Nicaragua - Earthquake Reconstruction Project : Credit 0389 - Project Agreement - 1 - Conformed

CONFORMED COPY CREDIT NUMBER 389 NI Part A Project Agreement (Earthquake Reconstruction Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND BANCO DE LA VIVIENDA DE NICARAGUA DATED JUNE 6, 1973 CONFORMED COPY CREDIT NUMBER 389 NI Part A Project Agreement (Earthquake Reconstruction Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND BANCO DE LA VIVIENDA DE NICARAGUA DATED JUNE 6, 1973 PART A PROJECT AGREEMENT AGREEMENT, dated June 6, 1973, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and BANCO DE LA VIVIENDA DE NICARAGUA (hereinafter called BAVINIC). WHEREAS by the Development Credit Agreement of even date herewith between the Republic of Nicaragua (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to twenty million dollars ($20,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that BAVINIC agree to undertake such obligations toward the Association as hereinafter set forth; WHEREAS by a grant agreement to be entered into between the Borrower and BAVINIC, part of the proceeds of the Credit provided for Linder the Development Credit Agreement will be made available to BAVINIC on the terms and conditions therein set forth; and WHEREAS BAVINIC, 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, and the following terms have the following meanings: (a) the term "c6rdoba" means the currency of the Borrower. (b) the term "Housing Fund" means the fund referred to in Section 2.04 of this Agreement; and 4 (c) the term "INVI" means "Instituto Nicaragiiense de la Vivienda", a department of BAVINIC responsible for the construction of low-cost housing. ARTICLE II Execution of Part A of the Project Section 2.01. BAVINIC shall carry out Part A of the Project described in Schedule 2 to the Development Credit Agreement, through INVI, with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering practices. Section 2.02. BAVINIC shall sell the sites to be developed under Part A of the Project in accordance with the chronological order in which applications for them are received, provided, however, that applicants must satisfy the following eligibility criteria: (i) that they were displaced by the December 23, 1972 earthquake; (ii) that their monthly income, together with that of their dependents who would occupy such sites, does not exceed 1,100 c6rdobas, and provided further that about 30%-of such sites shall be assigned to applicants with income, so computed, not exceeding 500 c6rdobas; and (iii) that they undertake to make a downpayment, at the time the respective site is assigned, equal to 5% of the price of the site, provided that this requirement shall not apply to the applicants described in the proviso to paragraph (ii) of this Section. Section 2.03. BAVINIC shall enter into loan agreements with the assignees of the sites included in Part A of the Project providing for the granting of loans for the acquisition of such sites and construction materials to build thereon, repayable in 22 years with interest at the rate of 5% per year on outstanding amounts; provided that ownership of the sites shall be transferred to the assignees promptly after they shall have built one room, or an additional room in the case of sites under Part A. I of the Project, to the satisfaction of BAVINIC; and provided further that simultaneously with the transfer of property rights on such sites a mortgage securing such loans shall be constituted thereon in favor of BAVINIC. Section 2.04. BAVINIC shall: (a) establish and maintain a fund (hereinafter called the Housing Fund); 5 (b) establish and maintain separate accounts to record the operations of the Housing Fund; (c) credit the Housing Fund with such amounts as BAVINIC shall receive, from time to time, from (i) the Borrower, pursuant to the provisions of Section 3.02(a)(i) and 5.01 of the Development Credit Agreement; (ii) assignees of sites included in Part A of the Project, pursuant to the loan agreements referred to in Section 2.03 of this Agreement; and (iii) assignees of the sites and housing referred to in Section 3.02(ii) of this Agreement, pursuant to the loans provided for therein; and (d) pay out of the Housing Fund (i) expenditures incurred in the carrying out of development works included in Part A of the Project or referred to in Section 3.02(i) of this Agreement; (ii) amounts disbursed against the loans referred to in Sections 2.03 and 3.02(ii) of this Agreement; and (iii) administrative expenditures incurred by BAVINIC in the processing and supervision of such loans, but not in excess of 2% of the aggregate principal amount of such loans, outstanding from time to time. Section 2.05. In order to assist BAVINIC in carrying out Part A of the Project, BAVINIC shall employ, as advisors, a structural engineer experienced in housing and small building construction in earthquake zones, an architect or municipal engineer familiar with locally available building materials, and a specialist in social sciences, all acceptable to the Association and upon terms and conditions satisfactory to the Association. Section 2.06. In carrying out Part A of the Project, BAVINIC shall employ contractors acceptable to the Association upon terms and conditions satisfactory to the Association. Section 2.07. Except as the Association shall otherwise agree, the goods and seivices (other than services of consultants) required for Part A of the Project and to be financed out of the proceeds of the Credit, shall be procured on the basis of international competition under procedures consistent with the Guidelines for Procurement under World Bank Loans and IDA Credits, published by the Bank in April 1972, as revised in October 1972, and in accordance with, and subject to, the provisions set forth in Schedule 3 to the Development Credit Agreement. Section 2.08. (a) BAVINIC undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit made available to it by the Borrower 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 BAVINIC to replace or repair such goods. 6 (b) Except as the Association may otherwise agree, BAVINIC shall cause all goods and services financed out of the proceeds of the Credit and made available to it by the Borrower to be used exclusively for Part A of the Project. Section 2.09. (a) BAVINIC shall furnish to the Association, for its approval, promptly upon their preparation, the plans, specifications, contract documents and construction and procurement schedules for Part A of the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) BAVINIC shall: (i) maintain records adequate to record the progress of Part A of the Project (including the cost thereof), to identify the goods and services financed out of the proceeds of the Credit made available to it by the Borrower, and to disclose the use thereof in the Project; (ii) without limitation upon the provisions of Section 5.03 of this Agreement, enable the Association's representatives to examine Part A of 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 Part A of the Project, the expenditure of the proceeds of the Credit so made available to it and the goods and services financed out of such proceeds. Section 2.10. BAVINIC shall duly perform all its obligations under the Grant Agreement and, except as the Association shall otherwise agree, shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Grant Agreement or any provision thereof. Section 2.11. BAVINIC shall take all such action as shall be necessary to take title and possession, and to have such title duly recorded, in respect of all such land and rights in respect of land as shall be required for the construction and operation of the facilities included in Parts A. 1 and A.2 of the Project, as and when such title, possession and rights are transferred by the Borrower to BAVINIC, pursuant to Section 3.03(ii) of the Development Credit Agreement. ARTICLE III Management and Operations of BAVINIC Section 3.01. BAVINIC shall increase INVI's permanent staff by employing: (a) a senior architect, a senior engineer and a senior sociologist whose duties will be confined exclusively to the carrying out of Part A of the Project; and 7 (b) an engineer, three foremen to provide technical awstancc, two inspectors and two social workers per each 1,000 serviced sites financed; provided that all such personnel shall reside where the respective serviced sites are located, during, at least, two years commencing with the beginning of construction of the shelter units on such sites. Section 3.02. Except as the Association shall otherwise agree, BAVINIC shall, after Part A of the Project has been completed, use all funds available in the Housing Funds to (i) carry out further development of residential serviced sites designed for low-cost housing and (ii) make loans for low-cost housing to the assignees of such sites, such housing to be earthquake-resistant and suitably located. ARTICLE IV Financial Covenants Section 4.01. BAVJNIC shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 4.02. BAVINIC shall: (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 BAVINIC 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 BAVINIC shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Association and BAVINIC 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 performance by BAVINIC of its obligations under the Grant Agreement, the administration, operations and financial condition of BAVINIC and other matters relating to the purposes of the Credit. 8 Section 5.02. The Association and BAVINIC 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 or BAVINIC of their respective obligations under the Grant Agreement. Section 5.03. BAVINIC shall enable the Association's representatives to examine all sites, works, properties and equipment of BAVINIC and any relevant records and documents. ARTICLE VI Effective Date; Termination; Cancellation and Suspension Section 6.01. This Agreement shall come into force and effect on the Effective Date. Section 6.02. (a) This Agreement and all obligations of the Association and of BAVINIC thereunder shall terminate on the date on which the Development Credit Agreement shall terminate in accordance with its terms. 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: * 9 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. For BAVINIC: Banco de la Vivienda de Nicaragua Managua, D.N. Nicaragua, C.A. Cable address: Banco de la Vivienda Managua, Nicaragua Section 7.02. Any action required or permitted to be taken, and any Jocuments required or permitted to be executed, under this Agreement on behalf of BAVINIC may be taken or executed by the Presidente of BAVINIC or such other person or persons as he shall designate in writing. Section 7.03. BAVINIC 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 BAVINIC, take any action or execute any documents required or permitted to be taken or executed by BAVINIC pursuant to any of the provisions of this Agreement. Section 7.04. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed 10 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/ Gerald Alter Regional Vice President Latin America and the Caribbean BANCO DE LA VIVIENDA DE NICARAGUA By /s/ Gustavo Escoto Goenaga Authorized Representative