Conformed Copy - L3618 - Land Development Project for Low-Income Families - Kingdom - Loan Agreement 1

Page 1 CONFORMED COPY LOAN NUMBER 3618 MOR Loan Agreement (Land Development Project for Low-Income Families - Kingdom) between KINGDOM OF MOROCCO and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated June 14, 1993 LOAN NUMBER 3618 MOR LOAN AGREEMENT AGREEMENT, dated June 14, 1993, between KINGDOM OF MOROCCO (the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). WHEREAS: (A) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Bank to assist in the financing of the Project; (B) Part A of the Project will be carried out by National Equipment and Construction Company (Societe Nationale d'Equipement et de Construction, or SNEC) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to SNEC a portion of the proceeds of the Loan as provided in this 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 and in the Project Agreement of even date herewith between the Bank and SNEC; NOW THEREFORE the parties hereto hereby agree as follows: Page 2 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 modifications set forth below (the General Conditions) constitute an integral part of this Agreement: (a) The last sentence of Section 3.02 is deleted. (b) 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." 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) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (b) "Category" means a withdrawal category set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (c) "SNEC" means the National Equipment and Construction Company (Societe Nationale d'Equipement et de Construction), a limited liability stock company (societe anonyme) established and operating pursuant to the SNEC Charter; (d) "SNEC Charter" means the Charter (Statuts) establishing SNEC, signed on July 28, 1987 by the Minister of Housing of the Borrower; (e) "Project Agreement" means the agreement between the Bank and SNEC of even date herewith, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the Project Agreement; (f) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and SNEC pursuant to sub-paragraph (1) (a) of Part A of Schedule 5 to this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement; and "Subsidiary Loan" means the loan provided for under the Subsidiary Loan Agreement; (g) "Housing Sector Development Program" means the program of policies, objectives and actions designed to restructure and further the efficient development of the housing sector, set forth in a letter dated May 6, 1993 from the Borrower to the Bank; (h) "Dirham" and "DH" mean the currency of the Borrower; (i) "Sub-project" means a specific development project for the development of serviced residential lots to be carried out by SNEC under Part A (1) of the Project, which satisfies the requirements referred to in paragraph 1 of Part A of the Schedule to the Project Agreement; (j) "Inter-ministerial Coordinating Committee" means the inter-ministerial committee to be established pursuant to paragraph 1 of Part B of Schedule 5 to this Agreement; and (k) "Fiscal Year" means the twelve month period commencing on January 1 and ending on December 31. ARTICLE II Page 3 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 Agreement, various currencies that shall have an aggregate value equivalent to the amount of sixty-six million dollars ($66,000,000), 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. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement 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 the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan. (b) The Borrower shall, for the purposes of Part A of the Project, open and maintain a special deposit account in a currency and a financial institution, both acceptable to the Bank, 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 4 to this Agreement. Section 2.03. The Closing Date shall be June 30, 2000 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) 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: Page 4 "(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 February 15 and August 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 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 or cause to be carried out the Project with due diligence and efficiency and in conformity with appropriate administrative, economic and financial practices and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Borrower and the Bank shall otherwise agree, the Borrower shall carry out or cause to be carried out the Project in accordance with the Implementation Program set forth in Schedule 5 to this Agreement. Section 3.02. Except as the Bank shall otherwise agree, procurement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 6 to this Agreement. ARTICLE IV Other Covenants Section 4.01. The Borrower shall: (a) carry out the Housing Sector Development Program with due diligence and efficiency; (b) maintain operational procedures adequate to enable it to monitor and evaluate, in accordance with indicators satisfactory to the Bank, the progress achieved in the carrying out of the Housing Sector Development Program; (c) prepare and furnish to the Bank: (i) not later than September 30 of each year, a report, in form and substance satisfactory to the Bank, on the conclusions and recommendations indicated by the monitoring and evaluation activities performed pursuant to paragraph (b) of this Section in respect of the preceding calendar year, together with any revisions Page 5 proposed to be introduced into the Housing Sector Development Program on the basis of said report; and (ii) not later than December 31, 1996, or such later date as the Bank shall agree, a report, in form and substance satisfactory to the Bank, on the overall progress achieved in the carrying out of the Housing Sector Development Program, based on the conclusions and recommendations indicated by the monitoring and evaluation activities performed pursuant to paragraph (b) of this Section; (d) afford the Bank a reasonable opportunity to exchange views with the Borrower on each report prepared pursuant to paragraph (c) of this Section; and (e) thereafter, promptly introduce such revisions into the Housing Sector Development Program as shall have been agreed between the Borrower and the Bank. Section 4.02. Without limitation or restriction upon the provisions of Section 3.01 of this Agreement, the Borrower shall carry out a program, satisfactory to the Bank, to increase its equity holdings in SNEC by increasing SNEC's paid-in capital annually by at least four million Dirhams (DH 4,000,000) not later than June 30 in each of the Borrower's Fiscal Years 1994 through 1998, so that not later than June 30, 1998 the total paid-in capital of SNEC shall be at least equal to twenty million one hundred thousand Dirhams (DH 20,100,000). Section 4.03. (a) The Borrower shall maintain or cause to be maintained records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) of this Section, including those for the Special Account, 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 months after the end of each such year, 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, 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 or payment out of the Special Account Page 6 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 (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 V Remedies of the Bank Section 5.01. Pursuant to Section 6.02 (l) of the General Conditions, the following additional events are specified: (a) SNEC shall have failed to perform any of its obligations under the Project Agreement. (b) As a result of events which have occurred after the date of the Loan Agreement, an extraordinary situation shall have arisen which shall make it improbable that SNEC will be able to perform its obligations under the Project Agreement. (c) the SNEC Charter shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of SNEC to perform any of its obligations under the Project Agreement. (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of SNEC or for the suspension of its operations. Section 5.02. Pursuant to Section 7.01 (h) of the General Conditions, the following additional events are specified: (a) Any event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower. (b) Any event specified in paragraph (c) or paragraph (d) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) The Subsidiary Loan Agreement has been executed on behalf of the Borrower and SNEC. (b) The Inter-ministerial Coordinating Committee has been established in accordance with the provisions of paragraph 1 of Part B of Schedule 5 to this Agreement. (c) SNEC has appointed the staff referred to in paragraph 1 of Part B of the Schedule to the Project Agreement, in accordance with the provisions of said paragraph. Section 6.02. The following are specified as additional Page 7 matters, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank: (a) The Project Agreement has been duly authorized or ratified by SNEC, and is legally binding upon SNEC in accordance with its terms. (b) The Subsidiary Loan Agreement has been duly authorized or ratified by the Borrower and SNEC and is legally binding upon the Borrower and SNEC in accordance with its terms. Section 6.03. 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 VII Representatives of the Borrower; Addresses Section 7.01. The Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministcre des Finances Rabat Kingdom of Morocco Cable address: Telex: 36936 36919 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 Rabat, Kingdom of Morocco, as of the day and year first above written. KINGDOM OF MOROCCO By /s/ Mohamed Berrada Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Page 8 By /s/ Harinder Kohli Acting Regional Vice President Middle East and North Africa 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 expenditures 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) Civil Works 58,500,000 65% under Part A of the Project (2) Goods, consultants' 500,000 100% of foreign services and expenditures, training under 100% of local Part A of the expenditures Project (ex-factory cost) and 75% of local expenditures for other items procured locally in respect of goods; and 100% in respect of consultants' services and training Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (3) Consultants' 2,000,000 100% services under Part B of the Project (4) Unallocated 5,000,000 __________ TOTAL 66,000,000 ========== 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 Borrower for goods or services supplied from the territory of any country other than that of the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding the equivalent of $2,000,000, may be made on account of payments made for expenditures before that date but after December 1, 1992. Page 9 SCHEDULE 2 Description of the Project The objectives of the Project are (1) to assist in the imple- mentation of the Borrower's strategy to promote the development of residential lots for low-income families, and (2) to improve the efficiency of the housing sector, all in accordance with the Housing Sector Development Program. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Bank may agree upon from time to time to achieve such objectives: Part A: SNEC (1) The carrying out of specific development projects to develop serviced residential lots, consisting of the preparation of residential and commercial plots, the construction of roads, footpaths and public utility networks and facilities and the connection of said networks and facilities to basic infrastructure. (2) The carrying out of a program to strengthen the operations and management of SNEC, including the development and introduction of suitable data processing and financial management systems and the provision of computer hardware and software and training required therefor. Part B: Sector Development The development and carrying out of a program to further develop the housing sector, consisting of: (1) the carrying out of a study of (a) housing finance institutions and systems, including housing subsidies, and (b) property taxation systems, and, on the basis thereof, the development and implementation of a suitable strategy and program to improve resource mobilization for the housing sector and the efficiency of the housing finance sector; (2) the carrying out of a study (a) of land registration and transfer systems, and of land development, land use and housing construction regulations, and (b) of the land and housing development markets, and, on the basis thereof, the development and implementation of a strategy and program to facilitate the development of private developers of land and housing and to improve the delivery of land to be utilized for residential purposes; and (3) the carrying out of a study of the socio-economic impact of the Borrower's programs for resettlement of residents of shanty- towns, including surveys of selected resettlement activities, and, on the basis thereof, the further development and application of policies and practices designed to ensure that said resettlement programs are designed and implemented in such a manner as will improve the living standards of the persons displaced by such programs. * * * The Project is expected to be completed by June 30, 1999. SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* February 15, 1999 1,235,000 Page 10 August 15, 1999 1,280,000 February 15, 2000 1,325,000 August 15, 2000 1,375,000 February 15, 2001 1,430,000 August 15, 2001 1,480,000 February 15, 2002 1,535,000 August 15, 2002 1,595,000 February 15, 2003 1,650,000 August 15, 2003 1,715,000 February 15, 2004 1,775,000 August 15, 2004 1,845,000 February 15, 2005 1,910,000 August 15, 2005 1,985,000 February 15, 2006 2,055,000 August 15, 2006 2,135,000 February 15, 2007 2,210,000 August 15, 2007 2,295,000 February 15, 2008 2,380,000 August 15, 2008 2,470,000 February 15, 2009 2,560,000 August 15, 2009 2,655,000 February 15, 2010 2,755,000 August 15, 2010 2,855,000 February 15, 2011 2,960,000 August 15, 2011 3,070,000 February 15, 2012 3,185,000 August 15, 2012 3,305,000 February 15, 2013 3,425,000 August 15, 2013 3,550,000 _____________________________ * The figures in this column represent dollar equivalents determined as of the respective dates of withdrawal. See General Conditions, Sections 3.04 and 4.03. 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 0.15 before maturity More than three years but 0.30 not more than six years before maturity More than six years but 0.55 not more than 11 years before maturity More than 11 years but not 0.80 more than 16 years before maturity More than 16 years but not 0.90 more than 18 years before maturity More than 18 years before 1.00 maturity Page 11 SCHEDULE 4 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1) and (2); (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods and services required for Part A of the Project and to be financed out of the proceeds of the Loan allocated from time to time to the eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $3,000,000 to be withdrawn from the Loan Account and deposited in the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Bank 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 shall be made as follows: (a) For withdrawals of the Authorized Allocation, the Borrower shall furnish to the Bank a request or requests for a deposit or deposits which do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or requests, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of the Special Account, the Borrower shall furnish to the Bank requests for deposits into the Special Account at such intervals as the Bank shall specify. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Bank the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit into the Special Account such amount as the Borrower shall have requested and as shall have been shown by said documents and other evidence to have been paid out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Bank from the Loan Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of the Special Account, the Borrower shall, at such time as the Bank shall reasonably request, furnish to the Bank such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Bank shall not be required to make further deposits into the Special Account: (a) if, at any time, the Bank shall have determined that all further withdrawals should be made by the Borrower directly from the Loan Account in accordance with the provisions of Article V of the Page 12 General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (b) once the total unwithdrawn amount of the Loan allocated to the eligible Categories, less the amount of any outstanding special commitment entered into by the Bank pursuant to Section 5.02 of the General Conditions with respect to Part A of the Project, shall equal the equivalent of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Loan Account of the remaining unwithdrawn amount of the Loan allocated to the eligible Categories shall follow such procedures as the Bank shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Bank 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 Bank shall have determined at any time that any payment out of the Special Account: (i) was made for an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished to the Bank, the Borrower shall, promptly upon notice from the Bank: (A) provide such additional evidence as the Bank may request; or (B) deposit into the Special Account (or, if the Bank shall so request, refund to the Bank) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Bank shall otherwise agree, no further deposit by the Bank into the Special Account shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case may be. (b) If the Bank 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 Borrower shall, promptly upon notice from the Bank, refund to the Bank such outstanding amount. (c) The Borrower may, upon notice to the Bank, refund to the Bank all or any portion of the funds on deposit in the Special Account. (d) Refunds to the Bank made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Loan Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions. SCHEDULE 5 Implementation Program The provisions of this Schedule shall apply for the purposes of Section 3.01 (b) of this Agreement. A. Part A of the Project 1. For the purpose of carrying out Part A of the Project, the Borrower shall: (a) relend the proceeds of the Loan allocated from time to time to Categories (1) and (2) to SNEC under a subsidiary loan agreement to be entered into between the Borrower and SNEC, under terms and conditions which shall have been approved by the Bank and which shall include the terms set forth or referred to in the Annex to this Schedule 5; (b) (i) cause SNEC to perform in accordance with the provisions of the Project Agreement all the obligations of SNEC therein set forth, (ii) take or cause to be taken all action, including the provision of funds, facilities, services and other Page 13 resources, necessary or appropriate to enable SNEC to perform such obligations, and (iii) not take or permit to be taken any action which would prevent or interfere with such performance; and (c) exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Bank and to accomplish the purposes of the Loan, and, except as the Bank shall otherwise agree, not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. 2. The Bank and the Borrower hereby agree that the obligations set forth in Sections 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of Part A of the Project shall be carried out by SNEC pursuant to Section 2.03 of the Project Agreement. B. Part B of the Project 1. In order to ensure the proper carrying out of Part B of the Project, the Borrower shall establish and thereafter at all times maintain an inter-ministerial committee, with membership and terms of reference satisfactory to the Bank, to be responsible for the overall coordination, supervision and monitoring of the carrying out of Part B of the Project and of the Housing Sector Development Program. 2. Under Part B (2) of the Project, the Borrower shall: (i) carry out an initial study of the process of development of the housing sector and ensure that said study shall be completed and a copy thereof, together with an action plan for the implementation of the recommendations based thereon, of such scope and in such detail as the Bank may reasonably request, shall be furnished to the Bank not later than December 31, 1993; (ii) afford the Bank a reasonable opportunity to exchange views with the Borrower on said study and action plan; (iii) thereafter, take all action required on its part to carry out such action plan as shall have been agreed between the Borrower and the Bank; and (iv) in order to assist the Borrower in the carrying out of said study, continue to employ consultants whose qualifications, experience and terms of reference shall be satisfactory to the Bank. 3. (a) Under Part B (3) of the Project, the Borrower shall: (i) carry out an initial survey of the socio- economic impact of the plan for the resettlement of shanty-town residents to be implemented in respect of the first Sub-project approved by the Bank under Part A of the Project; (ii) furnish said survey to the Bank promptly upon its conclusion, together with the recommendations based thereon, for the Bank's review and comments; and (iii) thereafter, introduce such revisions to its resettlement policies and practices for the resettlement of residents of shanty-towns as the Borrower and the Bank shall have agreed are required to ensure that the Borrower's programs for the resettlement of said residents are designed and implemented in such a manner as will improve the living standards of said residents. (b) Without limitation upon the provisions of sub-paragraph 3 (a) of this Part, for each Sub-project which involves the development of sites to be allocated to residents of shanty-towns, the Borrower shall: (i) (A) develop a resettlement plan, consistent with Page 14 the Housing Sector Development Program and in accordance with additional policies and guidelines satisfactory to the Bank, designed to improve the living standards of said residents and (B) furnish said plan, promptly upon its preparation, to the Bank for the Bank's approval; and (ii) ensure that said residents are resettled in accordance with such resettlement plan as shall have been approved by the Bank. ANNEX TO SCHEDULE 5 Principal Terms of the Subsidiary Loan Agreement The principal terms set forth in this Schedule shall apply for the purposes of paragraph 1 of Part A of Schedule 5 to this Agreement. 1. The principal amount of the Subsidiary Loan shall be the equivalent in Dirhams (determined as of the date or respective dates of withdrawal from the Loan Account or payment out of the Special Account) of the value of the currency or currencies so withdrawn or paid out on account of the cost of goods and services for Part A of the Project to be financed out of the proceeds of the Loan allocated from time to time to Categories (1) and (2). 2. The principal amount of the Subsidiary Loan shall be repaid over a period not exceeding 10 years, inclusive of a grace period not exceeding 5 years. 3. Interest shall be charged on the principal amount of the Subsidiary Loan withdrawn and outstanding from time to time at a rate not less than 12.5%. SCHEDULE 6 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: International Competitive Bidding Except as provided in Part C hereof, goods and works shall be procured under contracts awarded 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 1992 (the Guidelines). For fixed-price contracts, the invitation to bid referred to in paragraph 2.13 of the Guidelines shall provide that, when contract award is delayed beyond the original bid validity period, the successful bidder's bid price will be increased for each week of delay by two predisclosed correction factors acceptable to the Bank, one to be applied to all foreign currency components and the other to the local currency component of the bid price. Such an increase shall not be taken into account in the bid evaluation. Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A hereof, goods manufactured in the Kingdom of Morocco may be granted a margin of preference in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraphs 1 through 4 of Appendix 2 thereto. Part C: Other Procurement Procedures Local Competitive Bidding 1. Works estimated to cost the equivalent of $5,000,000 or less Page 15 per contract, may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Bank. Local Shopping 2. Goods estimated to cost the equivalent of $50,000 or less per contract may be procured under contracts awarded on the basis of comparison of price quotations obtained from at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Bank. Part D: Review by the Bank of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract for goods to be awarded in accordance with the procedures referred to in Part A hereof and each contract for works estimated to cost the equivalent of $300,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Bank pursuant to said paragraph 2 (d) shall be furnished to the Bank prior to the making of the first payment out of the Special Account in respect of such contract. (b) With respect to each contract not governed by the preceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, said procedures shall be modified to ensure that the two conformed copies of the contract together with the other information required to be furnished to the Bank pursuant to said paragraph 3 shall be furnished to the Bank as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 4 to this Agreement. (c) The provisions of the preceding sub-paragraph (b) 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. 2. The figure of 15% is hereby specified for purposes of paragraph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants Consultants' services shall be procured under contracts awarded to consultants: (A) whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank; and (B) who shall be selected in accordance with principles and procedures satisfactory to the Bank on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981.