Caribbean Region - Sixth Caribbean Development Bank Project : Credit 2640 - Credit Agreement - Conformed

C-,Z-~Ez)-7 -7c~-cJ CREDIT NUMBER 2640 CRG Development Credit Agreement (Sixth Caribbean Development Bank Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and CARIBBEAN DEVELOPMENT BANK Dated 4 , 1994 CREDIT NUMBER 2640 CRG DEVELOPMENT CREDIT AGREEMENT Agreement, dated OtobeL - , 1994, between the INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and CARIBBEAN DEVELOPMENT BANK (the Borrower), a regional development bank established by and operating under an Agreement entered into at Kingston, Jamaica, on October 18, 1969 by the Governments of the several states and territories which were signatories thereto. 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 Association to assist in the financing of the Project; (B) the Borrower has also requested the International Bank for Reconstruction and Development (the Bank) to provide additional assistance towards the financing of the Project and by an agreement of even date herewith between the Borrower and the Bank (the Loan Agreement), the Bank is agreeing to provide such assistance, inter alia, for Part B of the Project in a principal amount estimated, as of the date herewith and subject to change from time to time, to be equivalent to seven million one hundred fifty thousand dollars ($7,150,000) (the CDB VI Project Loan) which is a portion of the larger loan to the Borrower provided for the entire Project under the Loan Agreement in an aggregate principal amount equivalent to twenty million dollars ($20,000,000) (the Loan); (C) the Association and the Borrower intend, to the extent practicable, that the proceeds of the CDB VI Project Credit (as defined in the Preamble to the Loan Agreement) provided for in this Agreement be disbursed on account of expenditures in respect of Part B of the Project Rari-Rassu with disbursements of the proceeds of the CDB VI Project Loan; and WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, to extend the Credit to the Borrower 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 the Association, dated January 1, -2- 1985, with the modifications set forth in Schedule 3 to this Agree- ment (the General Conditions) constitute an integral part of this 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) "Approved Sector" means any economic sector in respect of which the Borrower will have adopted from time to time a sectoral strategy that is satisfactory to the Association for purposes of the Project (any such strategy hereinafter called "Agreed Strategy"); (b) "Organization" means the Organization of Eastern Caribbean States established by virtue of the Treaty entered into in Basseterre, St. Christopher, on June 18, 1981 by the Governments of the following states and territory: Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, and Monteerrat; (c) "Eligible Country" means any state or territory that, on the date on which disbursements from the Credit Account have been authorized by the Association in respect of an IDA Sub-loan for an Investment Project partially or totally located in such state or territory, was listed in Schedule 5 to this Development Credit Agreement, as such Schedule may be amended from time to time by the Association by notice to the Borrower; the term "OECS Eligible Country" means an Eligible Country, as so defined, that at the same date referred to above was a member of the Organization; and the term "Government" means the government of an Eligible Country and, if the context so requires for purposes of this Agreement (including the General Conditions), other than authorizations of disbursements from the Credit Account, of any country that at one point in time was either an Eligible Country and later ceased to be so or was not an Eligible Country and later became so; (d) "Investment Enterprise" means an entity, other than a Government or an administrative sub-division thereof, which is responsible for the carrying out of an Investment Project and the ultimate recipient of the proceeds of a Sub-loan made available by means of an Investment or a Secondary Loan; (e) "Investment Project" means a specific development project, within an Approved Sector, consistent with the -3- corresponding Agreed Strategy and located in an Eligible Country, to be carried out by an Investment Enterprise established in such Eligible Country, or by the Government in question, utilizing the proceeds of an Investment or Secondary Loan, or of a Sub-loan, respectively; and "Regional Investment Project" means a specific development project to be financed directly or indirectly under two or more Sub-loans made to two or more Eligible Countries, to be carried out by one or more Investment Enterprises or one or more Governments and to be located in, or of benefit to, two or more Eligible Countries; provided, however, that only in respect of Regional Investment Projects and for purposes of this Agreement, if the project in question is to be carried out by one or more Governments, said Government or Governments shall be deemed to be the Investment Enterprise regardless of the form the joint venture, if any, may take; (f) "IDA Sub-loan" means a loan made or proposed to be madei; out of the proceeds of the Credit by the Borrower to a Government for the financing of an Investment Project to be carried out by such Government or by an Investment Enterprise and, in the latter case, such financing being provided either directly through such Government, or indirectly through one or more financial intermediaries and, in both cases, in the form of an Investment or a Secondary Loan; the term "IBRD Sub-loan" has the same meaning as stipulated in Section 1.02 (c) of the Loan Agreement; and the term "Sub-loan" means, indistinctly, an IDA Sub-loan or an IBRD Sub-loan, unless the context otherwise requires; (g) "Investment" means an equity contribution made or proposed to be made, out of the proceeds of one or more IDA Sub- loans: (i) into an Investment Enterprise, in case the equity contribution in question is made or proposed to be made, by either a Government or a financial intermediary which has borrowed under an IDA Sub-loan for the purposes of making, inter alia, equity contributions into one or more Investment Enterprises; or (ii) into a financial intermediary, when the equity contribution in question is made or proposed to be made by a Government and the financial intermediary in question shall, on its turn, use the proceeds of such equity contribution exclusively to make one or more equity contributions into, or Secondary Loans to, one or more Investment Enterprises; (h) "Secondary Loan" means a loan made or proposed to be made, out of the proceeds of one or more IDA Sub-loans, to an Investment Enterprise for an Investment Project directly by a -4- Government, or indirectly through one or more financial intermediaries, exclusively for the purposes of financing with the proceeds of the loan in question a contribution to the equity of, or a loan to, one or more Investment Enterprises for the financing of one or more Investment Projects; provided, however, that in the case of a loan made with the intermediation of financial entities, and exclusively for purposes of this Agreement, the loan in question shall be deemed made to the Investment Enterprise regardless of the form of such intermediation and the nature of the risk attached thereto; (i) "Prior Credit Agreement" means any of the following agreements: (i) the Development Credit Agreement between the Borrower and the Association, dated January 9, 1980 (Second Caribbean Development Bank Project) Credit 960 CRG; (ii) the Special Action Credit Agreement between the Borrower and the Association, acting as Administrator of the Special Account established with the funds contributed by members of the European Economic Community, dated January 9, 1980 (Second Caribbean Development Bank Project) Special Action Credit 37 CRG; (iii) the Development Credit Agreement between the Borrower and the Association, dated May 27, 1983 (Third Caribbean Development Bank Project) Credit 1364 CRG; (iv) the Development Credit Agreement between the Borrower and the Association, dated May 29, 1987 (Fourth Caribbean Development Bank- Regional Vocational and Technical Education Project) Credit 1785 CRG; and (v) the Development Credit Agreement between the Borrower and the Association dated June 18, 1990 (Fifth Caribbean Development Bank Project) Credit 2135 CRG, and "Prior Credit" means the proceeds of the Credit granted by the Association to the Borrower under any Prior Credit Agreement; (j) "Charter" means the Agreement of October 18, 1969 establishing the Borrower referred to in the Preamble to this Agreement, as amended to the date of this Agreement; (k) "Statement of Policy" means the Borrower's Ordinary Capital Resources Financial Policies and Operating Guidelines approved by the Borrower's Directors on February 12, 1987, as modified from time to time in compliance with the provisions of Section 5.01 (a) of this Agreement; (1) "Policies and Procedures Manual" means the Borrower's operating policies and procedures issued on June 22, 1989 and May 5, 1989, as modified from time to time in compliance with the provisions of Section 5.01 (a) of this Agreement; -5- (m) "Loan Agreement" means the Loan Agreement defined in the Preamble to this Agreement, as amended from time to time, and the term includes the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated January 1, 1985, as applied to such agreement, and all schedules and agreements supplemental to the Loan Agreement, and "Loan Account" has the meaning defined in such General Conditions; (n) "Sub-loan Agreement" means the contract or agreement providing for a Sub-loan entered into between one or more Eligible Countries (or, exclusively in respect of an IBRD Loan, a third party other than an Eligible Country) and the Borrower, whose rights thereunder, exclusively in respect of each IDA Sub-loan, shall be assigned to the Association pursuant to Section 3.03 of, and paragraph 3 (a) (iv) of Schedule 1 to, this Agreement; and (o) "Assignment Agreement" means the agreement between the Association and the Borrower of even date herewith providing for the terms and conditions of each assignment of Borrower's rights to the Association r2ferred to in (n) above. ARTICLE II The Credit Section 2.01. (a) The Association agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Development Credit Agreement, an amount in various currencies equivalent to seven million eight hundred thousand Special Drawing Rights (SDR 7,800,000). (b) The Credit shall. be part of the special funds resources of the Borrower, as defined in Article 9 (3) of the Charter and, consequently, shall be funnelled through a special fund, other than those established by the Borrower for purposes of each of the Prior Credits, to be established for purposes of this Credit. Except insofar as this Agreement requires otherwise, the utilization of the Credit shall be governed by the provisions of the Charter prescribing how such special funds resources shall be utilized. (c) Notwithstanding the provisions of Section 5.04 of the General Conditions, no reallocation of the proceeds of the Credit allocated from time to time to Category (1) of the table set forth in paragraph 1 of Schedule 1 to this Agreement shall be made without the acquiescence of the Borrower before the third anniversary of the Effective Date, if, by such reallocation, the equivalent in dollars of such proceeds shall become lower than the proceeds of the Loan then allocated to said Category and yet unwithdrawn and the aggregate of the CDB VI Project Loan has not been reduced by an equivalent amount. Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule I to this Agreement for either: (i) amounts paid (or, if the Association shall so agree, amounts to be paid) by the Borrower on account of withdrawals made by a Government under an IDA Sub-loan to meet the reasonable cost of goods and services required for the Investment Project in respect of which the withdrawal from the Credit Account is requested (Categories (1) (a) and (2) (a) of the aforesaid Schedule); or (ii) foreign expenditures (as defined in paragraph 2 of Schedule 1 of this Agreement) made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for an Investment Project and to be financed out of the proceeds of the Credit (Categories (1) (b) and (2) (b) of the aforesaid Schedule), as the Borrower shall elect by notice given to the Association prior to, or at the time of, submitting the first application for withdrawals from the Credit Account in respect of such Investment Project. Section 2.03. The Closing Date shall be December 31, 2002 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to the Association a commitment charge on the principal amount of the Credit not withdrawn from time to time at a rate to be set by the Association as of June 30 of each year, but not to exceed the rate of one-half of one percent (1/2 of 11) per annum. (b) The commitment charge shall accrue in respect of each portion of the Credit allocated to a specific IDA Sub-loan: (i) from the date on which the Association has notified the Borrower that the Association has authorized withdrawals from the Credit Account in respect of the IDA Sub-loan in question pursuant to sub-paragraph (a) (iii) of paragraph 3 of Schedule 1 to this Agreement or a date sixty days after the date of this Agreement, whichever comes later, (such later date hereinafter called the accrual date) to the respective dates on which amounts of the aforesaid portion of the proceeds of the Credit allocated to the IDA Sub-loan in question shall be withdrawn by the Borrower from the Credit Account or -7- cancelled; and (ii) at the rate set as of the June 30 immediately preceding the accrual date and at such other rates as may be set from time to time thereafter pursuant to paragraph (a) above. The rate set as of June 30 in each year shall be applied from the next date in that year specified in Section 2.06 of this Agreement. (c) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without restrictions of any kind imposed by, or in the territory of, the applicable Government or Governments or in the territory where the Borrower is located; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Commitment charges and service charges shall be payable semiannually on June 15 and December 15 in each year. Section 2.07. (a) Subject to paragraphs (b) and (c) below, the Borrower shall repay the principal amount of the Credit in semi- annual installments payable on each June 15 and December 15 commencing December 15, 2004 and ending June 15, 2034. Each installment to and including the installment payable on June 15, 2014, shall be one and one-fourth of one percent (1-1/4Z) of the corresponding principal amount, and each installment thereafter two and one-half of one percent (2-1/2%) of such corresponding principal amount, in respect of every portion of the Credit the proceeds of which have been used to finance an IDA Sub-loan to be repaid over a period of 35 years in accordance with the provisions of Parts B.2 and B.4 of Schedule 4 to this Development Credit Agreement; provided, however, that, in respect of the portion of proceeds of the Credit used to finance one or more IDA Sub-loans to be repaid over a period of 40 years in accordance with the provisions of such Parts B.2 and B.4, each of the installments in question to and including the aforesaid date of June 15, 2014, shall be one percent (1%) of the corresponding portion of principal amount of the Credit, and, thereafter, two percent (2%) of such portion. From time to time, but not later than December 15, 2003, the preceding amortization schedule shall be revised by the Association, by notice -8- to the Borrower, to: (i) consolidate the relevant parts of the aggregate amortization schedules of every IDA Sub-loan in respect of which withdrawals from the Credit Account shall have been authorized by the Association pursuant to the provisions of paragraph 3 (a) (iii) of Schedule 1 to this Development Credit Agreement; and (ii) take into account any cancellation pursuant to Article VI of the General Conditions and any repayments made by the Borrower under paragraph (d) of this Section. In no event shall: (i) the initial or final dates set forth in any revised amortization schedule mentioned above be different than the initial or final dates stipulated at the beginning of this paragraph (a); or (ii) the maturities between and including December 15, 2029 and June 15, 2034 include repayments of any portion of the proceeds of the Credit corresponding to repayments of an IDA Sub-loan not eligible for repayment over a period of 40 years pursuant to the provisions of Part B.2 of Schedule 4 to this Development Credit Agreement. (b) Whenever: (i) any Eligible Country's gross national product per capita, as determined by the Association, shall have exceeded $790 in constant 1985 dollars for five consecutive years; and (ii) the Bank shall consider such Eligible Country creditworthy for Bank lending, the Association may, subsequent to the review and approval thereof by the Executive Directors of the Association and after due consideration by them of the development of the economy of the Eligible Country in question, modify the terms of repayment of installments under paragraph (a) above in respect of the portion of such installments attributable to the aggregate amount of the IDA Sub-loan or Sub-loans made to the Eligible Country in question, by requiring the Borrower to require the Eligible Country in question to repay twice the amount of each such installment not yet due until the principal amount of the Credit shall have been repaid. If so requested by the Eligible Country through the Borrower, the Association may revise such modification to include, in lieu of some or all of the increase in the amounts of such installments, the payment of interest at an annual rate agreed with the Association on the principal amount of the Credit withdrawn and outstanding from time to time, provided that, in the judgment of the Association, such revision shall not change the grant element obtained under the above-mentioned repayment modification. (c) If, at any time after a modification of terms pursuant to paragraph (b) above, the Association determines that the economic condition of the Eligible Country in question has deteriorated significantly, the Association may, if so requested by the Eligible Country in question through the Borrower, further modify the terms -9- of repayment to conform to the schedule of installments as provided in paragraph (a.) above. (d) If an IDA Sub-loan or any part thereof shall be repaid to the Borrower in advance of maturity, the Borrower shall promptly notify the Association and shall repay to the Association on the next following payment date specified in the preceding paragraph (a) of this Section the amount withdrawn from the Credit Account in respect of such IDA Sub-loan or part thereof and not theretofore repaid to the Association. Any amount so repaid shall be applied by the Association to the maturity or maturities of the Credit in amounts corresponding to the outstanding amounts of the maturity or maturities of the IDA Sub-loan so repaid. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. Section 2.09. Except as the Association or the Bank shall otherwise agree, the Borrower shall not utilize, or permit the utilization of, the proceeds of the Credit to co-finance projects financed by the proceeds of any other loan made by the Bank or any other credit granted by the Association. Section 2.10. As compensation for the costs to the Borrower of carrying out the Project, the Association shall pay to the Borrower the amount of three hundred eighty-five thousand dollars ($385,000) which shall be payable in five equal installments, the first installment to be paid promptly after the Effective Date and the others on each of the following four anniversaries thereof. ARTICLE III Description of the Project; Use of Proceeds of the Credit 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 the Project and conduct its operations and affairs in accordance with sound financial standards and practices, with qualified management and personnel, and in accordance with its Charter, Statement of Policy and the Policies and Procedures Manual. - 10 - (b) For purposes of carrying out the Project and conducting its operations, the Borrower shall: (i) continue its efforts to strengthen its capacity for assessing the ecological and environmental impact of projects in accordance with sound ecological and environmeital standards and practices; and (ii) apply the policy guidelines adopted on March 20, 1990 as revised pursuant to the provisions of paragraph (a) of Section 6.01 of this Development Credit Agreement. Section 3.02. (a) The Borrower shall ensure that, unless the Association shall otherwise agree, any Sub-loan, Secondary Loan or Investment will be made on terms whereby the Borrower shall obtain, pursuant to a written contract with the Government, Investment Enterprise or financial intermediary in question, or by other appropriate legal means, rights adequate to protect the interests of the Association and the Borrower, and to ensure that Sub-loans, and when applicable Secondary Loans and Investments, are made in accordance with the procedures and on the terms and conditions set forth or referred to in Schedule 4 to this Agreement. (b) The Borrower shall exercise its rights in relation to each Investment Project in such manner as to: (i) protect the interests of the Association and the Borrower; (ii) comply with its obligations under this Agreement; and (iii) achieve the purposes of the Project. To that end, the Borrower shall not, without the Association's concurrence, amend, abrogate or waive any term or condition applying to the payment of principal of, and service charge or other charges on, the Sub-loan or to the payment of principal of, and interest or other charges on, the Secondary Loan. Section 3.03. It shall be a condition in all contracts or agreements for IDA Sub-loans that the Government agree that the rights of the Borrower under such contracts or agreements shall be assigned by the Borrower to the Association pursuant to the terms and conditions of the Assignment Agreement. Section 3.04. The Borrower shall duly perform all its obligations under agreements under which funds have been lent or otherwise put at the disposal of the Borrower for relending, investment or management. The Borrower shall promptly inform the Association of any action which would have the effect of assigning, or of amending, abrogating or waiving any material provision of, any such agreement. - 11 - ARTICLE IV Financial Covenants Section 4.01. The Borrower shall maintain or cause to be maintained separate accounts and records adequate to monitor and record the progress of the Project (including its cost and the benefits to be derived from it) and of each Investment Project and to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of the Borrower and of the special fund to be established pursuant to Section 2.01 (b) of this Agreement. Section 4.02. The Borrower shall: (i) have the records referred to in Section 4.01 of this Agreement, its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association, as soon as available but in any case not later than six months after the end of each such year: (A) certified copies of said financial statements for such year as so audited; and (B) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning the said records, accounts and financial statements and the audit thereof as the Association shall from time to time reasonably request. Section 4.03. The Association and the Borrower shall from time to time, at the request of either party, exchange views through their representatives with regard to the administration, operation, including lending policies and strategies, and financial condition of the Borrower and any subsidiary, and the Borrower shall furnish to the Association all such information as the Association shall - 12 - reasonably request concerning such administration, operations and financial condition. Section 4.04. The Borrower shall take such steps satisfactory to the Association as shall be necessary or convenient to protect itself against risk of loss resulting from changes in the rates of exchange between the currencies used in its lending and borrowing operations. ARTICLE V Remedies of the Association Section 5.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) a change shall have been made in the Charter or the Statement of Policy or the Policies and Procedures Manual which would materially and adversely affect the operations er the financial condition of the Borrower and the Borrower shall have failed to take remedial action at the request of the Association within the period afforded by the Association for the purpose; (b) a resolution shall have been passed for the dissolution or liquidation of the Borrower or of the special fund to be established pursuant to Section 2.01 (b) of this Agreement; (c) (i) the Bank or the Association shall have suspended in whole or in part the right of any Government to make withdrawals in respect of any loan made by the Bank to, or with the guarantee of, the corresponding Bank member country, or under any development credit agreement between any such country and the Association, respectively; or (ii) the Borrower shall have suspended in whole or in part the right of any Government to make withdrawals under any loan agreement between such Government and the Borrower; or (iii) any Government shall have failed to make payment of principal, interest, service charge or any other amount due to the Borrower, or to the Association as assignee of the rights thereof, - 13 - under an IDA Sub-loan, or under a Sub-loan, as defined under the applicable Prior Credit Agreement, financed with any Prior Credit granted by the Association under such Prior Credit Agreement; or (iv) any Government shall have failed to make any payment due to the Bank in consequence of any guarantee or other financial obligation of any kind extended by the Bank to any third party with the agreement of such Government; provided, however, that any suspension of the right of the Borrower to make withdrawals from the Credit Account based on this paragraph shall be limited to that part of the Credit authorized to be used to finance one or more Sub-loans to the Government or Governments in question; and (d) a subsidiary or any other entity shall have been created or acquired or taken over by the Borrower, if such creation, acquisition or taking over would adversely affect the conduct of the Borrower's business or the Borrower's financial situation or the efficiency of the Borrower's management and personnel or the carrying out of the Project. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) any event specified in paragraph (a) or (b) of Section 5.01 of this Agreement shall occur; and (b) any event specified in paragraph (d) 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 Association to the Borrower. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: - 14 - (a) that the Borrower has revised, in form and substance satisfactory to the Association, the guidelines referred to in paragraph (b) of Section 3.01 of this Development Credit Agreement; (b) that the Borrower has issued standard bidding documents satisfactory to the Bank to be used, in respect of each Investment Project, to procure civil works and goods pursuant to the provisions of Part B.1 (a) of Section I of Schedule 6 to this Development Credit Agreement applicable also to the Loan Agreement by virtue of the provisions of paragraph (a) of Section 3.01 thereof; and (c) that all conditions precedent to the effectiveness of the Loan Agreement other than those related to the effectiveness of this Agreement have been fulfilled. Section 6.02. The date of 0 , 1995 is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 6.03. The obligations of the Borrower under Sections 3.04, 4.03 and 4.04 of this Agreement and the provisions of paragraphs (a) and (b) of Section 5.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on the date twenty years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Addressas Section 7.01. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Caribbean Development Bank P.O. Box 408 Wildey St. Michael Barbados, W.I. Cable address: Telex: CARIBANK WB 2287 Barbados - 15 - For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 197688 (TRT), Washington, D.C. 248423 (RCA), 64145 (WUI) or 82987 (FTCC) IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names in Madrid, Spain, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By /2-</ ~$v~ A It AcRegional Vice President Latin America and the Caribbean CARIBBEAN DEVELOPMENT BANK By AAt h e r t Authorized Representative - 16 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit and the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit and the Loan, the allocation of the amounts of the Credit and of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of Amount of the Credit the Loan Allocated Allocated (Expressed (Expressed % of in SDR in Dollar Expenditures Category Equivalent) Equivalent) to be Financed (1) Sub-loans 5,000,000 7,150,000 under Part B of the Project (a) Amounts dis- 100% bursed under a Sub-loan (b) Goods and 100% of foreign services for expenditures an Investment Project under Part B of the Project (2) IDA Sub-loans 2,000,000 under Part A of the Project - 17 - Amount of Amount of the Credit the Loan Allocated Allocated (Expressed (Expressed % of in SDR in Dollar Expenditures Category Equivalent) Equivalent) to be Financed (a) Amounts 100% disbursed under an IDA * Sub-loan (b) Goods and 100% of foreign services expenditures for an Investment Project under Part A of the Project (3) IBRD Sub- 11,000,000 loans under Part A of the Project (a) Amounts 100% disbursed under a Sub-loan (b) Goods and 100% of foreign services for expenditures an Investment Project under Part A of the Project (4) Unallocated 800,000 1,850,000 TOTAL 7,800,000 20,000,000 18 2. For the purposes of this Schedule, the term "foreign expenditures" means expenditures in the currency of any country other than the Eligible Country or Countries in which the Investment Project is located for goods or services supplied from the territory of any country other than such Eligible Country or Countries; provided, however, that if the currency of the Eligible Country or Countries in question is also that of another country from the territory of which goods or services are supplied, expenditures in such currency for such goods or services shall be deemed to be foreign expenditures. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made: (a) in respect of any IDA Sub-loan unless: (i) the Sub-loan has been made in accordance with the procedures and on the applicable terms and conditions set forth or referred to in Schedule 4 to this Agreement; (ii) the state or territory in which the Investment Project to be financed out of the proceeds of the Sub-loan is located, or, in the case of a Regional Investment Project, the state or states or territory or territories (the territory or territories only in the case of an IBRD Sub-loan) involved as Sub-loan borrowers, are, at the time the Borrower furnishes to the Association the instrument referred to in (iv) below, an Eligible Country or Eligible Countries; (iii) the Association shall have authorized disbursements in respect of the Sub-loan on the basis of the information to be provided pursuant to paragraph 6 of Part A of Schedule 4 to this Agreement; (iv) the Association shall have received an instrument in form and substance satisfactory to the Association, whereby the Borrower assigns to the Association its rights under the Sub-loan Agreement providing for the Sub-loan in question, such assignment to be subject to and in - 19 - accordance with the provisions of the Assignment Agreement; (v) the Borrower shall have furnished to the Association evidence that the Borrower and the Eligible Country or Countries involved have entered into the following agreements in form and substance satisfactory to the Association, all in respect of the financing of the Investment Project or Regional Investment Project in question: (A) the corresponding Sub-loan Agreement providing for the Sub-loan in question; and (B) one or more agreements, if and as required, that will provide the legal framework within which the Investment Enterprise or Enterprises or the Government or Governments or financial intermediaries, if any, or any combination thereof, as the case may be, shall carry out the Investment Project, including, but not limited to, agreements or other evidence, directly related to the making of the Secondary Loan or Loans or Investment or Investments, if any and as the case may be; and (vi) the Association shall have received on behalf of the applicable Government an opinion satisfactory to the Association of counsel acceptable to the Association or if the Association shall so request, a certificate satisfactory to the Association of a competent official of the applicable Government showing that the Sub-loan Agreement in question has been duly authorized or ratified by such Government and is legally binding upon such Government in accordance with its terms, and such other similar opinions or certificates as the Association may reasonably request in respect of the agreements mentioned in (v) (B) above; or (b) in respect of any IBRD Sub-loan unless: (i) the Sub-loan has been made in accordance with the procedures and the applicable terms and conditions set forth or referred to in Schedule 4 to this Agreement; - 20 - (ii) the state or territory in which the Investment Project to be financed out of the proceeds of the Sub-loan is located, or, in the case of a Regional Investment Project, the states or territories involved as Sub-loan borrowers or as guarantors of the obligations stipulated under the Sub-loan Agreement or Agreements in question or as contributors to the equity of the Investment Enterprise in question or by having otherwise given their approval of the Sub-loan to the Borrower, are an Eligible Country or Countries at the time the Guarantee Agreement or Agreements referred to in (iv) below become effective; (iii) the Bank shall have authorized disbursements in respect of the Sub-loan on the basis of the information to be provided pursuant to paragraph 6 of Part A of Schedule 4 to this Agreement; (iv) there shall have been provided to the Bank: (A) a guarantee or guarantees from a Bank member country, in form and substance satisfactory to the Bank, of the payment of principal of, and interest and other charges on, the Loan provided for under the Loan Agreement, and the premium, if any, on the prepayment of such Loan, to the extent of the amounts of the said loan to be withdrawn from the account to be opened by the Bank under the Loan Agreement and to be applied to the Sub-loan; and (B) on behalf of the Guarantor or Guarantors, an opinion or opinions satisfactory to the Bank, of one or more counsel acceptable to the Bank showing that the corresponding Guarantee Agreement or Agreements have been duly authorized by such Guarantor or Guarantors and are legally binding upon such Guarantor or Guarantors in accordance with their terms; and (v) the Borrower shall have furnished to the Bank evidence that the Borrower and the Eligible Country or Countries involved have entered into the following agreements in form and substance 21 - satisfactory to the Bank, all in respect of the Investment Project or Regional Investment Project in question: (A) the corresponding S'b-loan Agreement; (B) if the Sub-loan is not made to the Eligible Country in question, the corresponding guarantee agreement with, or instrument evidencing the approval or involvement of such Eligible Country; and (C) if the Sub-loan is made to a financial intermediary, the one or more agreements that will provide the legal framework within which the Investment Enterprise or Enterprises or the Government or Governments or any financial intermediaries, if any, or any combination thereof, as the case may be, shall carry out the Investment Project, including, but not limited to, agreements or other evidence, directly related to the making of the Secondary Loan or Loans or Investment or Investments, if any and as the case may be; or (c) in respect of payments made for expenditures prior to the date of this Agreement, except that withdrawals may be made on account of payments made for expenditures before that date but not before a date one hundred and eighty days prior to the date on which the Association or the Bank shall have received, in respect of the corresponding Sub-loan, the request and information required under paragraph 6 of Part A of Schedule 4 to this Agreement. - 22 - SCHEDULE 2 Description of the Project The objectives of the Project are: (i) to channel in the most economic manner the proceeds of the Loan and Credit to Eligible Countries to support projects in the Approved Sectors; (ii) to enhance the amount and scope of development and financial services offered to Eligible Countries through better work sharing arrangements emong the Bank, the Association and the Borrower under their current collaborative program; and (iii) to help the Borrower to implement the Agreed Strategies and its institutional strategies, including the proposed Borrower's strategy to expand its lending to the private sector through financial intermediaries and for human resource development, and to strengthen its institutional capabilities to undertake effective portfolio management and its economic and sector work, providing advice on appropriate sectoral strategy and policies for economic development of Organization countries, within the aforesaid collaborative program. The Project consists of the following Parts, subject to such modifications as the Borrower and the Association and the Bank may agree upon from time to time to achieve such objectives: Part A: The financing of specific development projects by the Borrower, utilizing either proceeds of the Loan Account or of the Credit Account, as the case may be, through IBRD or IDA Sub-loans to Governments, or, by means of such Sub-loans, through Secondary Loans to and Investments in Investment Enterprises within the applicable Eligible Countries. Part B: The financing of specific development projects by the Borrower, utilizing jointly proceeds of the Loan Account and the Credit Account, through Sub-loans to Governments or, by means of such Sub-loans, through Secondary loans to and Investment in Investment Enterprises within the applicable Eligible Countries. The Project is expected to be completed by June 30, 2002. - 23 - SCHEDULE 3 Modifications of the General Conditions For purposes of this Agreement, the provisions of the General Conditions are modified as follows: 1. Section 1.01 is deleted and replaced by the following Section 1.01: "Section 1.01. Application of General Conditions. These General Conditions set forth certain terms and conditions generally applicable to development credits granted by the Association. They apply to any development credit agreement providing for any such development credit to the extent and subject to any modifications set forth in such agreements." 2. Paragraphs 5 and 10 of Section 2.01 are deleted and replaced by the following paragraphs 5 and 10, and the following new paragraph 15 is added to said Section: "5. 'Borrower' means the party to the Development Credit Agreement to which the Credit is granted." "10. 'External Debt' means any debt which is or may become payable in a currency other than the currency of the country corresponding to the applicable Government." "15. 'Eligible Country', 'Government', 'IDA Sub- loan', 'Prior Credit' and 'Sub-loan Agreement' have the meanings defined in the Development Credit Agreement." 3. The last sentence of Section 3.02 is deleted. 4. The phrase "in the currency of the Borrower" in Section 4.01 is deleted and replaced by the phrase "in the currency of the applicable Eligible Country". 5. Paragraph (b) of Section 4.06 is deleted and replaced by the following paragraph: "(b) The principal of, and service charges on, the Credit shall be paid without restrictions of any kind - 24 - imposed by any Government, or in the territory of any Eligible Country, or in the territory where the Borrower is located." 6. Section 5.08 is deleted and replaced by the following Section 5.08: "Section 5.08. Treatment of Taxes. It is the policy of the Association that no proceeds of the Credit shall be withdrawn on account of payments for any identifiable taxes levied by, or in the territory of, any Eligible Country or in the territory where the Borrower is located, on goods or services, or on the importation, manufacture, procurement or supply thereof . To that end, if the amount of any taxes levied on or in respect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association may, by notice to the Borrower, increase or decrease the percentage for withdrawal set forth or referred to in respect of such item in the Development Credit Agreement as required to be consistent with such policy of the Association." 7. Section 5.09 is deleted and replaced by the following Section 5.09: "Section 5.09. Payment by the Association. The Association shall pay the amounts withdrawn by the Borrower from the Credit Account only to or on the order of the Borrower or, with the prior and specific written request of the Borrower, to or on the order of an agency of a Government; provided, however, that any request of the Borrower that such amounts be paid to or on the order of an agency of a Government shall be deemed also a representation made by the Borrower to the Association that: (i) the Borrower has received, and has agreed to, a specific written request from an authorized representative of the Government in question to the effect that such amounts be paid to or on the order of the agency in question; and (ii) that the Borrower is satisfied that the payment in question is made in direct connection with expenditures for the Project eligible for financing under the Credit." - 25 - 8. Paragraph (a) of Section 6.02 is deleted and replaced by the following paragraph (a): "(a) The Borrower shall have failed to make payment (notwithstanding the fact that such payment may have been made by a third party) of principal, interest, service charges or any other amount due to the Association or the Bank: (i) under any development credit agreement between the Borrower and the Association, including the Development Credit Agreement, except when the failure to make such payment is related to a corresponding default on the part of an Eligible Country in the payment of debt service or other charges payable pursuant to any agreement, including a Sub-loan Agreement, under which proceeds of the Credit or of a Prior Credit have been relent by the Borrower to such Eligible Country, and which has given rise to rights of the Borrower which have been assigned to the Association; or (ii) under any loan agreement between the Borrower and the Bank; or (iii) in consequence of any guarantee or other financial obligation of any kind extended by the Bank to any third party with the agreement of the Borrower, provided, however, that, for purposes of this paragraph a payment made to the Association by a Government (as defined in any agreement referred to in (i) above), upon request from the Association exercising, as assignee of the Borrower, the right of the Borrower to receive such payment from such Government, shall not be deemed made by a third party." 9. Paragraph (e) of Section 6.02 is deleted and replaced by the following paragraph: "(e) (i) The Association shall have dispatched a notice to the Borrower indicating that any country listed in Schedule 5 to the Development Credit Agreement as an Eligible Country has been deleted therefrom; or (ii) any Eligible Country shall have been suspended from membership in, or not been admitted as or ceased to be a member of, the Association; or (iii) any Eligible Country shall have ceased to be a member of the International Monetary Fund; provided, however, that any suspension of the right of the Borrower to make withdrawals from the Credit Account based on this paragraph shall be limited to that part of the Credit - 26 - intended to be used to finance one or more IDA Sub-loans to such Eligible Country; and provided further, that the provisions of this paragraph shall not apply, in the case of sub-paragraph (i) above, in respect of any IDA Sub-loan to the Eligible Country in question in respect of which disbursements from the Credit Account have been authorized before the dispatch referred to in such sub- paragraph (i) has taken place." 10. Section 6.03 is deleted and replaced by the following Section 6.03: "Section 6.03. Cancellation by the Association. If: (a) the right of the Borrower to make withdrawals from the Credit Account shall have been suspended with respect to any amount of the Credit for a continuous period of thirty days; or (b) at any time, the Association determines, after consultation with the Borrower, that an amount of the Credit will not be required to finance the Project's costs to be financed out of the proceeds of the Credit; or (c) at any time; the Association determines that the procurement of any item is inconsistent with the procedures set forth or referred to in the Development Credit Agreement and establishes the amount of the expenditures in respect of such item which would otherwise have been eligible for financing out of the proceeds of the Credit, and further determines that the amount in question cannot or should not be used in connection with other Investment Project or Projects; or (d) after the Closing Date, an amount of the Credit shall remain unwithdrawn from the Credit Account; or (e) by the date specified in paragraph 6 (b) of Part A of Schedule 4 to the Development Credit Agreement or another date agreed upon pursuant to the provisions of such paragraph: (i) no requests permitted under paragraph 6 (a) of such Part A shall have been received; or (ii) having been so received, shall have been denied, the Association may, by notice to the Borrower, terminate the right of the Borrower to submit such requests or to make withdrawals from the Credit Account, as the case may be, with respect to such amount or portion of the Credit. Upon the giving of such notice, such amount or portion of the Credit shall be cancelled." - 27 - 11. The words "commitment charge, if any and" are added between the words "together with the" and the words "service charges thereon" in the introductory paragraph to Section 7.01, and paragraph (a) of such Section is hereby deleted. 12. Sub-paragraph (i) of paragraph (b) of Section 7.01 is hereby deleted and replaced by the following: "(i) under any development credit agreement between the Association and the Borrower (including the Development Crcdit Agreement) except when the default in question is related to a corresponding default on the part of a Government or an Eligible Country in the payment of debt service or other charges payable pursuant to any agreement, including a Sub-loan Agreement, under which proceeds of the Credit or of a Prior Credit have been relent by the Borrower to such Government or Eligible Country, and which has given rise to rights of the Borrower which have been assigned to the Association, or". 13. Section 8.01 is hereby deleted and replaced by the following Section: "Section 8.01. Taxes. (a) The principal of, and other charges on, the Credit and/or each IDA Sub-loan shall be paid without deduction for, and free from, any taxes levied by, or in the territory of any Eligible Country, or levied in the territory where the Borrower is located. (b) The Development Credit Agreement, the Assignment Agreement defined in Section 1.02 (o) of the Development Credit Agreement, and any other agreement to which these General Conditions shall be made applicable, shall be free from any taxes levied by, or in the territory of, the applicable Eligible Country, or levied in the territory where the Borrower is located on, or in connection with, the execution, delivery or registration thereof." 14. Paragraph (b) of Section 9.01 is deleted and replaced by the following paragraph (b): - 28 - "(b) The Borrower shall require that each Eligible Country affords all reasonable opportunity for representatives of the Association to visit any part of its territories for purposes related to the Credit." 15. Section 9.02 is deleted and replaced by the following: "Section 9.02. Financial and Economic Data. The Borrower shall furnish or shall require that each Eligible Country furnishes to the Association all such information as the Association shall reasonably request with respect to financial and economic conditions in the Eligible Country's territory including its balance of payments and its external debt as well as that of its political or administrative subdivisions and any entity owned or controlled by, or operating for the account or benefit of such Eligible Country or any such subdivision, and any institutions performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Eligible Country in question." 16. The words "corporate and" are added immediately before the word "governmental" in paragraph (a) of Section 12.01. - 29 - SCHEDULE 4 Procedures for and Terms and Conditions of Sub-loans, Secondary Loans and Investments Part A: 1. The appraisal report for each Investment Project shall be prepared in accordance with the Statement of Policy and the Policies and Procedures Manual, shall provide an analysis of the technical feasibility, financial viability, including, where applicable, commercial soundness and availability of markets, and economic justification, of the Investment Project, and shall show such Project's consistency with the corresponding Agreed Strategy. It shall also provide an assessment of the impact of carrying out the Investment Project in terms of environmental, health and safety considerations. 2. The aggregate amount of Sub-loans to be made in respect of an Investment Project shall not exceed the following percentages of the estimated cost of the Investment Project: (a) 80%, in the case of an OECS Eligible Country, Anguilla, Belize, Guyana, Jamaica and Turks and Caicos Islands; or (b) 70%, in the case of Trinidad and Tobago; or (c) a percentage to be determined by agreement between the Association and the Borrower before disbursements are authorized, in the case of financing of Regional Sub- projects. 3. Each IDA Sub-loan to an OECS Eligible Country shall be made in conjunction with an IBRD Sub-loan to such OECS Eligible Country for the financing of the same Investment Project so as to blend Loan and Credit proceeds with a proportion of Loan proceeds of not less than 50%. Disbursement applications from the Credit and Loan Accounts for each Investment Project to be financed with a blend of Credit and Loan proceeds shall be prepared and filed with the Association so as to enable, to the extent possible, that withdrawals of said proceeds be made pari-passu and maintaining the corresponding proportion of Credit and Loan proceeds. - 30 - 4. The aggregate amount of the IDA Sub-loans or IBRD Sub-loans made or to be made to any one given Eligible Country shall not at any time exceed 352 of Credit or Loan proceeds, respectively, except in special circumstances where the Association and the Borrower may find justifiable to agree to a larger percentage of financing either with Credit or Loan proceeds, or both. 5. No expenditures for goods or services required for an Investment Project shall be eligible for financing out of the proceeds of the Credit or the Loan unless the Association or the Bank in the case of each IBRD Sub-loan other than an IBRD Sub-loan to be blended with an IDA Sub-loan, pursuant to Part A.3 above, for the financing of the Investment Project in question, have authorized withdrawals from the Credit and/or Loan Account, as the case may be, and such expenditures shall have been made not earlier than one hundred and eighty days prior to the date on which the Association or the Bank, as the case may be, shall have received relevant information in connection with the request required under paragraph 6 (a) of this Part A of this Schedule in respect of the Sub-loan in question. 6. (a) Each request by the Borrower for authorization to make withdrawals from the Loan or Credit Account, as the case may be, in respect of a Sub-loan shall be made on the basis of: (i) an appraisal of the Investment Project (including an assessment of the environmental impact thereof) and of the financial intermediary, if any, and the Investment Enterprise or agency of Government responsible for the carrying out thereof (including a description of the expenditures proposed to be financed out of the proceeds of the Credit and/or Loan, as the case may be); (ii) the terms and conditions of the Sub-loan, including the repayment terms therefor; and (iii) terms and conditions of the Investment and/or Secondary Loan, if any, including the repayment terms for the latter, and proposed legal and institutional framework for the materialization of the Investment and/or Secondary Loan. (b) Except as the Association shall have otherwise determined, requests made pursuant to the provisions of sub- paragraph (a) of this paragraph shall be presented to the Association and/or the Bank, as the case may be, on or before September 30, 1998. 7. Sub-loans, Secondary Loans and Investments shall be made on terms whereby the Borrower shall obtain, by one or more written contracts with the Government, financial intermediary, if any, or - 31 - Investment Enterprise in question, as the case may be, or by other appropriate legal means, rights adequate to protect the interests of the Association, the Bank and the Borrower, including, in the case of any Sub-loan and Secondary Loan, and to the extent that it shall be appropriate in the case of any Investment, the right to: (a) require the Government or Investment Enterprise, as the case may be, to carry out and operate the Investment Project with due diligence and efficiency and in accordance with sound technical, environmental, financial and managerial standards and to maintain adequate records; (b) require that: (i) the goods and services to be financed out of the proceeds of the Credit and/or the Loan, as the case may be: (A) shall be purchased at a reasonable price, account being taken also of other relevant factors such as time of delivery and efficiency and reliability of the goods and availability of maintenance facilities and spare parts therefor, and, in the case of services, of their quality and the competence of the parties rendering them; and (B) shall be procured in accordance with the provisions of Schedule 6 to this Agreement; and (ii) such goods and services shall be used exclusively in the carrying out of the Investment Project; (c) inspect, by itself or jointly with representatives of the Association and/or the Bank, if the Association and/or the Bank shall so request, such goods and the sites, works, plants and construction included in the Investment Project, the operation thereof, and any relevant records and documents; (d) require that: (i) the Government or Investment Enterprise, as the case may be, shall take out and maintain with responsible insurers such insurance, against such risks and in such amounts, or make adequate provision for the insurance of such risks, as shall be consistent with sound business practices; and 1ii) without any limitation upon the foregoing, such insurance or adequate provision shall cover hazards incident to the acquisition, transportation and delivery of goods financed out of the proceeds of the Credit and/or the Loan, as the case may be, to the place of use or installation, any indemnity thereunder to be made payable in a currency freely usable by the Investment Enterprise to replace or repair such goods; (e) obtain all such information as the Association or the Bank or the Borrower shall reasonably request relating to the - 32 - foregoing and to the administration, operations and financial condition of the relevant agency of the Government or Investment Enterprise, or, if any, the financial intermediary, as the case may be, and to the benefits to be derived from the Investment Project, and, particularly such information as shall be necessary or convenient to enable the Borrower to discharge its obligations under Sections 9.06 and 9.07 of the General Conditions referred to in Sections 1.01 and 1.02 (m), respectively, of the Development Credit Agreement; (f) require the Government or Investment Enterprise, as the case may be, to take such other action on their part as shall be necessary in respect of Sections 9.07 and 9.08, and 9.08 and 9.09, respectively, of each of the General Conditions mentioned in (e) above to enable the Borrower to discharge its obligations thereunder; (g) suspend or terminate the right of the Government, financial intermediary, if any, or Investment Enterprise, as the case may be, to the use of the proceeds of the Credit and/or the Loan, as the case may be, upon failure by such Investment Enterprise to perform its obligations under its contract with the Borrower; and (h) accelerate the maturities under each Sub-loan Agreement providing for IDA Sub-loans in the events mentioned in paragraph (c) of Section 5.01 of this Agreement and to submit disputes under each such Agreement to arbitration in conformity with the provisions of Section 10.03 of the General Conditions referred to in Section 1.01 of this Agreement. Part B: 1. IDA Sub-loans shall be denominated in an amount of Special Drawing Rights to be determined as the aggregate value of SDR of each withdrawal from the Credit Account in respect of the IDA Sub- loan in question as of the date of the respective withdrawal, and sha.L. be repayable in amounts equivalent to the value of the currency or currencies withdrawn from the Credit Account expressed in terms of SDR determined as of the date or dates of repayment. 2. Subject to the provisions of 3 below, repayment periods of IDA Sub-loans shall extend to as close as possible to 35 years, including a grace period which shall not exceed 10 years, both counting from the date of the Borrower's Board approval, as estimated at the time of negotiations for the Sub-loan in question; - 33 - provided, however, that in the case of Guyana, the repayment period may extend to as close as possible to 40 years unless the Association shall have otherwise determined and so informed the Borrower. 3. Notwithstanding the stipulations in 2 above, neither the grace period for, nor the last maturity under, an IDA Sub-loan shall extend beyond a date 15 days earlier than the first payment date set forth in Section 2.07 (a) of this Agreement and a date 15 days earlier than the last payment date set forth in such Section 2.07 (a), respectively. The grace period may, however, be shorter so as to enable the IDA Sub-loan in question to conform to the provisions of 4 below. 4. Subject to 5 below, repayment of an IDA Sub-loan to be repaid over a 35-year period shall be in installments payable semiannually and equivalent to one and one-fourths percent (1-1/4%) of the principal amount relent under the IDA Sub-loan in question during the eleventh through twentieth year of the repayment period and equivalent to two and one-half percent (2-1/2%) of such principal amount thereafter, such percentages to be reduced to 1% and 2%, respectively, in the case of an IDA Sub-loan to be repaid during a 40 years period. 5. Each Sub-loan Agreement for an IDA Sub-loan shall include provisions to the effect of enabling the Borrower to modify the terms of repayment of the installments stipulated under the Sub-loan Agreement in question pursuant to 4 above, due to modifications that the Association may make, in the terms of repayment of the IDA credit under Section 2.07 (a) of this Agreement, pursuant to paragraphs (b) and (c) of such Section. 6. Interest on the outstanding and unpaid principal amount of a Secondary Loan financed under an IDA Sub-loan shall be payable at a rate in line with the applicable rate then prevailing for loans financed by the Borrower with its ordinary capital resources. 7. A comitment charge shall be charged in respect of the principal amount of an IDA Sub-loan not withdrawn from time to time, shall be paid at the same rate applicable to, and shall accrue in the same fashion as, the unwithdrawn principal amount of the Credit, as stipulated in Section 2.04 of the Development Credit Agreement. - 34 - Part C: 1. Without limitation or restriction upon the Borrower's obligations under Section 2.07 of the Loan Agreement, the repayment and grace periods of each IBRD Sub-loan or Secondary Loan, financed thereunder, or both, as the case may be, shall be determined by the Borrower on Investment Project grounds. 2. Interest and other charges, including connitment charges in respect of each IBRD Sub-loan, shall be determined by the Borrower in accordance with the Statement of Policy. A commitment charge shall be charged in respect of the principal amount of an IBRD Sub- loan not withdrawn from time to time, shall be paid at a rate not lower than the rate applicable to, and shall accrue in the same fashion as, the unwithdrawn principal amount of the Loan, as stipulated in Section 2.04 of the Loan Agreement and Section 3.02 of the applicable General Conditions. - 35 - SCHEDULE 5 Eligible Countries Dominica Grenada Guyana Saint Lucia Saint Vincent and the Grenadines - 36 - SCHEDULE 6 Procurement and Consultant's Services Section I. Procurement of Goods and Works Part A: International Competitive Bidding 1. Except as provided in Part B hereof, goods and works for Investment Project 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). (a) 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 Association, 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. (b) In the procurement of goods and works in accordance with this Part A, the Borrower shall use the relevant atandard bidding documents issued by the Bank, with such modifications thereto as the Association shall have agreed to be necessary for the purposes of the Project. Where no relevant standard bidding documents have been issued by the Bank, the Borrower shall use bidding documents based on other internationally recognized standard forms agreed with the Association. 2. The reference to "local representatives of eligible countries" and to "the Borrower's country" in paragraph 2.9 of the Guidelines shall be understood as a reference to representatives in Barbados of said countries and in the Eligible Country or Countries in question. Part B: Other Procurement Procedures 1. (a) Subject to 2 below and in respect of each Investment Project to be carried out by a Government or by an Investment Enterprise controlled by a Government, civil, works and goods estimated to cost, respectively, the equivalent of $1,500,000 or - 37 - less and $150,000 or less, may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in Barbados and the Eligible Country involved or regionally in the regional states or territories which are currently members of the Borrower (Regional Countries), as determined by the Borrower, in accordance with procedures satisfactory to the Association and the Borrower. (b) In respect of an Investment Project to be carried out by a privately owned and controlled Investment Enterprise, civil works or goods estimated to cost less than the equivalent of $3,000,000 may be procured in accordance with established commercial practices, acceptable to the Association and in conformity with the provisions of paragraph 3.9 of the Guidelines. 2. In respect of an Investment Project to be carried out by a Government or by an Investment Enterprise owned or controlled by a Government, civil works estimated to cost less than $150,000 equivalent or goods estimated to cost less than $25,000 equivalent may be procured under contracts awarded on the basis of comparison of price quotations from at least three qualified contractors or suppliers, as applicable, including one or more based in the Eligible Country in question and at least one based in one of the other Regional Countries, or more than one in the absence of any based in such Eligible Country. Part C: Review by the Association of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: it is hereby stipulated that with respect to each contract awarded under the Project and to be financed out of the proceeds of the Credit, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. 2. The figure of 20Z is hereby specified for purposes of para- graph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants In order to assist a Government or Investment Enterprise or a financial intermediary in connection with the carrying out or financing of an Investment Project, the Borrower shall cause consultants to be employed whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Association on the - 38 - 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. For complex, time-based assignments, the Borrower shall employ such consultants under contracts using the standard form of contract for consultants' services issued by the Bank, with such modiCications as shall have been agreed by the Association. Where nro relevant standard contract documents have been issued by the Bank, the Borrower shall use other standard forms agreed with the Association. 2. Notwithstanding the provisions of paragraph 1 of this Section, the provisions of the Consultant Guidelines requiring prior Association review or approval of budgets, short lists, selectionL procedures, letters of invitation, proposals, evaluation reports and contracts shall not apply: (a) to contracts with consulting firms estimated to cost less than $100,000 equivalent each; (b) to contracts with individuals estimated to cost less than $30,000 equivalent each; however, the exceptions to prior Association review shall not apply; (c) to the terms of reference for such contracts; (d) to single source selection of firms; (e) to assignments of a critical nature as reasonably determined by the Association; (f) to amendments to contracts with consulting firms raising the contract value to $100,000 equivalent or above; or (g) to amendments to contracts with individuals raising the contract value to $30,000 equivalent or above. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that thE foregoing is a true copy of the original in the archives of the International Development Association. FOR SECRETARY