank and expressed as a percentage per annum, of the outstanding borrowings of the Bank drawn down after June 30, 1982, excluding such borrowings or portions thereof as the Bank has allocated to fund: (A) Page 4 the Bank's investments; and (B) loans which may be made by the Bank after July 1, 1989 bearing interest rates determined otherwise than as provided in paragraph (a) of this Section. (iii) "Semester" means the first six months or the second six months of a calendar year. (d) On such date as the Bank may specify by no less than six months' notice to the Borrower, paragraphs (a), (b) and (c) (iii) of this Section shall be amended to read as follows: "(a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time, at a rate for each Quarter equal to the Cost of Qualified Borrowings determined in respect of the preceding Quarter, plus one-half of one percent (1/2 of 1%). On each of the dates specified in Section 2.06 of this Agreement, the Borrower shall pay interest accrued on the principal amount outstanding during the preceding Interest Period, calculated at the rates applicable during such Interest Period." "(b) As soon as practicable after the end of each Quarter, the Bank shall notify the Borrower of the Cost of Qualified Borrowings determined in respect of such Quarter." "(c) (iii) `Quarter' means a three-month period commencing on January 1, April 1, July 1 or October 1 in a calendar year." Section 2.06. Interest and other charges shall be payable semiannually on March 1 and September 1 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 2 to this Agreement. Section 2.08. (a) The Central Bank is designated as represen- tative of the Borrower 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 Borrower hereby entrusts the Central Bank with the responsibility for the preparation of withdrawal applications under the Loan, and for the collection of the documents and other evidence to be furnished to the Bank in support of such applications; such withdrawal applications shall to the extent practicable be con- solidated so as to apply for withdrawal of aggregate amounts of not less than one million dollars ($1,000,000) equivalent. ARTICLE III Particular Covenants Section 3.01. (a) The Borrower 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 and the actions specified in Schedule 4 to this Agreement. (b) Prior to each such exchange of views, the Borrower 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. Section 3.02. Except as the Bank shall otherwise agree, procurement of the goods to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 3 to this Agreement. Page 5 Section 3.03. (a) The Borrower shall maintain or cause to be maintained separate records and accounts adequate to reflect in accordance with consistently maintained sound accounting practices the expenditures financed out of the proceeds of the Loan. (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) of this Section for each Fiscal Year audited, in accordance with appropriate auditing 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 (6) months after the end of each such year, a certified copy of the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning said records and accounts and the audit thereof as the Bank shall from time to time reasonably request. (c) 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 or cause to be maintained, in accordance with paragraph (a) of this Section, separate records and accounts reflecting such expenditures; (ii) retain, until at least one (1) 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 audits referred to in paragraph (b) 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 procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. ARTICLE IV Additional Event of Suspension Section 4.01. Pursuant to Section 6.02 (l) of the General Conditions, the following additional events are specified, namely: (a) That a situation has arisen which shall make it improbable that the Program, or a significant part thereof, will be carried out. (b) That the Borrower shall have failed to reduce, by February 15, 1992, the share of its imports subject to quantitative restrictions by at least fifteen percentage points (15%), in terms of Domestic Production weights, as determined on the basis of the Domestic Production Value of NAP Classification items 0111 to item 6414 applicable as of Fiscal Year 1989, from the level in effect as of May 30, 1991. Page 6 ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as additional conditions to the effectiveness of this Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) The Borrower has submitted for adoption by its Chamber of Deputies a draft Fiscal Year 1992 Finance Law (Loi de Finances) allowing the Borrower to take all necessary action to reduce the share of its imports subject to quantitative restrictions by at least fifteen percentage points (15%), in terms of Domestic Production weights, as determined on the basis of the Domestic Production Value of NAP Classification item 0111 to item 6632 applicable as of Fiscal Year 1989, from the level in effect as of May 30, 1991; (b) The Borrower has reduced the aggregate share of goods subject to price control at the distribution stage by at least ten percentage points (10%) in terms of their value of Domestic Production, as determined on the basis of the Domestic Production Value of NAP Classification item 111 to item 6414 applicable as of Fiscal Year 1989, from the level in effect as of May 30, 1991; (c) The Borrower has taken any and all necessary action, satisfactory to the Bank, to amend the requirement on deposit banking institutions to hold twenty percent (20%) of their deposit assets in Bons d'Equipement, and to permit such institutions to hold any available freely market traded treasury securities of the Borrower, other than Bons d'Equipement; (d) The Borrower has furnished to the Bank an action plan, acceptable to the Bank, for the redemption over four (4) years, covering the period 1993-1996, of any and all outstanding Bons d'Equipement issued after Fiscal Year 1988; (e) The Borrower has furnished to the Bank the relevant extracts, satisfactory to the Bank, of the Borrower's draft Fiscal Year 1992 Finance Law (Loi de Finances), submitted for adoption by its Chamber of Deputies, which extracts shall: (i) amend the tax treatment of financial instruments so as to remove all restrictions limiting the sale, purchase and freedom of transfer of said financial instruments within the Borrower's territory; and (ii) harmonize the taxation of income derived from special savings accounts with the taxation of income derived from other financial instruments within the Borrower's territory; (f) The Borrower has taken any and all necessary action, satisfactory to the Bank, to allow each deposit bank operating within its territory to provide its loans at an interest rate above the prevailing Money Market Rate plus three percentage interest points (3%), provided, however, that the difference between said Money Market Rate and each such bank's respective average lending rate in respect of all of its loans, excluding Rediscounted Preferential Credits and Special Resource Credits, does not exceed three percentage points (3%); (g) The Central Bank has adopted a program of actions to strengthen its prudential banking supervision capabilities, which program shall be satisfactory to both the Bank and the Borrower; (h) The Central Bank has adopted regulations, satisfactory to the Bank, for inter alia: (i) the provisioning and classification of loans, as of January 1, 1992, by banking institutions operating within the Borrower's territory; (ii) the fixing of maximum loan concentration for each of said banking institution at forty percent (40%) of such institution's respective aggregate own funds; (iii) the definition of group ownership and control in respect of said institutions' borrowers; (iv) the definition of auditing principles upon which auditors must base their opinions, and the removal of Page 7 ceilings on the cost of long-version audits; and (v) the obligation of banking institutions operating within the Borrower's territory to provide to the Central Bank quarterly profit and loss accounts; and (i) The Borrower has increased, by at least one percentage point (1%), the interest rate on Rediscounted Preferential Credit, based on a methodology satisfactory to the Bank. Section 5.02. 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. ARTICLE VI Representatives of the Borrower; Addresses Section 6.01. Except as provided in Section 2.08 (a) of this Agreement, the Minister of Plan and Regional Development of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Minister of Plan and Regional Development Ministry of Plan and Regional Development Place Ali Zouaoui Tunis Republic of Tunisia Cable address: Telex: MIPLAN 15117 Tunis 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 248423 (RCA), Washington, D.C. 82987 (FTCC), 64145 (WUI) or 197688 (TRT) 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 By /s/ Ismail Khelil Authorized Representative INTERNATIONAL BANK FOR Page 8 RECONSTRUCTION AND DEVELOPMENT By /s/ Pieter B. Bottelier Acting Regional Vice President Middle East and North Africa SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. Subject to the provisions set forth or referred to in this Schedule, the proceeds of the Loan may be withdrawn from the Loan Account for expenditures made (or, if the Bank 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 subgroups, or any successor groups or subgroups under future revisions to the SITC, as designated by the Bank by notice to the Borrower: Group Subgroup Description of Items 112 -- Alcoholic beverages 121 -- Tobacco, unmanufactured, tobacco refuse 122 -- Tobacco, manufactured (whether or not containing tobacco substitutes) 525 -- Radioactive and associated materials 667 -- Pearls, precious and semiprecious stones, unworked or worked GroupSubgroupDescription of Items 718 718.1 Nuclear reactors, and parts thereof, fuel elements (cartridges), nonirradiated for nuclear reactors 728 728.43 Tobacco processing machinery 897 897.3 Jewelry of gold, silver or platinum group metals (except watches and watch cases) and goldsmiths' or silversmiths' wares (including set gems) 971 -- Gold, nonmonetary (excluding gold ores and concentrates) (b) Expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower, excluding, if the currency of the Borrower is also that of another country, expenditures in such currency for goods or services supplied from the territory of such other country; (c) Payments made for expenditures prior to the date of this Page 9 Agreement, except that withdrawals in an aggregate amount not exceeding the equivalent of eighty-seven million five hundred thousand dollars ($87,500,000) may be made on account of payments made for such expenditures before that date but after June 30, 1991; (d) Expenditures for goods procured under contracts costing less than the equivalent of one hundred thousand dollars ($100,000); (e) Expenditures for goods supplied under a contract which any national or international financing institution or agency other than the Bank 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 in excess of an aggregate amount equivalent to fifty million dollars ($50,000,000) for petroleum products. 3. Withdrawals for expenditures under contracts for the procure- ment of goods estimated to cost less than the equivalent of five million dollars ($5,000,000) may be permitted by the Bank upon the basis of statements of expenditure, under such terms and conditions as the Bank shall specify. 4. No withdrawal shall be made and no commitment shall be entered into to pay amounts to or on the order of the Borrower in respect of expenditures to be financed out of the proceeds of the Loan after the aggregate of the proceeds of the Loan withdrawn from the Loan Account and the total amount of such commitments shall have reached the equivalent of: (a) One hundred million dollars ($100,000,000), unless the Bank shall be satisfied, after an exchange of views as described in Section 3.01 of this Agreement based on evidence satisfactory to the Bank, with the progress achieved by the Borrower in the carrying out of the Program, and that the actions described in Part A of Schedule 4 to this Agreement have been taken; and (b) One hundred and seventy million dollars ($170,000,000), unless the Bank shall be satisfied, after an exchange of views as described in Section 3.01 of this Agreement based on evidence satisfactory to the Bank, with the progress achieved by the Borrower in the carrying out of the Program, and that the actions described in Part B of Schedule 4 to this Agreement have been taken. 5. If, after the exchange of views described in paragraph 4 above, the Bank shall have given notice to the Borrower that the progress achieved and actions taken are not satisfactory and, within ninety (90) days after such notice, the Borrower shall not have achieved progress and taken actions satisfactory to the Bank, then the Bank may, by notice to the Borrower, cancel the unwithdrawn amount of the Loan or any part thereof. SCHEDULE 2 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each March 1 and September 1 beginning September 1, 1997 through September 1, 2008 10,415,000 On March 1, 2009 10,455,000 _____________________________ * The figures in this column represent dollar equivalents determined as of the respective dates of withdrawal. (See General Conditions at Sections 3.04 and 4.03.) Page 10 Premiums on Prepayment Pursuant to Section 3.04 (b) of the General Conditions, the premium payable on the principal amount of any maturity of the Loan to be prepaid shall be the percentage specified for the applicable time of prepayment below: Time of Prepayment Premium The interest rate (expressed as a percentage per annum) applicable to the Loan on the day of prepayment multiplied by: Not more than three years 0.18 before maturity More than three years but 0.35 not more than six years before maturity More than six years but 0.65 not more than eleven years before maturity More than eleven years but not 0.88 more than fifteen years before maturity More than fifteen years before 1.00 maturity SCHEDULE 3 Procurement 1. Contracts for the procurement of goods estimated to cost the equivalent of five million dollars ($5,000,000), or more, each shall be awarded through international competitive bidding in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in May 1985 (the Guidelines), subject to the following modifications: (a) Paragraph 2.8 of the Guidelines is deleted and the following is substituted therefor: "2.8 Notification and Advertising The international community should be notified in a timely manner of the opportunity to bid. This will be done by advertising invitations to apply for inclusion in a bidder's invitation list, to apply for prequalification, or to bid; such advertisements should be placed in at least one newspaper of general circulation in the Borrower's country and, in addition, in at least one of the following forms: (i) a notice in the United Nations publication, Development Forum, Business Edition; or (ii) an advertisement in a newspaper, periodical or technical journal of wide international circula- tion; or (iii) a notice to local representatives of countries and territories referred to in the Guidelines, that are potential suppliers of the goods required." (b) The following is added at the end of paragraph 2.21 of the Guidelines: Page 11 "As a further alternative, bidding documents may require the bidder to state the bid price in a single currency widely used in international trade and specified in the bidding documents." (c) Paragraphs 2.55 and 2.56 of the Guidelines are deleted. 2. Contracts for the procurement of goods estimated to cost the equivalent of less than five million dollars ($5,000,000) shall be awarded: (a) By purchasers required to follow the Borrower's public procurement procedures for the importation of goods, on the basis of such procedures, provided that such procedures shall have been found acceptable by the Bank; and (b) By other purchasers, in accordance with established commercial practice, provided that such contracts shall be awarded on the basis of evaluation comparison of quotations obtained from suppliers from at least two (2) countries, except that direct contracting procedures acceptable to the Bank may be used where considered appropriate under paragraph 3.5 of the Guidelines. 3. Contracts for the procurement of proprietary items, or items required for standardization, may be awarded after direct negotia- tions with suppliers, subject to the prior approval of the Bank all in accordance with procedures acceptable to the Bank. 4. Subject to the prior approval of the Bank, commonly traded commodities may be procured through organized international commodity markets or other channels of competitive procurement acceptable to the Bank, in accordance with procedures acceptable to the Bank. 5. With respect to each contract referred to in paragraph 1 of this Schedule, the Borrower shall furnish to the Bank, prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids and recommendations for award, a description of the advertising and tendering procedures followed and such other information as the Bank shall reasonably request. 6. With respect to each contract referred to in paragraphs 2 and 3 of this Schedule, the Borrower shall furnish to the Bank, prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect thereof, such documentation and information as the Bank may reasonably request to support withdrawal applications in respect of such contract. 7.The provisions of the preceding paragraph 6 of this Schedule shall not apply to contracts on account of which withdrawals from the Loan Account are to be made on the basis of statements of expenditure. SCHEDULE 4 Actions Referred to in Paragraph 4 of Schedule 1 to this Agreement Part A: Actions Referred to in Paragraph 4 (a) of Schedule 1 1. Continued maintenance by the Borrower of a macro-economic framework consistent with the objectives of the Program, as determined on the basis of indicators acceptable to the Bank. 2. The Borrower has reduced the share of its imports subject to quantitative restrictions by at least thirty percentage points (30%), in terms of Domestic Production weights, as determined on the basis of the Domestic Production Value of NAP Classification item Page 12 0111 to item 6632 applicable as of Fiscal Year 1989, from the level in effect as of May 30, 1991. 3. The Borrower has increased the aggregate share of goods not subject to price control at the distribution stage to at least forty percentage points (40%) in terms of their value of the Domestic Absorption in Fiscal Year 1989, as measured on the basis of a methodology satisfactory to the Bank. 4. The Borrower has: (i) removed any and all taxation require- ments, and related rights and obligations, that restrict or otherwise impair the development and operation of an efficient secondary market for the purchase, sale and free trade of financial instruments within the Borrower's territory; and (ii) has adopted rules and regulations, satisfactory to the Bank, exempting from taxation at least one quarter (1/4) of all specific provisions and interest suspension. 5. The Central Bank has adopted regulations, satisfactory to the Bank, for inter alia: (i) reducing the maximum loan concentration permitted for each banking institution operating within the Borrower's territory to thirty-five percent (35%) of such institu- tion's respective aggregate own funds; (ii) setting forth standard auditing principles in respect of banking institutions operating within the Borrower's territory, which principles shall be consis- tent with internationally accepted auditing practices and shall include, inter alia, the obligation to provide long-version audit reports; and (iii) regulating the provision by said institutions to the Central Bank of required accounting and statistical documenta- tion, which regulation shall become effective not later than January 1, 1993. 6. The Borrower has submitted for adoption by its Chamber of Deputies a banking law satisfactory to the Bank. 7. (a) The Borrower and the Bank shall have carried out a joint review, based on data acceptable to the Bank, of the individual financial position of each audited or inspected banking institution operating within the Borrower's territory; and (b) Taking into considerations the Bank's recommendations pursuant to such review, the Borrower has put into operation action plans for, inter alia, strengthening or restructuring each of said banking institutions. 8. The Central Bank has adopted a program, acceptable to the Bank, for auditing and examining the overall viability of banking institutions accounting for at least two-thirds (2/3) of the banking operations carried out within the Borrower's territory. 9. The Borrower has taken all action necessary, satisfactory to the Bank: (a) limiting the duration and selectivity of tax advantages accorded to investors under the Borrower's investment codes; and (b) adopting satisfactory measures to reform related finanial advantages. 10. Without limitation or restriction to the provision of Section 5.01 (i) of this Agreement, the Borrower has increased, by at least two percentage points (2%), the interest rate on Rediscounted Preferential Credits, based on a methodology satisfactory to the Bank. 11. The Borrower has adopted guidelines, acceptable to the Bank, in respect of the investments and related operations of its social security funds. Part B: Actions Referred to in Paragraph 4 (b) of Schedule 1 1. Continued maintenance by the Borrower of a macro-economic framework consistent with the objectives of the Program, as determined on the basis of indicators acceptable to the Bank. Page 13 2. The Borrower has taken all necessary measures, satisfactory to the Bank, to eliminate all quantitative restrictions on imports of all goods, except for the following goods which have been previously specified in agreement with the Bank: (a) security related goods; (b) basic consumption articles whose consumer prices are subsidized by the Borrower; (c) certain luxury goods which are not produced within the Borrower's territory; and (d) certain other articles previously approved by the Bank. 3. The Borrower has reduced the aggregate share of goods not subject to price control at the distribution stage to at least sixty percentage points (60%) in terms of their value of the Domestic Absorption as of December 31, 1989, as measured on the basis of a methodology satisfactory to the Bank. 4. The Borrower has achieved progress, satisfactory to the Bank, in carrying out the action plan referred to in Section 5.01 (d) of this Agreement. 5. The Borrower has removed any and all percentage interest point ceilings applicable to the lending rate or rates charged by each deposit bank operating within its territory. 6. The Central Bank has adopted regulations, satisfactory to the Bank, for, inter alia, reducing the maximum loan concentration permitted for each banking institution operating within the Borrower's territory to twenty-five percentage points (25%) of such institution's total own funds and providing for the establishment of a surcharge, in the form of an addition to own funds, for exceeding the said maximum of twenty-five percentage points (25%). 7. The Borrower and the Bank have carried out a joint review, based on data acceptable to the Bank, of the individual financial positions of each audited or inspected banking institution operating within the Borrower's territory. 8. The Bank and the Borrower have carried out a joint review, based on terms of reference acceptable to the Bank, of the progress achieved in carrying out the actions plans referred to in sub- paragraph 7 (b) of Part A of this Schedule. 9. The Central Bank has adopted a program, acceptable to the Bank, for auditing and examining the overall viability of banking institutions accounting for all banking operations carried out within the Borrower's territory. 10.The Borrower has: (a) carried out the action plans referred to in sub-paragraph 9 (b) of Part A of this Schedule; and (b) adopted an Investment Code and related implementing regulations, all satisfactory to the Bank. 11. The Borrower has adopted a program, satisfactory to the Bank, for reforming its social security system, and has carried out the measures of said program in respect of the most disadvantaged groups of its population.