Colombia - Caqueta Rural Settlement Project Phase II : Loan 1118 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1118 CO Loan Agreement (Caqueta Rural Settlement Project - Phase II) BETWEEN REPUBLIC OF COLOMBIA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED JUNE 2, 1975 CONFORMED COPY LOAN NUMBER 1118 CO Loan Agreement (Caqueta Rural Settlement Project - Phase II) BETWEEN REPUBLIC OF COLOMBIA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED JUNE 2, 1975 LOAN AGREEMENT AGREEMENT, dated June 2, 1975, between REPUBLIC OF COLOMBIA (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank), WHEREAS (A) The Borrower has requested the Bank to assist in the financing of the Project described in Schedule 2 to this Agreement by making the Loan as hereinafter provided; (B) The Project is a continuation of a program of the Borrower, a previous phase of which was financed out of the proceeds of a loan for the equivalent of $8,100,000 made by the Bank to the Borrower pursuant to the Loan Agreement (Caquetd Land Colonization Project) between them dated May 28, 1971; (C) The Project will be carried out by Instituto Colombiano de la Reforma Agraria (hereinafter called INCORA) and other entities, with the Borrower's assistance and, as part of such assistance, the Borrower will make available to INCORA, and, through it, to such other entities, the proceeds of the Loan as hereinafter provided; and (D) The Bank is willing to make the Loan available upon the terms and conditions set forth hereinafter and in a project agreement of even date herewith between the Bank and INCORA; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: 4 (a) "Project Agreement" means the agreement between the Bank and INCORA of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement; (b) the symbol Col.$ and the term "peso" mean the unit of the currency of the Borrower; (c) "CECORA" means Central de Cooperativas de la Reforma Agraria L tda; (d) "COOPERAGRO" means Cooperativa Agropecuaria del Caquetd Ltda.; (e) "ICCE" means Instituto Colombiano de Construcciones Escolares; (f) "ICA" means Instituto Colombiano Agropecuario; (g) "INDERENA" means Instituto de Desarrollo de los Recursos Naturales Renovables; (h) "Project Entities" means collectively the entities with which INCORA has entered into agreements pursuant to Sections 2.02, 2.03 and 2.04 of the Project Agreement; (i) "Project Area" means the area of about 1.2 million hectares, between the Cagudn River (from San Vicente de Cagudn to Cartagena) and the Caquetd River (from its confluence with the Yuruyaco River to Solano); and (j) "Basic Laws" means Laws No. 135 of 1961, No. I of 1968 and No. 4 of 1973 of the Republic of Colombia, establishing and organizing INCORA, as such Laws may be amended from time to time. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to nineteen million five hundred thousand dollars ($ 19, 5 00,0 00). Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule I to this Agreement, as 5 such Schedule may be amended from time to time, for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Loan. Section 2.03. Except as the Bank shall otherwise agree, contracts for the purchase of goods or for the carrying out of works or services (other than consultants' services) for the Project to be financed out of the proceeds of the Loan, shall be awarded in accordance with the provisions referred to in Section 2.10 of the Project Agreement. Section 2.04. The Closing Date shall be October 31, 1979 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of eight and one-half per cent (8-1/2%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and- other charges shall be payable semi-annually on May I and November 1 in each year. Section 2.08. The Borrower shall repay the principal of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. Section 2.09. INCORA 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 Loan Agreement, the Borrower shall cause INCORA and the other entities assisting in the carrying out of the Project to perform, in accordance 6 with the pr,visions of the Project Agreement and the agreements referred to in Sections 2.02, 2.03 and 2.04 of the Project Agreement, all their obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable INCORA and such other entities 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 make available to INCORA the proceeds of the Loan under an agreement satisfactory to the Bank and which shall include, inter alia, the terms and conditions set forth in paragraph 1 of Schedule I to the Project Agreement, as such Schedule may be amended from time to time. (c) The Borrower shall exercise its rights under such agreement in such manner as to protect the interests of the Borrower and the Bank and to accomplish the purposes of the Loan, and except as the Bank shall otherwise agree, the Borrower shall not assign, nor amend, abrogate or waive such agreement or any provision thereof. (d) Without limitation or restriction upon the provisions of Section 3.01(a) hereof, the Borrower shall: (i) make available to INCORA (under the terms and conditions set forth in paragraph I of Schedule I to the Project Agreement, as such Schedule may be amended from time to time), INDERENA and ICA funds aggregating Col. $397,200,000 and, (ii) if there is reasonable cause to believe that the funds in (i) hereof will be inadequate to meet the estimated expenditures required for the carrying out of the Project, make or cause to be made arrangements, satisfactory to the Bank, to enable INCORA, INDERENA and ICA promptly to be provided with such funds as are needed to meet such expenditures. Section 3.02. The Borrower shall take and shall cause its agencies to take all action which shall be necessary on their part to enable INCORA to perform its obligations under the Project Agreement and the agreements referred to in Sections 3.01 and 3.03 hereof, and to enable all Project Entities to carry out the activities required from them, and shall not take or permit to be taken any action which might interfere with the performance of such obligations. Section 3.03. Without limitation or restriction upon the provisions of Section 3.01(a) hereof, the Borrower shall: (i) cause its Ministerio de Salud P(iblica and its Ministerio de Educaci6n Nacional to enter into, within six months after the date of this Agreement or such later date as the Bank shall determine, legally binding agreements with INCORA to establish, operate and maintain the education and health facilities included in Parts C and D of the Project and (ii) provide promptly as needed all funds and resources therefor. 7 Section 3.04. The Borrower shall: (a) promptly inform the Bank of any changes in the regulations set forth in the decree of the Monetary Board of September 1973, issued pursuant to Law 5 of 1973, governing credit to the agricultural sector in Colombia; (b) review with the Bank, in the light of any such changes, the desirability of revising the rate of interest and the repayment schedule for long-term loans under Part A.1 of the Project; (c) make no loans under Part A.1 of the Project after six months from the date such changes have come into force and effect if by the expiration of such six month period the Borrower and the Bank have not reached agreement on the new conditions of lending under Part A.1. of the Project, and shall reassume such lending on the date such an agreement is reached; and (d) cause all agreements to be entered into pursuant to this Agreement and the Project Agreement to contain such clauses as shall be necessary to enable the Borrower to fulfill this commitment. ARTICLE IV Other Covenants Section 4.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, special security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of foreign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Borrower, in creating or permitting the creation of such lien, shall make express provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or administrative subdivisions, the Borrower shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank. (b) The foregoing undertaking shall, not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the 8 purchase price of such property; and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means assets of the Borrower, of any political or administrative subdivision thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Borrower or any such subdivision, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Borrower. Section 4.02. The Borrower shall: (a) cause all roads in the Project Area to be maintained and repaired in accordance with sound engineering and financial practices and shall provide, promptly as needed, all funds, equipment and other resources required for the purposes. (b) cause to be taken all reasonable anti-erosion measures necessary to protect the roads included in Part B of the Project including, inter alia, those referred to in paragraph 2 of Schedule 3 to the Project Agreement. Section 4.03. The Borrower shall, after completion of Part E of the Project, continue to provide to INDERENA, promptly as needed, funds and resources sufficient to maintain and operate the forest reserve area and to carry on the experimentation included in Part E of the Project. Section 4.04. The Borrower shall take all action, including the granting of all necessary authorizations, import licenses, foreign exchange permits and all other approvals required under the laws of the Borrower, to ensure the timely procurement of the goods and services required for the Project. ARTICLE V Remedies of the Bank Section 5.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: (a) INCORA or any Project Entity with which INCORA shall have entered into a legally binding agreement pursuant to the Project Agreement shall have failed to perform any of its respective obligations under the Project Agreement or any such agreement. 9 (b) An extraordinary situation shall have arisen which shall make it improbable that INCORA or any of such Project Entities will be able to perform any of its respective obligations under the Project Agreement or any such agreements. (c) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of INCORA or any of such Project Entities or for the suspension of its operations related to the execution of the Project. (d) The Borrower or any other authority having jurisdiction shall divest INCORA or any of such Project Entities of any of the powers vested in any of them as of the date of this agreement which in the opinion of the Bank are necessary for the efficient carrying out of the Project. (e) The Basic Laws of INCORA or any provision thereof shall have been amei -'d, suspended or abrogated so as to affect adversely, in the opinion of the Bank, ie performance by INCORA of its obligations under the Project Agreement. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified, namely, any of the events specified in paragraphs (a), (c), (d) and (e) of Section 5.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Bank to the Borrower. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01(c) of the General Conditions: (a) The execution and delivery of the Project Agreement on behalf of INCORA have been duly authorized or ratified by all necessary corporate and governmental action. (b) The execution and delivery of the agreement referred to in Section 3.01(b) of this Agreement on behalf of the Borrower and INCORA, respectively, have been duly authorized or ratified by all necessary corporate and governmental action. 10 (c) The execution and delivery of the agreements referred to in Sections 2.02, 2.03 and 2.04 of the Project Agreement on behalf of INCORA and the Project Entities, respectively, *have been duly authorized or ratified by all necessary corporate and governmental action. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02(c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank, namely, that each of the agreements referred to in Section 6.01 hereof has been duly authorized or ratified by, and executed and delivered on behalf of, each of the parties thereto, and is legally binding upon each of them in accordance with its terms. Section 6.03. The date October 2, 1975 is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Ministro de Hacienda y Credito Pt2blico of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministerio de Hacienda y Cr6dito Pfiblico Bogota Colombia Cable address: MINHACIENDA Bogota For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America 11 Cable address: INTBAFRAD 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 in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF COLOMBIA By /s/ Julio C6sar Turbay Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Adalbert Krieger Regionial Vice Presideit Latin America and the Caribbean 12 SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amoum of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Long-term 7,100,000 70% of amounts Credit (Part A.1 disbursed of the Project) (2) Cattle Fattening 150,000 70% of amounts Program (Part A.2 disbursed of the Project) (3) Road Construction 5,910,000 70% (4) Construction of 620,000 70( Schools, Health Facilities, Supply Stores and Admin- strative and .other Buildings (5) Construction of 200,000 50% Water Supply and Sewer Systems (6) Vehicles, Equipment 1,240,000 100% of foreign and Anti-Malaria expenditures or Products 95% of the ex- factory cost of locally produced goods 13 Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (7) Education, Forestry 1,000,000 70% and Erosion Control and Technical Assist- ance Program (8) Unallocated 3,280,000 TOTAL 19,500,000 2. For purposes of this Schedule, the term "foreign expenditures" means expenditures for goods or services supplied from the territory, and payable in the currency, of any country other than the Borrower. 3. The disbursement percentages have been calculated in compliance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if any event occurs which shall affect the amount of any such taxes included in the cost of any item to be financed out of the proceeds of the Loan, the Bank may, by notice to the Borrower, correspondingly adjust the disbursement percentage then applicable to such item. 4. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of expenditures prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph I above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Category to the extent required to meet the estimated shortfall proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are 14 not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement 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. If the Bank shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. 15 SCHEDULE 2 Description of the Project The Project is the continuation of the Borrower's colonization program in the Project Area. The Project consists of: Part A Lending Program 1. Not less than 3,200 long-term loans to settlers for livestock production. 2. Not less than 800 medium-term loans to settlers for cattle fattening. Part B Road Construction and Maintenance 1. Design and construction of about 200 km of roads. 2. Maintenance and upgrading of about 1000 km of roads in the Project area. Part C Education Services 1. Construction, furnishing and equipment of about 30 primary schools. 2. Provision of teaching aid equipment, including reading materials, to about 500 primary schools and for about 60 short adult training courses. Part D Health Services 1. Construction, furnishing and equipment of about two health centers and ten health posts. 2. A program of malaria eradication and improvement of water and sewerage conditions in rural centers. Part E Forestry and Erosion Control 1. Demarcation of a forest reserve area of about 20,000 hectares. 16 2. Experimentation to determine the species that are better suited to contain erosion in river banks and to replace natural forest for commercial exploitation. 3. Identification of a suitable project in the Cordillera where the socio-economic effects of anti-erosive measures can be studied. Part F Technical Assistance Extension services to settlers with not more than 200 hectares each, especially on animal husbandry and pasture management. Part G Stores and Offices 1. Construction of three farm input supply stores and three office buildings. 2. Acquisition and use of vehicles and equipment for the Project. The Project is expected to be completed by April 30, 1979. 17 SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* November 1, 1979 295,000 May 1, 1980 310,000 November 1, 1980 320,000 May 1, 1981 340,000 November 1, 1981 350,000 May 1, 1982 365,000 November 1, 1982 380,000 May 1, 1983 400,000 November 1, 1983 415,000 May 1, 1984 430,000 November 1, 1984 450,000 May 1, 1985 470,000 November 1, 1985 490,000 May 1, 1986 510,000 November 1, 1986 535,000 May 1, 1987 555,000 November 1, 1987 575,000 May 1, 1988 605,000 November 1, 1988 630,000 May 1, 1989 655,000 November 1, 1989 680,000 May 1, 1990 715,000 November 1, 1990 740,000 May 1, 1991 775,000 November 1, 1991 805,000 May 1, 1992 845,000 November 1, 1992 875,000 May 1, 1993 915,000 November 1, 1993 950,000 May 1, 1994 995,000 November 1, 1994 1,035,000 May 1, 1995 1,090,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. 18 Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05(b) of the General Conditions: Time of Prepayment Premium Not more than three years 1-1/4% before maturity More than three years but 2-1/2% not more than six years before maturity More than six years but not 4-1/2% more than eleven years before maturity More than eleven years but 6-3/4, not more than sixteen years before maturity More than sixteen years but 7-1/2% not more than eighteen years before maturity More than eighteen years 8-1/2% before maturity