Afghanistan - Idba Project : Credit 0380 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBEP 380 AF Development Credit Agreement (IDBA Project) BETWEEN KINGDOM OF AFGHANISTAN AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED MAY 15, 1973 CONFORMED COPY CREDIT NUMBER 380 AF Development Credit Agreement (IDBA Project) BETWEEN KINGDOM OF AFGHANISTAN AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED MAY 15, 1973 0R DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated May 15, 1973, between KINGDOM OF AFGHANISTAN (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) The Industrial Development Bank of Afghanistan (IDBA) has been established under the laws of the Borrower as a joint stock company pursuant to the Industrial Banks Law of August 22, 1971, of the Borrower; (B) The Borrower, on behalf of IDBA, has requested the Association to make a credit for the use by IDBA for promoting economic development in the territories of the Borrower; (C) The Project described in Section 3.01 of this Agreement will be carried out by IDBA with the Borrower's assistance and, as part of such assistance, the Borrower will make the proceeds of the Credit available to IDBA as hereinafter provided; and (D) Whereas certain foreign banks have undertaken to subscribe to and thereafter to pay in, and the International Finance Corporation has agreed to subscribe to, a portion of IDBA's shares; WHEREAS the Association is willing to make the Credit available upon the terms and conditions set forth hereinafter and in a project agreement of even date herewith between the Association and IDBA; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Development Credit Agreement accept all the provisions of the General Conditions Applic.. !e 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 modifications thereof set forth in Schedule I to this Agreement (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified, being hereinafter called the General Conditions). 4 4 Section 1.02. Whenever used in this Development Credit Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the specific meanings therein set forth and the following additional terms have the following meanings: (a) "IDBA Law" means the Industrial Banks Law of Afghanistan of August 22, 1971. (b) "Regulations" means the Regulations for Obtaining Loans for the Industrial Development Bank of Afghanistan, of November 28, 1972. (c) "Project Agreement" means the Agreement of even date herewith between the Association and IDBA, as amended from time to time. (d) "Subsidiary Loan Agreement" means the loan agreement to be entered into between the Borrower and IDBA pursuant to Section 3.02(a) of this Agreement. (e) "Articles" means Articles of Incorporation of the Industrial Development Bank of Afghanistan, as approved by the first General Meeting of shareholders of IDBA on March 3, 1973. (f) "sub-loan " means a loan or credit made or proposed to be made by IDBA out of the proceeds of the Credit relent to IDBA under the Subsidiary Loan Agreement, to an Investment Enterprise for an Investment Project, and "free-limit sub-loan" means a sub-loan as so defined which qualifies as a free-limit sub-loan pursuant to the provisions of Section 2.03(b) of this Agreement. (g) "investment" means an investment other than a sub-loan made or proposed to be made by IDBA out of the proceeds of the Credit relent to IDBA under the Subsidiary Loan Agreement in an Investment Enterprise for an Investment Project. (h) "Investment Enterprise" means an enterprise to which IDBA proposes to make or has made a sub-loan or in which it proposes to make or has made an investment. (i) "Investment Project" means a specific development project to be carried out by an Investment Enterprise utilizing the proceeds of a sub-loan or investment. 5 (j) "Statement of Policy" means the statement of lending and investment policy adopted by the Board of Directors of IDBA on March 4, 1973 as amended from time to time with the agreement of the Association. (k) "Subsidiary" means any company of which the majority of the outstanding voting stock or other proprietary interest is owned or effectively controlled by IDBA or by any one or more subsidiaries of IDBA or by IDBA and one or more of its subsidiaries. (1) "Afghani" and the letters "Af" mean the currency of the Borrower. (m) "IDBA Agreement" means the form of agreement under which IDBA shall make loans to enterprises in Afghanistan. (n) "Da Afghanistan Bank Loan Agreement" means the agreement between IDBA and the Da Afghanistan Bank as contained in the exchange of letters between them dated March 7, 1973, providing for a loan in an amount of Af560,000,000 pursuant to the requirements of Article XIV(2) of tne IDBA Law. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in this Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to two million dollars ($2,000,000), for use by IDBA. Section 2.02. The Borrower designates IDBA as its representative for the purposes of taking any action required or permitted under the provisions of Section 2.03 of this Agreement and Article V of the General Conditions. Section 2.03. (a) Pursuant to Section 2.02 of this Agreement, IDBA may withdraw from the Credit Account in respect of a sub-loan or investment to finance the reasonable cost of goods and services required for the Investment Project in respect of which the withdrawal is requested, such amounts as shall have been expended (or, if the Association shall so agree, shall be required to meet expenditures to be made) in a currency other than the currency of the Borrower for goods procured, or services supplied, from outside the territories of the Borrower; provided, however, that no withdrawal shall be made in respect of a sub-loan or investment unless (A) the sub-loan or investment shall have been 6 approved by the Association; or (B) the sub-loan shall be a free-limit sub-loan for which the Association shall have authorized withdrawals from the Credit Account. (b) A free-limit sub-loan shall be a sub-loan in an amount to be financed undei the Credit Agreement which, together with any other amount or amounts financed or proposed to be financed for the same project out of the proceeds of the Credit, and not repaid, shall not exceed in the aggregate the equivalent of fifty thousand dollars ($50,000) and which, when added to all other free-limit sub-loans financed out of the pryceeds of this Credit, shall not exceed in the aggregate the equivalent of five hundred thousand dollarf ($500,000), the foregoing amounts being subject to change from time to ti.e as determined by the Association and IDBA. (c) Except as the Association and IDBA shall otherwise agree and subject to the provisions of Section 5.01 of the General Conditions, no withdrawals shall be made on account of expenditures made by an Investment Enterprise in respect of a sub-loan subject to the Association's approval, or in respect of an investment, more than ninety days prior to the date on which the Association shall have received in respect of such sub-loan or investment the application and information required by Section 2.02(b) of the Project Agreement or, under a free-limit sub-loan, more than ninety days prior to the date on which the Association shall have received in respect of such free-limit sub-loan the request and information required by Section 2.02(c) of the Project Agreement. Section 2.04. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. Section 2.05. The Closing Date shall be December 31, 1977 or such later date as shall be determined by the Association. Section 2.06. 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 2.07. Service charges shall be payable semi-annually on February I and August I in each year. Section 2.08. The Borrower shall repay the principal amount of the Credit withdrawn from the Credit Account in semi-annual installments payable on each February I and August 1, commencing August 1, 1983 and ending February 1, 7 2023, each installment to and including the installment payable on February 1, 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. ARTICLE III Description of the Project; Use of Proceeds of -the Credit Section 3.01. The purpose of the Project is to assist IDBA in financing the development of productive facilities and resources in the territories of the Borrower. The Project consists in the financing by IDBA of specific development projects through loans to and investments in productive enterprises in the territories of the Borrower in accordance with the IDBA Law, Regulations and the Statement of Policy. Section 3.02. (a) The Borrower shall make the proceeds of the Credit available to IDBA pursuant to a Subsidiary Loan Agreement containing terms and conditions satisfactory to the Borrower, the Association and IDBA. Except as the Association shall otherwise agree, the said Agreement shall provide inter alia that such proceeds will be made available to IDBA for a term of 1 8 years, including 3 years of grace, and for payment of interest by IDBA at the rate of seven and one-quarter per cent (7-1/4%) per annum on amounts withdrawn and outstanding from time to time. (b) 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, except as the Association shall otherwise agree, the Borrower shall not assign, or amend, abrogate or waive any provision of, the Subsidiary Loan Agreement. ARTICLE IV Additional Covenants Section 4.01. The Borrower shall not take, or permit any of its political subdivisions or any of its agencies or instrumentalities or any agency or instrumentality of any political subdivision to take, any action which would prevent or materially interfere with the performance by IDBA of any of its obligations under the Project Agreement or the Subsidiary Loan Agreement, and shall take led 8 or cause to be taken all reasonable action which shall be required on its part in order to enable IDBA to perform such obligations. Section 4.02. 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 V Consultation and Information Section 5.01. (a) The Borrower and the Association shall cooperate fully to ensure 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, exchange views through their representatives with regard to (i) the performance of the respective obligations of the parties under the Development Credit Agreement, the Project Agreement and the Subsidiary Loan Agreement; (ii) the administration, operations and financial condition of IDBA and its subsidiaries, including any proposal to amend the IDBA Law or the Regulations; and (iii) any other matters relating to the purposes of the Credit. (b) The Borrower shall furnish to the Association all such information as the Association shall reasonably request concerning financial and economic conditions in the territories of the Borrower, including its balance of payments, and the external debt of the Borrower and of any of its administrative subdivisions and of any agency of the Borrower or of any such administrative suadivision. Section 5.02. 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 IDBA of its obligations under the Project Agreement and the Subsidiary Loan Agreement. 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. 0 9 Section 6.02. The Development Credit Agreement, the Project Agreement, and the Subsidiary Loan Agreement shall be free from any taxes that shall be imposed under the laws Qf the Borrower or laws in effect in its territories on or in connection with the execution, delivery or registration thereof. 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, together with such charges, shall become due and payable immediately, anything in this Development Credit Agreement to the contrary notwithstanding. Section 7.02. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: (a) any part of the principal amount of any loan to IDBA having an original maturity of one year or more shall, in accordance with its terms, have become due and payable in advance of maturity as provided in the relative contractual instruments, or any security for any such loan shall have become enforceable; (b) IDBA shall have been unable to pay its debts as they mature or any action or proceeding shall have been taken by IDBA or by others whereby any of the property of IDBA shall or may be distributed among its creditors; (c) the IDBA Law or the Regulations shall have been amended, suspended, abrogated, repealed or waived, or a change shall have been made in the Articles, in such a way as to affect materially and adversely the carrying out of the Project or the operations or financial condition of IDBA; 10 (d) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of IDBA or for the suspension of all or part of IDBA's operations; (e) a subsidiary or any other entity shall have been created or acquired or taken over by IDBA, if such creation, acquisition or taking over would adversely and materially affect the conduct of IDBA's business or IDBA's financial situation or the carrying out of the Project; and (f) a default shall occur in the performance of any obligation of IDBA under the Project Agreement or of the Da Afghanistan Bank or IDBA under the Da Afghanistan Bank Loan Agreement. Section 7.03. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) Any of the events specified in paragraphs (a) through (d) of Section 7.02 of this Agreement shall occur. (b) Any of the events specified in Section 7.02(e) or (f) of this Agreement shall occur and shall continue for a period of sixty days after notice there( f shall have been given by the Association to the Borrower and to IDBA. ARTICLE VIII Effective Date; Termination Section 8.01. The following events are specified as additional conditions to the effectiveness of this 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 IDBA have been duly authorized or ratified by all necessary corporate and governmental action; (b) the Borrower and IDBA have entered into the Subsidiary Loan Agreement in form and substance satisfactory to the Association, and the Subsidiary Loan Agreement has become fully effective and binding on the parties thereto in accordance with its terms, subject only to the effectiveness of this Agreement; (c) the authorized capital of IDBA (Af240,000,000) has been fully subscribed and paid in; and 11 (d) a form of draft IDBA Agreement, satisfactory to the Association and IDBA, has been furnished to 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 the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, IDBA and constitutes a valid and binding obligation of IDBA 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 IDBA and constitutes a valid and binding obligation of the Borrower and IDBA in accordance with its terms, subject only to the effectiveness of this Agreement; and (c) that the loan provided for under Article XIV of the Law has been duly authorized or ratified by, and executed and delivered on behalf of, the Da Afghanistan Bank and IDBA and constitutes a valid and binding obligation of the Da Afghanistan Bank and IDBA respectively, in accordance with its terms. Section 8.03. The date August 20, 1973 is hereby specified for the purposes of Section 10.04 of the General Conditions. Section 8.04. The obligations of the Borrower under Sections 3.02, 4.01, 4.02, 7.02 and 7.03 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on the date on which the Project Agreement shall terminate in accordance with its terms, whichever shall be the earlier. ARTICLE IX Miscellaneous Section 9.01. Subject to the provisions of Section 2.02 of this Agreement, the Minister of Finance 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: 12 For the Borrower: Ministry of Finance Kabul Afghanistan Cable address: MINSFINANCE Kabul 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 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. KINGDOM OF AFGHANISTAN By /s/ A. Malikyar Authorized Representati'e INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ M. Benjenk Regional Vice President Europe, Middle East and North Africa 13 SCHEDULE 1 Modifications of the General Conditions For the purposes of the Development Credit Agreement, the provisions of the General Conditions are modified as follows: (1) The following sub-paragraph is added to Section 2.01: "13. The term 'Project Agreement' has the meaning set forth in paragraph (c) of Section 1.02 of the Development Credit Agreement." (2) The words "Investment Projects" are substituted for the words "the Project" at the end of Section 5.03. (3) Section 6.02(h) is deleted and Section 6.02(i) is renumbered into Section 6.02(h). (4) Section 6.03 is deleted and replaced by the following new Section: "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) by the date specified in paragraph (e) of Section 2.02 of the Project Agreement no applications or requests permitted under paragraph (a) or paragraph (b) of such Section shall have been received by the Association in respect of any portion of the Credit, or having been so received, shall have been denied, or (c) after the Closing Date an amount of the Credit shall remain unwithdrawn from the Credit Account, the Association may by notice to the Borrower terminate the right of IDBA to submit such applications or 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." (5) The words ", the Project Agreement" are added after the words "the Development Credit Agreement" in Section 6.06. (6) The words "or the Project Agreement" are added after the words "the Development Credit Agreement" in Section 8.02.