Dominican Republic - Livestock Development Project : Credit 0245 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 245 DO Project Agreement (Livestock Development Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND BANCO CENTRAL DE LA REPUBLICA DOMINICANA DATED MAY 19, 1971 CONFORMED COPY CREDIT NUMBER 245 DO Project Agreement (Livestock Development Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND BANCO CENTRAL DE LA REPUBLICA DOMINICANA DATED MAY 19, 1971 PROJECT AGREEMENT AGREEMENT, dated May 19, 1971, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and BANCO CENTRAL DE LA REPUBLICA DOMINICANA (hereinafter called the Banco Central). WHEREAS by a development credit agreement of even date herewith between Dominican Republic (hereinafter called the Borrower) and the Association (said development credit agreement being hereinafter referred to as the Development Credit Agreement), the Association has agreed to make available to the Borrower an amount in various currencies equivalent to five million dollars ($5,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that the Banco Central agree to undertake such obligations toward the Association as hereinafter set forth; WHEREAS by a subsidiary loan agreement of even date herewith between the Borrower and the Banco Central, the proceeds of the credit provided for under the Development Credit Agreement will be made available to the Banco Central on the terms and conditions therein set forth; and WHEREAS the Banco Central, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. (a) The Banco Central shall carry out the Project described in Schedule 2 to the Development Credit Agreement through DIA and with due 4 diligence and efficiency and in accordance with sound administrative, financial, agricultural and economic practices; and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Without limitation or restriction upon any of its obligations under the preceding paragraph, the Banco Central shall, out of its own resources, provide the Development Credit Account with all such amounts as shall be necessary to make its own financing of Part A of the Project equal to about one-fifth of the financing thereof provided out of the proceeds of the Subsidiary Loan. Section 2.02. The Banco Central shall duly perform all its obligations under the Subsidiary Loan Agreement and under any Project Administration Agreement. Except as the Association and the Banco Central shall otherwise agree, the Banco Central shall not amend, abrogate, assign or waive the Subsidiary Loan Agreement or any Project Administration Agreement, or any provision of any of such agreements. Section 2.03. For the purposes of carrying out the Project: (a) the Banco Central shall (i) operate within DIA a Livestock Project Division (LPD) under the authority of a qualified and experienced Project Director acceptable to the Association and the Banco Central, responsible directly to the Director of DIA, under terms and conditions satisfactory to the Association and the Banco Central and with such responsibilities and powers as are specified in Schedule 2 to this Agreement; and (ii) provide LPD, promptly as needed, with such experts acceptable to the Project Director and to the Livestock Assistant to DIA Director, and supporting staff, facilities and other resources as shall be necessary for its efficient operation. (b) The Banco Central shall appoint a qualified and experienced Livestock Assistant to DIA Director acceptable to, and under terms and conditions satisfactory to, the Association and the Banco Central, and with such responsibilities and powers as are specified in Schedule 3 to this Agreement. Section 2.04. The Banco Central shall invite public and private banks and development finance companies established in the Borrower's territories to participate in the carrying out of the Project, and shall on-lend thereto the proceeds of the Development Credit Account through Project Administration Agreements under which, unless the Association shall otherwise agree, each Participating Bank shall, inter alia: (a) undertake (i) to maintain separate accounts in respect of the use of such proceeds, cause such accounts to be audited in a manner satisfactory to the 5 Association and submit to the Association certified copies of the audits thereof not later than three months after the end of each fiscal year; (ii) to make Part A Loans and Part B Loans in accordance with the operating policies and procedures set forth in Schedule 1 to this Agreement; (iii) to provide ranchers with technical assistance, satisfactory to the Project Director and to the Livestock Assistant to DIA Director, in preparing and implementing Investment Plans; (iv) to employ in the Project livestock technicians acceptable to the Project Director and to the Livestock Assistant to DIA Director; (v) to cause such technicians to be trained under the authority of the Project Director; (vi) to supervise, through such technicians, the progress in ranch development under the Project; and (b) be entitled to obtain refinancing at the Banco Central for the same terms and grace periods provided for Part A Loans, for the amounts of Part A Loans, at a rate of interest of five per cent (5%) per annum, provided such Participating Bank shall accept the Banco Central's refinancing terms and conditions and shall agree to finance such working capital as shall be necessary for the Project. Section 2.05. The Banco Central shall submit to the Association, for review, any Part A Loan proposed to be made in excess of the equivalent of one hundred thousand dollars ($100,000), or which shall cause the aggregate of Part A Loans to the same rancher to exceed such equivalent, and shall not refinance any such Loan without the concurrence of the Association. Section 2.06. In carrying out Part D of the Project the Banco Central shall employ market-research consultants acceptable to, upon terms and conditions satisfactory to, the Association and the Banco Central. Section 2.07. (a) Except as the Association and the Banco Central shall otherwise agree: (i) the goods and services (other than consultants' services) required for the Project, shall be procured through regular commercial channels from responsible suppliers; and (ii) the vehicles to be financed under Category 11 (c) of the table in paragraph I of Schedule 1 to the Development Credit Agreement shall be procured on the basis of local competitive bidding, from suppliers with efficient servicing facilities and sufficient spare parts available within the territories of the Borrower. (b) Except as the Association and the Banco Central may otherwise agree, the Banco Central shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively in the carrying out of the Project. Section 2.08. The Banco Central shall: (i) maintain records adequate to record the progress of the Project (including the cost thereof, the Investment Plans, loans made and disbursed under the Project Administration Agreements, and LPD's 6 expenses), to identify the goods and services financed out of the proceeds of the Subsidiary Loan, and to disclose the use thereof in the Project; (ii) enable the Association's representatives to inspect the Project, the goods financed out of such proceeds 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 Subsidiary Loan and the goods and services financed out of such proceeds. ARTICLE III Management and Operations of the Banco Central Section 3.01. The Banco Central shall at all times, in respect of the Project, manage its affairs, maintain its financial position and carry on its operations in accordance with sound business and financial practices and under the supervision of experienced and competent staff in adequate number. Section 3.02. The Banco Central shall at all times maintain its existence and right to carry on operations and shall, except as the Association and the Banco Central shall otherwise agree, take all steps necessary to maintain and renew all rights, powers, privileges and franchises which are necessary or useful in the conduct of its business. ARTICLE IV Financial Covenants Section 4.01. The Banco Central shall use the proceeds of payments which it receives from the Participating Banks under any Project Administration Agreement and which are not currently required to service the Subsidiary Loan, for further lending for either agricultural development or such other purpose as the Association and the Banco Central shall agree. The Association and the Banco Central shall consult from time to time as to the procedure for ensuring effective use of such proceeds. Section 4.02. The Banco Central shall maintain records adequate to reflect in accordance with consistently maintained sound accounting practices its operations and financial condition in respect of the Project and of the use of the proceeds referred to in Section 4.01 of this Agreement. Section 4.03. The Banco Central shall, in respect of the Project and of the use of the proceeds referred to in Section 4.01 of this Agreement: (i) have its 7 accounts, including the Development Credit Account, 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 and the Banco Central; (ii) furnish to the Association as soon as available, but in any case not later than three 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 the Banco Central and the audit thereof as the Association shall from time to time reasonably request. ARTICLE V Consultation, Information and Inspection Section 5.01. The Association and the Banco Central shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Association and the Banco Central shall from time to time, at the request of either party, exchange views through their representatives with regard to the performance of their respective obligations under this Agreement, the administration, operations and financial condition, in respect of the Project, of the Banco Central and other matters relating to the purpose of the Credit. Section 5.02. The Association and the Banco Central 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 performance by either of them of its obligations under this Agreement or the performance by the Borrower and the Banco Central of their respective obligations under the Subsidiary Loan Agreement. Section 5.03. The Banco Central shall enable the Association's representatives to inspect any of its records and documents relevant to the Project. ARTICLE VI Effective Date; Termination; Cancellation and Suspension Section 6.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. 8 Section 6.02. (a) This Agreement and all obligations of the Association and of the Banco Central hereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) a date fifteen years after the date of this Agreement; provided, however, that the obligations under Section 4.01, and those relevant thereto under Section 4.02 and Section 4.03, of this Agreement, shall in no event terminate before termination of the Development Credit Agreement. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify the Banco Central of this event and, upon the giving of such notice, this Agreement and all obligations of the parties thereunder shall forthwith terminate. Section 6.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the Development Credit Agreement. ARTICLE VII Miscellaneous Provisions Section 7.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America 9 Cable address: Indevas Washington, D.C. For the Banco Central: Banco Central de la Repiblica Dominicana Calle Pedro Henriques Urefa Santo Domingo, D.N. Dominican Republic Cable address: Bancentral Santo Domingo Section 7.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of the Banco Central may be taken or executed by the Director of DIA or such other person or persons as the Banco Central shall designate in writing. Section 7.03. The Banco Central shall furnish to the Association sufficient * evidence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of the Banco Central, take any action or execute any documents required or permitted to be taken or executed by the Banco Central pursuant to any of the provisions of this Agreement. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and delivered in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ J. Burke Knapp Vice President BANCO CENTRAL DE LA REPUBLICA DOMINICANA By /s/ Di6genes H. Fernandez Authorized Representative 10 SCHEDULE I Operating Policies and Procedures Except as the Association and the Banco Central shall otherwise agree, Parficipating Banks shall: (i) provide Part A Loans and Part B Loans to creditworthy ranchers and in accordance with Investment Plans approved on the authority of the Project Director and the Livestock Assistant to DIA Director; (ii) process all applications for such Loans in accordance with their normal administrative and financial procedures, and accept, as security, real estate mortgages or chattel mortgages on livestock and equipment, or both; (iii) make Part A Loans in an amount of about eighty per cent (80%) of the total investments, excluding land, set forth in the Investment Plans, with a grace period ranging from two to four years, at an interest rate of nine per cent (9%) per annum. No more than fifty per cent (50%) of the proceeds of such Loans, or of the total amount of the respective Investment Plans, whichever shall be deemed more appropriate by the Project Director and the Livestock Assistant to DIA Director, shall be used for purchasing breeding cattle; and (iv) provide Part B Loans out of their own resources. 11 SCHEDULE 2 The Project Director Except as the Association and the Banco Central shall otherwise agree, the Project Director shall have the necessary authority, and shall be responsible for: (i) handling the technical aspects of Part A and Part B of the Project in accordance with the recommendations of the Livestock Assistant to DIA Director, inter alia ensuring that DIA and Participating Banks' technicians visit Project Ranchers at regular intervals to extend technical assistance; (ii) presenting Investment Plans and loan applications approved by the Livestock Assistant to DIA Director to the appropriate authorities within the Banco Central; (iii) carrying out Part C and Part E of the Project in accordance with the recommendations of the Livestock Assistant to DIA Director; (iv) technically cooperating with the Directorate General of Livestock of the Borrower's Secretariat of Agriculture to ensure that all cattle under the Project are dipped or sprayed as required against external parasites, drenched against external worms and vaccinated against brucellosis, black leg, hemorrhagic septicemia and hemoglobinuria; (v) preparing jointly with the Livestock Assistant to DIA Director quarterly and annual progress reports for submission to the Association and DIA; (vi) assuring that Project ranchers will keep a system of records in accordance with the recommendations of the Livestock Assistant to DIA Director; (vii) establishing and maintaining records of sample ranches as needed for Project evaluation in accordance with the recommendations of the Livestock Assistant to DIA Director; and (viii) three years after the Effective Date, taking over the authority and responsibilities of the Livestock Assistant to DIA Director. 12 SCHEDULE 3 Livestock Assistant to DIA Director Except as the Association and the Banco Central shall otherwise agree and subject to paragraph (viii) of Schedule 2 to this Agreement, the Livestock Assistant to DIA Director shall have the necessary authority, and shall be responsible for: (i) recommending field technicians to be employed in the Project by DIA, and their duty stations; (ii) evaluating the qualifications of field technicians employed in the Project by Participating Banks, recommending their replacement when necessary and the appointment of new ones; (iii) recommending a program for carrying out Part E of the Project including the training of DIA's and Participating Banks' technical staff as necessary for the Project, and approving all training fellowships under the Project; (iv) recommending on the performance of field technicians employed in the Project by DIA and Participating Banks and on their acceptability for such employment; (v) approving the technical feasibility and financial viability of all Investment Plans before presentation thereof to DIA's appropriate authorities within the Banco Central; (vi) visiting Project-financed ranches at intervals to determine progress; (vii) developing a simple and adequate system for the keeping of records on Project-financed ranches; (viii) notifying DIA and Participating Banks of problems in connection with Part A and Part B Loans and suggesting remedial action; (ix) proposing field trials included in Part C of the Project and approving the carrying out of such trials before any funds are allocated therefor; (x) cooperating with the Project Director in the preparation of quarterly and annual progress reports for submission to the Association and DIA, and co-signing them with him; 13 (xi) recommending the establishment and maintenance of records of sample ranches as needed for Project performance evaluation; and (xii) guiding DIA staff in preparation of a second livestock development project.