Senegal - Terres Neuves Resettlement Project : Credit 0254 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 254 SE Development Credit Agreement (Terres Neuves Resettlement Project) BETWEEN 0 REPUBLIC OF SENEGAL AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JUNE 18, 1971 CONFORMED COPY CREDIT NUMBER 254 SE Development Credit Agreement (Terres Neuves Resettlement Project) BETWEEN REPUBLIC OF SENEGAL AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JUNE 18, 1971 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated June 18, 1971, between REPUBLIC OF SENEGAL (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated January 31, 1969, with the same force and effect as if they were fully set forth herein, subject, however, to the followir, modifications thereof (said General Conditions AApplicable to Development Credi Agreements of the Association, as so modified, being hereinafter calied the General Conditions): (a) Section 5.01 is deleted; (b) Section 6.02 (h) is deleted and Section 6.02 (i) is renumbered into 6.02 (h); and (c) Section 6.05 is amended to read as follows: "Section 6.05. Application of Cancellation to Maturities of the Credit. Except as otherwise agreed between the Association and the Borrower, any cancellation shall be applied pro rata to the several instalments of the principal amount of the Credit which shall mature after the date of such cancellation and shall not have been theretofore sold or agreed to be sold by the Association." Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "STN" means the statutory corporation to be created and maintained pursuant to Section 3.01 (b) of this Agreement; 4 (b) "Project Area" means an area of about 250 square kilometers situated between, but not including, the villages of Koumpentoum, Malem-Niani, Ndougossine and Kountouata in the Borrower's Oriental Province; and (c) "Participant" means "Diakonisches Werk Der Evangelischen Kirche In Deutschland ". ARTICLE 11 The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to one million three hundred fifty thousand dollars ($1,350,000). 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, as such Schedule shall be amended from time to time, for expenditures made (or, if the Association 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 under the Development Credit Agreement; provided, however, that, except as the Association shall otherwise agree, no withdrawal shall be made on account of expenditures in the territories of any country which is not a member of the Bank (other than Switzerland) or for goods produced in, or services supplied from, such territories. Section 2.03. (a) Except as the Association shall otherwise agree, the goods and services (other than services of consultants) required for the Project and to be financed out of the proceeds of the Credit shall be procured on the basis of procedures consistent with the Guidelines for Procurement under World Bank Loans and IDA Credits published by the Bank in August 1969; provided, however, that, without in any way restricting or limiting any right, power or remedy of the Association under the Development Credit Agreement, expenditures under any contract for the procurement of any such goods or services which the Association shall reasonably determine to have been awarded according to procedures inconsistent with those hereinabove set forth or referred to, shall not be financed out of the proceeds of the Credit. (b) Contracts for the above mentioned goods and services need not be made subject to international competitive bidding. * 5 Section 2.04. The Closing Date shall be December 31, 1977 or such other date as shall be agreed between the Borrower and the Association. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semi-annually on May 1 and November 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit withdrawn from the Credit Account in semi-annual installments payable on each May 1 and November 1 commencing November 1, 1981 and ending May 1, 2021, each installment to and including the installment payable on May 1, 1991 to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the Republic )f France is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out Part A of the Project and shall cause STN to carry out Parts B and C of the Project with due diligence and efficiency and in conformity with sound administrative, financial, engineering and agricultural practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) The Borrower shall create and maintain a statutory corporation to be named La SociMtd des Terres Neuves with powers and authorities adequate to carry out Parts B and C of the Project in accordance with the provisions of this Agreement. Section 3.02. (a) The Borrower shall make the funds required for Parts B and C of the Project available to STN as follows: an amount equivalent to one hundred twenty-six thousand dollars ($126,000) in the form of equity capital and the balance in the form of a grant. 6 (b) The funds referred to in paragraph (a) of this Section shall be made available to STN in accordance with annual budgets proposed by STN and approved by the Borrower and the Association and before each three months' period during which they shall be needed by STN. (c) The before-mentioned equity capital shall be paid in three annual tranches, the first in an amount equivalent to fifty-four thousand dollars ($54,000) and the last two each in an amount equivalent to thirty-six thousand dollars ($36,000), provided, however, that the aggregate amount made available to STN under the Project on or before the due payment date of any tranche, after deduction of the amounts paid under previous tranches, if any, shall be counted towards the payment of such tranche. Section 3.03. In order to assist the Borrower in carrying out the surveys included in Part A of the Project, the Borrower shall employ consultants or an agency acceptable to the Association upon terms and conditions satisfactory to the Association. Section 3.04. Except as the Association shall otherwise agree, the Borrower shall cause STN to carry out Part B of the Project in accordance with the following provisions: (a) In order to assist STN in the management of Part B of the Project, STN shall employ management consultants or a managing agency acceptable to the Borrower and the Association upon terms and conditions satisfactory to the Borrower and the Association; (b) STN shall conclude arrangements satisfactory to the Association with the Borrower's Public Works Department to construct under force account the access roads included in the Project; (c) STN shall select the settlers in accordance with policies and procedures satisfactory to the Borrower and the Association; (d) STN shall conclude with each farmer a farm contract, substantially in accordance with a form of farm contract acceptable to the Borrower and the Association, providing that the farmer shall comply with the requirements of his farm plan, and specifying inter alia land allocation, the terms and conditions of land clearing and seasonal and medium-term loans available to the farmer, and marketing arrangements; (e) STN shall furnish settlers with food and building materials required by them during the first year of settlement over and above their own means; 7 (f) STN shall employ qualified contractors to construct the warehouses and houses for STN staff included in the Project; (g) STN shall prepare and update each year a farm plan for each farmer, specifying in detail his agricultural requirements, such as agricultural inputs, equipment and credit; (h) STN shall provide, promptly as needed, to each farmer the animals, equipment, inputs and credit required under his farm plan and to each village included in the Project the necessary communal equipment; (i) Seasonal credit included in the Project shall bear interest at the rate applicable under the Borrower's annual agricultural programs; (j) Medium-term credit included in the Project shall bear interest at the rate applicable under the Borrower's annual agricultural programs and shall be repaid in five equal annuities of principal and interest. Section 3.05. The Borrower shall cause STN to provide all rock phosphate fertilizer required under the Project free of charge to the farmers, and to take * all such other action as shall be necessary to provide sufficient other agricultural inputs against such prices or such other incentives as shall be required to ensure the successful participation of the farmers in the Project. Section 3.06. (a) The Borrower shall cause STN to employ consultants acceptable to the Borrower and the Association upon terms and conditions satisfactory to the Borrower and the Association, for the purpose of carrying out the annual surveys and the feasibility study included in Part C of the Project. (b) The annual surveys shall be carried out on ten per cent of all farms in the Project Area and a special report shall be issued by September 1973 which shall analyze the results of the first two seasons of the Project and make appropriate recommendations for a project representing the second phase of the Borrower's farm settlement program in its Oriental Province. Section 3.07. (a) The Borrower undertakes, and shall cause STN, to insure, or to make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. 8 (b) Except as the Association shall otherwise agree, all goods and services financed out of the proceeds of the Credit shall be used exclusively for the Project until its completion. Section 3.08. (a) The Borrower shall cause to be furnished to the Association, promptly upon their preparation, the plans, specifications, surveys, contract documents and work and procurement schedules, for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower shall or shall cause STN to: (i) maintain records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Credit, and to disclose the use thereof in the Project; (ii) enable the Association's representatives to inspect the Project, the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) furnish to the Association all such information as the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. Section 3.09. The Borrower shall take or cause to be taken all such action as shall be necessary for STN to acquire promptly all such user rights in respect of land as shall be required for carrying out the Project and shall furnish to the Association, promptly after such acquisition, evidence satisfactory to the Association that such user rights in respect of land are available to STN for purposes related to the Project. Section 3.10. By the end of 1972, the Borrower shall have rehabilitated the Koumpentoum-Maka road as an all-weather road in accordance with sound highway engineering practices. Section 3.11. The Borrower shall have established, by the end of 1974, and shall maintain thereafter, adequate health and school facilities in the Project Area. Section 3.12. All appointments to the posts of Manager, Deputy Manager and Senior Agriculturalist of STN to be made before the Closing Date shall be acceptable to the Borrower and the Association and upon terms and conditions satisfactory to the Borrower and the Association. * 9 ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall cause STN to maintain records adequate to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of STN. (b) The Borrower shall cause STN to: (i) have 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 four months after the end of each such year, (A) certified copies of its 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 accounts and financial statements of STN and the audit thereof as the Association shall from time to time reasonably request. Section 4.02. The Borrower shall cause STN to take out and maintain with responsible insurers insurance against such risks and in such amounts as shall be consistent with sound practice. Section 4.03. (a) The Borrower shall cause STN at all times to manage its affairs, nmintain its financial position, plan its future expansion and carry on its operatior: '1 in accordance with sound business, financial, agricultural and banking practices anLd under the supervision of experienced and competent management, assisted by qualified staff in adequate numbers. (b) The Borrower shall cause such steps to be taken as shall be required to ensure that, within thirty calendar days following any veto by STN's Government Commissioner of a decision of STN's Board, the competent authorities shall have taken a final decision concerning such veto. (c) The Borrower shall establish and maintain an Advisory Committee which shall consist of senior representatives of all ministries and other entities involved in STN's operations, to advise STN on the technical aspects of its operations and to ensure effective assistance of said ministries and entities to STN. Section 4.04. The Borrower shall cause STN: 10 (a) to take all steps necessary to acquire, maintain and renew all such rights and interests in land and all such other rights, powers, privileges and franchises as are necessary or useful in the conduct of STN's business; and (b) at all times to operate and maintain its installations, equipment and other property, and promptly as required make all necessary repairs and renewals thereof, all in accordance with sound business and engineering practices. Section 4.05. (a) The Borrower shall cause STN to be provided, promptly as needed, with improved seeds in accordance with annual forecasts prepared by STN. (b) The Borrower shall cause STN to establish and maintain effective marketing arrangements, satisfactory to the Borrower and the Association, covering all produce of the Project Area, and shall permit STN to market all available cereals grown in the Project Area directly without restriction. (c) The Borrower shall keep the Association informed of any proposed changes in producer prices of seed cotton and ground nuts. Section 4.06. The Borrower shall maintain and repair the Koumpentoum-Maka road, and shall cause the roads and tracks in the Project Area to be maintained and repaired pursuant to annual plans agreed with STN, all in accordance with sound engineering practices and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 4.07. The Borrower shall ensure that after completion of the Project the extension services, agricultural inputs and agricultural credit required by the farmers included in the Project shall be continued to be made available promptly as needed and in conformity with sound financial and agricultural practices. Section 4.08. The legislation under which STN shall have been created, or any provision thereof, shall not be amended, suspended or abrogated without the prior concurrence of the Association. ARTICLE V Consultation, Information and Inspection Section 5.01. The Borrower and the Association shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Borrower and the Association shall from time to time, at the request of either party: 0 11 (a) exchange views through their representatives with regard to the performance of their respective obligations under the Development Credit Agreement, the administration, operations and financial condition of STN and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof, and other matters relating to the purposes of the Credit; and (b) furnish to the other all such information as it shall reasonably request with regard to the general status of the Credit. On the part of the Borrower, such information shall include information with respect to financial and economic conditions in the territories of the Borrower, including its balance of payments, and the external debt of the Borrower, of any of its political subdivisions and of any agency of the Borrower or of any such political subdivision. Section 5.02. (a) The Borrower shall furnish or cause to be furnished to the Association all such information as the Association shall reasonably request concerning the operations and financial condition of STN and, 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 and the Association shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, the maintenance of the service thereof or the performance by either of them of its obligations under the Development Credit Agreement. Section 5.03. The Borrower shall afford all reasonable opportunity for accredited representatives of the Association to inspect all installations, sites, works, buildings, property and equipment of STN and any relevant records and documents and to visit any part of the territories of the Borrower for purposes related to the Credit. ARTICLE VI Taxes and Restrictions Section 6.01. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes imposed under the laws of the Borrower or laws in effect in its territories. Section 6.02. The Development Credit Agreement shall be fre,, from any taxes on or in connection with the execution, delivery or registration thereof, imposed under the laws of the Borrower or laws in effect in its territories. 12 Section 6.03. The payment of the principal of, and service charges on, the Credit shall be free from all restrictions, regulations, controls and moratoria of any nature imposed under the laws of the Borrower or laws in effect in its territories. ARTICLE VII Remedies of the Association Section 7.01. If any event specified in Section 7.01 of the General Conditions or in Section 7.03 of this Agreement shall occur and shall continue for the period, if any, therein set forth, then at any subsequent time during the continuance thereof, the Association, at its option, may by notice to the Borrower declare the principal of the Credit then outstanding to be due and payable immediately together with the service charges thereon and upon any such declaration such principal and service charges shall become due and payable immediately, anything to the contrary in the Development Credit Agreement notwithstanding. Section 7.02. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: (a) STN shall have been unable to pay its debts as they mature or any action or proceeding shall have been taken by STN or by others whereby any of the property of STN shall or may be distributed among its creditors. (b) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of STN or for the suspension of all or part of STN's operations. Section 7.03. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified, namely, that any event specified in Section 7.02 of this Agreement shall occur. ARTICLE VIII Effective Date; Termination Section 8.01. The following events are specified as additional conditions to tl-e effectiveness of the Development Credit Agreement within the meaning of Section 10.01 (b) of the General Conditions: (a) STN shall have been duly created under legislation satisfactory to the Association; 13 (b) STN shall have duly acquired the user rights in respect of land referred to in Section 3.09 of this Agreement; (c) STN shall have received the first tranche of its, equity capital in accordance with Section 3.02 of this Agreement; (d) STN shall have appointed a Manager, Deputy Manager and Senior Agriculturalist in accordance with Section 3.12 of this Agreement; (e) STN shall have retained management consultants or a managing agency in accordance with Section 3.04 (a) of this Agreement; and (f) The form of farm contract referred to in Section 3.04 (d) shall have been approved by the Borrower and the Association. Section 8.02. The following are specified as additional matters, within the meaning of Section 10.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) That STN has been duly created and is a valid statutory corporation under the laws of the Borrower with powers and authorities adequate to carry out Parts B and C of the Project and any other operations in accordance with the Development Credit Agreement; and (b) That the acquisition by STN of the user rights in respect of land pursuant to Section 3.09 of the Development Credit Agreement is valid under the laws of the Borrower. Section 8.03. The date of October 1, 1971 is hereby specified for the purposes of Section 10.04 of the General Conditions. Section 8.04. The obligations of the Borrower under Sections 3.01 (b), 3.02 (a) and 3.11 and Article IV of this Agreement and the provisions of paragraphs (a) and (b) of Section 7.02 of this Agreement and those of paragraph (a) of Section 7.03 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date ten years after the date of this Agreement, whichever shall be the earlier. ARTICLE IX Representative of the Borrower; Addresses Section 9.01. The Ministre chargd des Finances of the Borrower is designated as representative of the Borrower for the purposes of Section 9.03 of the General Conditions. 14 Section 9.02. The following addresses are specified for the purposes of Section 9.01 of the General Conditions: For the Borrower: Minist6re des Finances Rue Charles Lafn6 Bofte Postale 4017 Dakar, Senegal Cable address: Minifinances Dakar For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Indevas Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed 15 in their respective names and to be delivered in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF SENEGAL By /s/ Leopold Sedar Senghor President of the Republic INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Robert S. McNamara President 16 SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the categories of items to be financed out of the proceeds of the Credit, the allocation of amounts of the Credit to each category and the percentage of eligible expenditures so to be financed in each category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed I. Civil works 220,000 65% of total ex- (buildings and penditures wells) II. Vehicles, equip- 120,000 100% of foreign ment and opera- expenditures and ting costs 67% of local ex- penditures III. Farm inputs (seeds, 170,000 100% of foreign fertilizers, pesti- expenditures and cides, oxen and im- 85% of local ex- plements) penditures IV. Mechanical land 200,000 85% of total ex- clearing and roads penditures V. STN staff and 530,000 100% of foreign surveys expenditures and 78% of local ex- penditures VI. Unallocated 110,000 TOTAL 1,350,000 17 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures for goods procured in, or services supplied from, the territories, and in the currency, of any country other than the Borrower; provided however, that if the currency of the Borrower is also that of another country in the territories of which goods are procured or from the territories of which services are supplied, expenditures in such currency for such goods or services shall be deemed to be "foreign expenditures"; (b) the term "local expenditures" means expenditures for goods procured in, or services supplied from, the territories of the Borrower; and (c) the term "total expenditures" means the aggregate of foreign and local expenditures. 3. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of: (a) expenditures prior to the date of this Agreement, except that withdrawals may be made in respect of Categories I and V on account of expenditures under Parts A, B (1) and B (2) of the Project incurred after October 31, 1970 in an aggregate amount not exceeding the equivalent of $65,000; and (b) payments for taxes imposed under the laws of the Borrower or laws in effect in its territories on goods or services, or on the importation, manufacture, procurement or supply thereof. To the extent that the amount represented by the percentage set forth in the third column of the table in paragraph I above in respect of any Category would exceed the amount payable net of all such taxes, such percentage shall be reduced to ensure that no proceeds of the Credit will be withdrawn on account of payments for such taxes. 4. Notwithstanding the allocation of an amount of the Credit set forth in the second column of the table in paragraph I above: (a) if the estimate of the expenditures under any Category shall decrease, the amount of the Credit then allocated to such Category and no longer required therefor will be reallocated by the Association by increasing correspondingly the unallocated amount of the Credit; 18 (b) if the estimate of the expenditures under any Category shall increase, the percentage set forth in the third column of the table in paragraph I above in respect of such expenditures shall be applied to the amount of such increase, and a corresponding amount will be allocated by the Association, at the request of the Borrower, to such Category from the unallocated amount of the Credit, subject, however, to the requirements for contingencies, as determined by the Association, in respect of any other expenditures. 5. Notwithstanding the percentages set forth in the third column of the table in paragraph I above, if the estimate of total expenditures under Category I or IV or of local expenditures under Category 1I, III or V shall increase and no proceeds of the Credit are available for reallocation to such Category, the Association may, by notice to the Borrower, adjust the percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. Notwithstanding the allocation of an amount of the Credit set forth in the second column, or the percentages set forth in the third column, of the table in paragraph I above, if on or before the Effective Date the Association shall not have received a formal commitment from the Participant to invest in the Project in the form of a participation in the Credit, the Association may by notice to the Borrower cancel under each of the Categories III and IV an amount of the Credit up to the equivalent of fifty thousand dollars ($50,000) and adjust the percentage then applicable to local or total expenditures under such Category in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. Upon the giving of such notice, such amount or amounts of the Credit shall be cancelled and such percentage or percentages shall be so adjusted. * 19 SCHEDULE 2 Description of the Project The Project represents the first phase of the Borrower's farm settlement program in the Borrower's Oriental Province and shall benefit about 550 farm families. The Project consists of the following parts: Part A. Detailed topographical and soil survey of the Project Area, including aerial photography. Part B. (1) Construction of about 65 km of access roads to connect all villages in the Project Area with the Koumpentoum-Maka road; (2) Drilling of village wells; (3) Recruiting, transporting and settling of about 300 farm families in six new villages; (4) Construction of warehouses and houses for STN staff serving the Project Area; (5) Establishment of a central farm equipment pool to serve the Project Area; (6) A program of farm extension services and seasonal and medium-term agricultural credit to all settlers and established farmers in the Project Area; and (7) Establishment of marketing arrangements with respect to the crops of the Project. Part C Annual surveys of the socio-economic and technical results of the Project and feasibility studies of a second phase of the before mentioned program. The Project is expected to be completed by June 30, 1977.