Argentina - Agricultural Credit Project : Loan 1564 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1564 AR Loan Agreement (Agricultural Credit Project) between THE ARGENTINE REPUBLIC and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated June 29, 1978 LOAN NUMBER 1564 AR LOAN AGREEMENT AGREEMENT, dated June 29, 1978, between THE ARGENTINE REPUBLIC (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). ARTICLE 1 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 Agree- ments 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: (a) "BNA" means Banco de la Naci6n Argentina. (b) "Participating Banks" means BNA and any other banks selected by the Borrower for purposes of carrying out the Project in accordance with the Lending Policies. (c) "Lending Policies" means the policies set forth in Schedule 4 to this Agreement, as the same may be amended from time to time. (d) "Subsidiary Loan Agreement" means any of the agreements to be entered into between the Borrower and each of the Partici- pating Banks pursuant to Section 3.02 of this Agreement; and "Subsidiary Loan" means a loan provided for in a Subsidiary Loan Agreement. (e) "sub-borrower" means a farmer or cooperative of farmers to which a sub-loan is made or proposed to be made. (f) "sub-loan" means a loan to finance a farm investment plan made or proposed to be made in accordance with the provisions referred to in Section 3.02 of this Agreement. - 2 - (g) "farm investment plan" means a plan consisting of on- farm improvements, weed control or land clearing to be carried out by a sub-borrower and to be financed in part by means of a sub- loan. (h) "Project Committee" means the committee referred to in Section 3.03 (a) of this Agreement. (i) "Project Coordinator" means the coordinator referred to in Section 3.03 (b) of this Agreement. (j) "INTA" means Instituto Nacional de Tecnologfa Agro- pecuaria. (k) "peso" means the currency unit of the Borrower. 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 sixty million dollars ($60,000,000). Section 2,002. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank, for expendi- tures 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 described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan. Section 2.03. Except as the Bank shall otherwise agree, the goods and services for the technical assistance included in Part B of the Project to be financed out of the proceeds of the Loan, shall be procured in accordance with local procurement procedures satisfactory to the Bank. Section 2.04. The Closing Date shall be June 30, 1983 or such later date as the Bank shall otherwise 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%) - 3 - 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 seven and one-half per cent (7.50%) 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 semiannually on March 15 and September 15 in each year. Section 2.08. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out the Project with due diligence and efficiency and in conformity with the Lending Policies and appropriate technical, administrative, economic and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.02. (a) The Borrower shall relend the proceeds of the Loan to the Participating Banks under Subsidiary Loan Agree- ments on the terms and conditions specified in Part I of Schedule 4 to this Agreement, or on such other terms and conditions as the Bank shall agree. (b) The Borrower shall require the Participating Banks to lend the proceeds of the Subsidiary Loans to sub-borrowers on the terms and conditions specified in Part II of Schedule 4 to this Agreement, or on such other terms and conditions as the Bank shall agree. (c) The Borrower shall require the Participating Banks to operate, in respect of the Project, in accordance with appropriate business, technical, economic, banking and financial practices, under the supervision of experienced and competent management. Section 3.03. The Borrower shall: (a) establish and maintain a Project Committee for purposes of coordinating and supervising the execution of the Project; the -4- members of the Project Committee to be representatives, inter alia, of the Borrower's Secretarla de Estado de Agricultura y Ganaderla, BNA and INTA; and (b) employ a competent and experienced Project Coordinator. Section 3.04. (a) The Borrower: (i) shall maintain or cause to be maintained records and procedures adequate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it), to identify the goods and ser- vices financed out of the proceeds of the Loan, and to disclose their use in the Project; (ii) shall enable the Bank's accredited representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) shall furnish or cause to be furnished to the Bank at regular intervals all such information as the Bank shall reason- ably request concerning the Project, its cost and, where appro- priate, the benefits to be derived from it, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. (b) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Bank, the Borrower shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reason- ably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Bank of their respec- tive obligations under the Loan Agreement and the accomplishment of the purposes of the Loan. 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 - 5 - 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 cireating 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 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 sub- division 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 maintain or cause to be maintained records adequate to reflect in accordance with con- sistently maintained sound accounting practices the operations, resources and expenditures, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. Section 4.03. The Borrower shall cause the Participating Banks: (a) to establish and maintain separate accounts to record their receipts and payments for or in connection with the Project, including: (i) amounts received and payments made under Subsidiary Loan Agreements, and (ii) amounts disbursed to and received from the sub-borrowers; and -6- (b) (i) to have such accounts for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors satisfactory to the Bank; (ii) to furnish to the Bank as soon as available, but in any case not later than four months after the end of each such year, (A) certified copies of such accounts 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 Bank shall have reasonably requested; and (iii) to furnish to the Bank such other information concerning such accounts and the audit thereof as the Bank shall from time to time reasonably request. ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as addi- tional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) a Subsidiary Loan Agreement has been executed on behalf of the Borrower and BNA; (b) the Project Committee has been established; (c) the Project Coordinator has been employed; and (d) the Tribunal de Cuentas of the Borrower has examined this Agreement in accordance with the laws of t'B borrower and has issued its opinion thereon without formulating any objection thereto. Section 5.02. The date October 30, 1978, is hereby speci- fied for the purposes of Section 12.04 of the General Conditions. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Minister of Economy of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: -7- For the Borrower: Ministerio de Economia Hip6lito Yrigoyen 250 Buenos Aires Argentina Cable address: Telex: Ministerio de Economla 121952 Buenos Aires For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) 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. THE ARGENTINE REPUBLIC By /s/ Guillermo Walter Klein Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Adalbert Krieger Regional Vice President Latin America and the Caribbean - 8 - 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 e2ach Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Sub-loans 46% of payments (Part A of made by Partici- the Project) pating Banks to finance sub- (a) on-farm 8,700,000 loans for farm investment development plans (b) weed control 13,500,000 (c) land clearing 32,000,000 (2) Vehicles and 100% of foreign equipment for expenditures or Part B of the 50% of local Project and for expenditures Project adminis- tration 800,000 (3) Unallocated 5,000,000 TOTAL 60,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower; and - 9 - (b) the term "local expenditures" means expenditures in the currency of the Borrower and for goods or services supplied from the territory of the Borrower. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement; (b) 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; and (c) expenditures made before the execution and delivery of a Subsidiary Loan Agreement in respect of any portion of the Loan to be lent thereunder. 4. Notwithstanding the allocation of an amount of the Loan 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 per- centage of all expenditures in that Category, the Bank may, by notice to the Borrower, 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 not needed to meet other expenditures. 5. 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. 6. Withdrawals from the Loan Account in respect of Category (1) shall be made in pesos bought by the Bank from the Central Bank of the. Borrower at the official prevailing rate of exchange of the peso in terms of the dollar on the fifteenth day of the month in which the Participating Banks disbursed the funds in respect of which withdrawal is requested or on the fifteenth day of the fourth month preceding the month in which the withdrawal applica- tion therefor is received by the Bank, whichever shall be later. - 10 - SCHEDULE 2 Description of the Project The Project consists of: Part A. Making of sub-loans to sub-borrowers to finance on- farm investment, weed control and land clearing. Part B. 1. Provision of technical assistance to sub-borrowers for the preparation and execution of farm investment plans. 2. Supervision by technicians of INTA, pertinent official entities or the technicians authorized by the Project Coordinator of the execution by sub-borrowers of farm investment plans. 3. Training by INTA of field technicians. - 11 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each March 15 and September 15 beginning September 15, 1982 through September 15, 1990 3,335,000 On March 15, 1991 3,305,000 * 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 equiva- lents determined as for purposes of withdrawal. - 12 - 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 1.75% before maturity More than three years but 2.90% not more than five years before maturity More than five years but not 5.20% more than nine years before maturity More than nine years but 6.35% not more than eleven years before maturity More than eleven years 7.50% before maturity - 13 - SCHEDULE 4 Lending Policies Part I. Terms and conditions of Subsidiary Loans 1. Subsidiary Loans shall: (a) be denominated in pesos; (b) bear interest at a rate of not less than 2.75% per annum on their outstanding principal amount, adjusted from time to time in accordance with the fndice general de precios al por mayor of the Borrower; and (c) be repayable over a period of time equal to that applicable to the repayment of the Loan including a grace period of not more than 4 years. 2. Each Participating Bank shall provide out of its own resources: (a) 54% of the amount of each sub-loan made by such Participating Bank; and (b) short-term credit to sub-borrowers in such amounts and on such terms and conditions as shall be required to ensure that the purposes of the Loan will be accomplished. 3. Participating Banks shall be required to use any funds accruing to them from the carrying out of the Project for similar purposes and on the same terms and condi- tions as the proceeds of Subsidiary Loans. Part II. Terms and conditions of Sub-loans 1. Sub-loans shall: (a) be denominated in pesos; (b) bear interest at an annual rate on their outstand- ing principal amount, adjusted from time to time in accordance with the fndice general de precios al - 14 - por mayor of the Borrower, equal to the annual rate of interest on the corresponding Subsidiary Loan plus at least three percentage points; provided, however, that the resulting annual rate of interest is not less than 6%; and (c) be repayable over a period of not less than 3 years and not more than 9 years, including a grace period of not more than 4 years, such periods to be deter- mined on the basis of the projected cash-flow of the farm investment plan concerned. 2. Sub-loans shall be made only to finance farm investment plans prepared by the sub-borrowers with the assistance of INTA or consultants authorized by the Project Coordi- nator. 3. Each sub-borrower shall be required to provide not less than 20% of the cost of his farm investment plan out of his own resources. 4. The technical assistance referred to in paragraph 2 above may be included in the cost of a farm investment plan, provided, however, that it does not exceed 10% of the amount of the sub-loan made therefor. 5. Applications for sub-loans to finance farm investment plans consisting of: (a) land clearing shall be accompanied by a land clearing permit issued by the competent authori- ties; and (b) weed control shall be authorized by INTA.