Honduras - Second Livestock Development Project : Credit 0434 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 434 HO Development Credit Agreement (Second Livestock Development Project) BETWEEN REPUBLIC OF HONDURAS AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED OCTOBER 29, 1973 CONFORMED COPY CREDIT NUMBER 434 HO Development Credit Agreement (Second Livestock Development Project) BETWEEN REPUBLIC OF HONDURAS AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED OCTOBER 29, 1973 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated October 29, 1973, between REPUBLIC OF HONDURAS (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) The Borrower has undertaken a program for the development of the Borrower's livestock sector, such program to be carried out by Banco Central de Honduras; (B) The Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; and (C) The Association is prepared to grant a development Credit to the Borrower, for use by Banco Central and the Participating Banks in carrying out the Project upon the terms and conditions set forth in the Development Credit Agreement and in a project agreement of even date herewith between the Association and Banco Central; NOW THEREFORE the parties hereto hereby agree as follows: 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 following modifications thereof (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified, being hereinafter called the General Conditions): (a) in Section 2.01, the following paragraph is added after paragraph 12: "13. The term "Project Agreement" has the meaning set forth in Section 1.02 of the Development Credit Agreement." (b) Section 5.01 is deleted; 4 (c) Section 6.02(h) is deleted and Section 6.02(i) becomes 6.02(h); (d) in Section 6.06, the words ", the Project Agreement" are added after the words "the Development Credit Agreement"; (e) in Section 8.02, the words "or the Project Agreement" are added after the words "the Development Credit Agreement". 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) "Banco Central" means the Banco Central de Honduras, established by Decree No. 53 of the National Congress, dated February 3, 1950, as such Decree may be amended from time to time, and includes any successor thereto. (b) "Participating Bank" means any banking institution established and operating in Honduras which has entered into a Project Administration Agreement. (c) "Project Administration Agreement" means an agreement, as referred to in Section 2.06 of the Project Agreement, entered into between Banco Central and a Participating Bank for the purpose of carrying out Part A of the Project, and includes any amendment thereto made with the approval of the Association. (d) "Project Agreement" means the agreement between the Association and Banco Central, of even date herewith, providing for the carrying out of the Project, as the same shall be amended from time to time, and such term includes the schedule to the Project Agreement. (e) "Subsidiary Loan Agreement" means the agreement entered into between the Borrower and Banco Central pursuant to Section 3.01(b) of this Agreement, as the same may be amended from time to time with the approval of the Association. (f) "Acuerdo No. 865" means the Acuerdo dated December 18, 1969 of the Borrower, issued through the Ministerio de Economfa y Hacienda of the Borrower, and any amendment thereto, relating to the establishment, functions and composition of the Project Commission. (g) "Project Commission" means the commission established by Acuerdo No. 865 for supervising the Project. 5 (h) "Sub-loan Agreement" means an agreement, as referred to in Section 2.06(a) of the Project Agreement, entered into betweer a Participating Bank and a farmer for the purpose of carrying out Part A of the Project; and "sub-loan" means a loan provided for in a Sub-loan Agreement. (i) "Abattoir Sub-loan Agreement" means an agreement, as referred to in Section 2.04 of the Project Agreement, entered into between Banco Central and a municipality for the purpose of carrying out Part B of the Project; and "abattoir sub-loan" means a loan provided for in an Abattoir Sub-loan' Agreement. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Boriower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to six million six hundred thousand dollars ($6,600,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule shall be amended from time to time, for amounts disbursed (or if the Association shall so agree, to be disbursed) under the sub-loans or Abattoir sub-loans, or 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 Part C of the Project, 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. Except as the Association shall otherwise agree, the goods and services required for Parts A and B of the Project and to be financed out of the proceeds of the Credit shall be procured pursuant to the provisions set forth or referred to in Section 2.13 of the Project Agreement. Section 2.04. The Closing Date shall be June 30, 1979 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. 6 Section 2.06. Service charges shall be payable semi-annually on February 15 and August 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each February 15 and August 15 commencing February 15, 1984 and ending August 15, 2023, each installment to and including the installment payable on August 15, 1993 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 United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. Section 2.09. The President of Banco Central is designated as representative of the Borrower for the purposes of taking any action required or permitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause Banco Central to perform, in accordance with the provisions of the Project Agreement and the Subsidiary Loan Agreement, all the obligations therein set forth, shall take and cause to be taken all action necessary or appropriate to enable Banco Central to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall relend the proceeds of the Credit under a subsidiary loan agreement to be entered into between the Borrower and Banco Central under terms and conditions satisfactory to the Association including, inter alia, the following: (i) interest rate of two percent (2%) per annum; and (ii) repayment of the principal of the Subsidiary Loan in twenty years, including a grace period of ten years. (c) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, nor amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. 7 (d) Except as the Borrower and the Association shall otherwise agree, all goods and services financed out of the proceeds of the Credit shall be used exclusively in carrying out the Project. ARTICLE IV Other Covenants Section 4.01. For the purpose of carrying out the Project, the Borrower shall: (a) require that prior to construction of abattoirs included in Part B of the Project, abattoir design be reviewed and approved by the Meat Inspection Authority in the Ministry of Natural Resources of the Borrower; (b) require that suitably qualified personnel be available and on the premises of the abattoirs included in Part B of the Project during slaughtering to ensure that only wholesome meat is used for human consumption; (c) require that the municipalities concerned with Part B of the Project, actively and effectively take steps to prevent non-inspected meat from entering their jurisdictions; (d) adopt policies with respect to prices, marketing, quotas and taxation which, taking into account the needs of an adequate internal supply of livestock products, provide adequate incentives to livestock producers to expand production; and (e) maintain the Project Commission at least until completion of the Project, and shall at all times ensure that the Project Commission shall coordinate and supervise all aspects of the Project in accordance with sound administrative, agricultural, economic and financial practices. 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: 8 (a) exchange views through their representatives with regard to the performance of their respective obligations under the Development Credit Agreement, the performance by Banco Central of its obligations under the Project Agreement and the Subsidiary Loan Agreement, the administration, operations, resources and expenditures of Banco Central in respect of the Project, and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out any part of the Project, 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 g'-4ieral 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 AssociaLvon all such information as the Association shall reasonably request concerning the administration, operations, resources and expenditures of Banco Central in respect of the Project and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out any part of the Project. (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, the performance by either of them of its obligations under the Development Credit Agreement or the performance by Banco Central of its obligations under the Project Agreement and the Subsidiary Loan Agreement. Section 5.03. The Borrower shall afford all reasonable opportunity for accredited representatives of the Association 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 and the Project Agreement shall be free from any taxes on or in connection with the execution, delivery 9 or registration thereof, imposed under the laws of the Borrower or laws in effect in its territories. 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 VH 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) the Subsidiary Loan Agreement or any Project Administration Agreement shall have been amended, suspended, abrogated or waived without the prior approval of the Association; (b) Banco Central shall have failed ito perform any of its obligations under the Project Agreement; (c) an extraordinary situation shall have arisen which shall make it improbable that Banco Central will be able to perform its obligations under the Project Agreement; (d) the Borrower shall have taken any action for the dissolution or disestablishment of Banco Central or for the suspension of its operations; (e) Acuerdo No. 865 or any provision thereof shall have been materially amended, suspended, abrogated, repealed or waived so as to affect the Project adversely. 10 Section 7.03. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) the event specified in paragraphs (a) and (b) of Section 7.02 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Association to the Borrower and Banco Central; and (b) any event specified in paragraphs (c), (d) or (e) of 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 the effectiveness of the Development Credit Agreement within the meaning of Section 10.01(b) of the General Conditions: (a) The execution and delivery of the Project Agreement on behalf of Banco Central have been duly authorized or ratified by all necessary corporate and governmental action. (b) The execution and delivery of the Subsidiary Loan Agreement on behalf of the Borrower and of Banco Central, respectively, have been duly authorized or ratified by all necessary corporate and governmental action, and have become fully effective and binding on the parties thereto in accordance with its terms, or shall become so effective and binding upon and by reason of the effectiveness of this Develonment Credit Agreement. (c) All action necessary for the Project Commission to carry out its functions under the Project as required by this Agreement shall have been taken. 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 furitished to the Association: (a) That the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, Banco Central, and constitutes a valid and binding obligation of Banco Central in accordance with its terms. (b) That the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and Banco 11 Central, respectively, and constitutes a valid and binding obligation of the Borrower and Banco Central in accordance with its terms. (c) That all action necessary for the Project Commission to carry out its functions under the Project as required by this Agreement shall have been taken. Section 8.03. The date January 28, 1974 is hereby specified for the purposes of Section 10.04 of the General Conditions. ARTICLE IX Representative of the Borrower; Addresses Section 9.01. The Ministro de Hacienda y Crddito Ptblico of the Borrower is designated as representative of the Borrower for the purposes of Section 9.03 of the General Conditions. Section 9.02. The following addresses are specified for the purposes of Section 9.01 of the General Conditions: For the Borrower: Ministerio de Hacienda y Cr6dito Pfiblico Tegucigalpa, D.C. Honduras Cable address: HACIENDA Tegucigalpa, D.C. Honduras 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. 12 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 to be delivered in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF HONDURAS By /s / Manuel Acosta Bonilla Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s / Gerald Alter Regional Vice President Latin America and the Caribbean 13 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 financing in each Category: Amount of the Credit Allocated (Expressed in Category Dollar Equivalent) o of Financing I. Sub-loans under 500,000 90% of amounts Part A(1) of the disbursed under Project the sub-loans 11. Sub-loans under 5,100,000 75% of amounts Part A(2) of the disbursed under Project the sub-loans III. Abattoir Sub- 700,000 75% of amounts loans under disbursed under Part B of the the abattoir Project sub-loans IV. Training and tech- 300,000 100% of foreign nical services expenditures under Part C of the Project TOTAL 6,600,000 As provided in Section 2.02 of this Agreement, the amounts in the second column and the percentages in the third column of the table above may be amended from time to time as shall be agreed by the Borrower and the Association. 2. For the purposes of this Schedule, the term "foreign expenditures" means expenditures for goods produced in, or services supplied from, the territories, and in the currency, of any country other than the Borrower. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: 14 (a) expenditures prior to the date of this Agreement; (b) a sub-loan by a Participating Bank under Categories I or II, unless the Project Administration Agreement under which such sub-loan will be provided has been entered into and has become effective; (c) amounts under Categories II and III in respect of a sub-loan or an Abattoir sub-loan exceeding the equivalent of seventy-five thousand dollars ($75,000) unless such sub-loan or Abattoir sub-loan shall have received the prior approval of the Association; and (d) 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, if the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in Section 2.13 of the Project Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. 15 SCHEDULE 2 Description of the Project The Project is part of the Borrower's program of livestock development, and consists of the following: Part A: Extension through Participating Banks of long-term sub-loans (8-12 years) to farmers for the development of dairy, beef and pig farms of two different sizes: (1) small livestock farms with sub-loans in an amount not exceeding the equivalent of nine thousand dollars ($9,000) individually or in aggregate per farmer; (2) medium-size livestock farms with sub-loans in an amount exceeding nine thousand dollars ($9,000) individually or in aggregate per farmer. Part B: Extension through Banco Central of Abattoir sub-loans (10-12 years) to municipalities for the construction or improvement or both, of municipal abattoirs. Part C: Training of Project staff and employment of the services of about four speciAist livestock advisors for assisting farmers and the livestock technicians employed by the Participating Banks. * * * * * The Project is expected to be completed by December 31, 1978.