Tanzania - Fourth TIB Project : Loan 1750 - Credit Agreement - Conformed

CONFORMED COPY SPECIAL ACTION CREDIT NUMBER 27 TA Special Action Credit Agreement (Fourth TIB Project) between UNITED REPUBLIC OF TANZANIA and INTERNATIONAL DEVELOPMENT ASSOCIATION as ADMINISTRATOR of the SPECIAL ACTION ACCOUNT established with funds contributed by the MEMBER STATES of the EUROPEAN ECONOMIC COMMUNITY Dated August 20, 1979 SPECIAL ACTION CREDIT NUMBER 27 TA SPECIAL ACTION CREDIT AGREEMENT AGREEMENT, dated August 20, 1979, between UNITED REPUBLIC OF TANZANIA (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION as ADMINISTRATOR of the Special Action Account established with funds contributed by the MEMBER STATES of the EUROPEAN ECONOMIC COMMUNITY. WHEREAS (A) by the Agreement, dated May 2, 1978, between the International Development Association and the European Economic Community and its Member States there has been established by the International Development Association a Special Action Account constituted by the funds contributed by the Member States of the European Economic Community and administered by the International Development Association, acting as Administrator of such Special Action Account, for the purpose of, and in accordance with, the provisions of said Agreement (hereinafter called the Adminis- trator); (B) the Borrower has requested the Administrator for assis- tance from the resources of the Special Action Account in the financing of a project described in Section 3.01 to this Agreement (hereinafter called the Project) and the Administrator has deter- mined that such assistance would be in accordance with the provi- sions of the Agreement of May 2, 1978 referred to above; (C) by an agreement of even date herewith between the International Bank for Reconstruction and Development (the Bank) and Tanzania Investment Bank (TIB) (hereinafter called the Loan Agreement), the Bank has agreed to provide further assistance in the financing of the Project in an aggregate principal amount equivalent to twenty-five million dollars ($25,000,000) (herein- after called the Bank Loan); (D) by an agreement of even date herewith between the Borrower and the Bank (hereinafter called the Guarantee Agreement) the Borrower, in consideration of the Bank's entering into the Loan Agreement, has agreed to guarantee the obligations of TIB thereunder; and (E) the Project will be carried out by TIB with the Bor- rower's assistance and, as part of such assistance, the Borrower will make available to TIB the proceeds of the Special Action Credit as hereinafter provided; -2- WHEREAS the Administrator has agreed, on the basis inter alia of the foregoing, to extend the Special Action Credit to the Borrower in an aggregate principal amount equivalent to about fifteen million dollars ($15,000,000) upon the terms and condi- tions hereinafter set forth and in the Project Agreement of even date herewith between the Administrator and TIB; 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 International Development Association, dated March 15, 1974, 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 International Development Association, as so modified, being hereinafter called the General Conditions): (a) the term "Association", wherever used in the General Conditions, means the International Development Association acting as the Administrator of the Special Action Account referred to in the Preamble to this Special Action Credit Agreement; (b) the terms "Development Credit Agreement" and "Credit", wherever used in the General Conditions are amended to read "Special Action Credit Agreement" and "Special Action Credit", respectively; (c) the following subparagraph is added to Section 2.01: "B. The term 'Project Agreement' has the meaning set forth in Section 1.02 (c) of the Special Action Credit Agreement." (d) Sections 4.01, 4.02, 4.03, 4.04 and the second sentence of Section 5.01 are deleted; (e) the words "Investment Projects" are substituted for the words "the Project" at the end of Section 5.03; (f) Section 6.03 is deleted and replaced by the following new Section: 3 "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 Section 2.02 (e) of the Project Agreement no applications for approval or requests for authorization to withdraw from the Credit Account in respect of any portion of the Credit shall have been received by the Association, 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 to request such approvals and authorizations 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." (g) in Sections 6.02 and 7.01, the term "Association" shall also include the International Development Association acting in its own capacity; (h) the words "and the Project Agreement" are added after the words "the Development Credit Agreement" in Section 6.06; (i) in Section 9.01 (a) (i) of the General Conditions the following words are inserted immediately following the words "Guarantee Agreement" namely, "the administration, operations and financial condition of the Borrower"; (j) in Section 9.01 (a) (ii) of the General Conditions the following words are inserted immediately following the words "the Project," namely "the Investment Enterprises, Investment Projects, the Sub-loans and Investments"; and (k) the words "or the Project Agreement" are added after the words "the Development Credit Agreement" in Section 10.02. Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Member States" means the Member States of the European Economic Community, i.e., Belgium, Denmark, The Federal Republic -4- of Germany, France, Ireland, Italy, Luxembourg, The Netherlands and The United Kingdom; (b) "Administrator" means the International Development Association acting as Administrator of the Special Action Account referred to in the Preamble to this Special Action Credit Agree- ment; (c) "Project Agreement" means the agreement between the Administrator and TIB of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement and all agreements supplemental to the Project Agreement; (d) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and TIB pursuant to Section 3.01 (b) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement; (e) "Sub-loan" means a loan or credit made or proposed to be made by TIB to an Investment Enterprise for an Investment Project out of the equivalent of the proceeds of the Special Action Credit relent to TIB under the Subsidiary Loan Agreement and "free-limit Sub-loans" means a Sub-loan as so defined, which qualifies as a free-limit Sub-loan pursuant to the provisions of Section 2.02 (c) of this Agreement. (f) "Investment" means an investment, other than a Sub-loan, made or proposed to be made by TIB in an Investment Enterprise for an Investment Project out of the equivalent of the proceeds of the Special Action Credit relent to TIB under the Subsidiary Loan Agreement; (g) "Investment Enterprise" means an enterprise to which TIB proposes to make or has made a Sub-loan or in which it pro- poses to make or has made an Investment; (h) "Investment Project" means a specific development project to be carried out by an Investment Enterprise utilizing the proceeds of a Sub-loan or Investment; (i) "Tanzanian Shillings" and "TShs" mean the currency of the Borrower; (j) "Foreign currency" means any currency other than the currency of the Borrower; -5 - (k) "Act" means the Tanzania Investment Bank Act, 1970, as amended to the date of this Agreement; (1) "Statement of Policy" means the policies set forth in TIB's "Statement of Investment and Financial Policies" approved by the Directors of TIB on December 18, 1973, as amended to the date of this Agreement; (m) "Prior Loan Agreement" means (A) any outstanding loan agreement between the Bank and TIB dated before the date of this Agreement and (B) any outstanding development credit agreement between the Borrower and the Association dated before the date of this Agreement providing for a development credit to be relent by the Borrower to TIB, and "Prior Loan" means any loan or develop- ment credit provided for therein; and (n) "Subsidiary" means any company of which a majority of the outstanding voting stock or other proprietary interest is owned or effectively controlled by TIB or by any one or more subsidiaries of TIB or by TIB and one or more of its subsidiaries. ARTICLE II The Special Action Credit Section 2.01. (a) The Administrator agrees to lend to the Borrower on the terms and conditions in the Special Action Credit Agreement set forth or referred to, the following currency amounts: eighteen million five hundred one thousand Belgian francs (BFl8,501,000); two million three hundred three thousand Danish kroner (DK2,303,000); eight million eight hundred ninety-three thousand Deutsche marks (DM8,893,000); nine million four hundred one thousand French francs (FF9,401,000); twenty thousand five hundred Irish pounds (IrZ20,500); one billion ninety million nine hundred eleven thousand Italian lire (ItLl,090,911,000); five hundred eighty-two thousand Luxembourg francs (LF582,000); -6- two million four hundred fifty-eight thousand Netherlands guilders (DFl 2,458,000); and two million two hundred sixty-seven thousand one hundred Pounds sterling (E2,267,100). (b) Withdrawals from the Special Action Credit Account shall be made only on account of expenditures (i) in the currency of the Borrower, or (ii) for goods produced in or services supplied from (A) any of the Member States and (B) any developing country which is a member of the International Development Association and could be the recipient of a special action credit, as determined by the Administrator. (c) Withdrawals from the Special Action Credit Account shall be made in the respective currencies in which the expenditures to be financed out of the proceeds of the Special Action Credit have been paid or are payable or, at the option of the Administrator, in such currency or currencies as the Administrator shall from time to time select. Section 2.02. (a) Subject to the provisions of Section 2.01 (b) and (c) hereof, and of sub-Section (d) of this Section, the amount of the Special Action Credit may be withdrawn by TIB, on behalf of the Borrower, from the Special Action Credit Account for amounts paid (or, if the Administrator shall so agree, for amounts to be paid) by TIB on account of withdrawals made by an Investment Enterprise under a sub-loan or investment to meet the reasonable cost of goods and services required for the Investment Project in respect of which the withdrawal from the Special Action Account is requested; provided, however, that no withdrawal shall be made in respect of a sub-loan or investment unless (i) the sub-loan or investment shall have been approved by the Administrator, or (ii) the sub-loan shall be a free-limit sub-loan for which the Adminis- trator shall have authorized withdrawals from the Special Action Account. (b) For the purposes of paragraph (a) above, except as otherwise agreed between the Borrower and the Administrator, withdrawals from the Special Action Account shall be authorized by the Administrator in respect of expenditures under a sub-loan or investment: (i) in a foreign currency for goods procured or ser- vices supplied from any of the countries referred to in Section 2.01 (b) (ii) hereof; 7 (ii) in Tanzanian Shillings on account of noc more than sixty per cent (60%) of the invoiced price for goods previously imported through normal trade channels into the territories of the Borrower from any of the countries referred to in Section 2.01 (b) (ii) hereof; and (iii) in Tanzanian Shillings on account of not more than forty per cent (40%) of the contract price under civil works and/or construction contracts to be carried out in the territories of the Borrower. (c) A free-limit sub-loan shall be a sub-loan for an Investment Project in an amount to be financed out of the proceeds of the Special Action Credit which shall not exceed the sum of (i) $1,000,000 equivalent, when added to any other outstanding amounts financed or proposed to be financed out of the proceeds of the Special Action Credit or of any Prior Loan for such Investment Project or (ii) $5,000,000 equivalent, when added to all other free-limit sub-loans financed or proposed to be financed out of the proceeds of the Special Action Credit, the foregoing amounts being subject to change from time to time as determined by the Administrator. (d) Except as the Borrower and the Administrator may other- wise agree, no withdrawals shall be made on account of (i) expenditures made before the date of this Agreement or (ii) expenditures made by an Investment Enterprise in respect of a sub-loan subject to the Administrator's approval or in respect of an investment if such expenditures shall have been made more than ninety days prior to the date on which the Administrator 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, in respect of a free-limit sub-loan, more than ninety days prior to the date on which the Administrator 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 2.03. The Closing Date shall be December 31, 1981 or such later date as the Administrator shall establish. The Administrator shall promptly notify the Borrower of such later date. -8- Section 2.04. (a) The Borrower shall pay to the Administrator a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum, on each of the various currency amounts with- drawn from the Credit Account and outstanding from time to time. The amounts of service charge in various currencies so found, and additional service charges (if any) payable pursuant to Section 3.02 of the General Conditions, shall be payable in the currency of the United Kingdom of Great Britain and Northern Ireland, or in another currency selected by the Administrator in accordance with the provisions of paragraph (b) of this Section, after their conversion into such currency on the basis of exchange rates determined in accordance with the provisions of Section 4.05 of the General Conditions. (b) If the Administrator shall at any time determine that the currency so specified or selected is not freely convertible or freely exchangeable by the International Development Association for currencies of other members of the International Development Association for the purposes of its operations, service charges shall be payable in such other currency as the Administrator may select for such purposes and shall notify in writing to the Borrower, whereupon, commencing thirty days after the date of such notice, service charges shall be payable in such other currency. Section 2.05. Service charges shall be payable semiannually on January 1 and July 1 in each year. Section 2.06. (a) The Borrower shall repay the principal amount of the Special Action Credit in semiannual installments payable on each May 1 and November 1 commencing November 1, 1989 and ending May 1, 2029, each installment to and including the installment payable on May 1, 1999, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment there- after to be one and one-half per cent (1-1/2%) of such principal amount. (b) Each of the installments payable pursuant to paragraph (a) of this Section shall be the aggregate of such amounts in the various currencies withdrawn from the Credit Account as shall be found by multiplying the total amount in each currency so with- drawn by the applicable installment percentage as specified in paragraph (a) of this Section, unless the Administrator shall otherwise specify by notice to the Borrower prior to each pay- ment date for the purpose of avoiding the payment of fractional currency amounts. -9- (c) If withdrawal shall have been made in a currency which the Administrator shall have purchased with one or more other currencies for the purpose of such withdrawal, the portion of the Special Action Credit so withdrawn shall, for the purpose of paragraph (b) of this Section, be deemed to have been withdrawn in the currency or currencies used by the Administrator for such purchase in the amounts of such currency or currencies so used. (d) The Administrator will, at the request of the Borrower and on such terms and conditions as the Administrator shall determine, use its best efforts to purchase any currency needed by the Borrower for payment of principal required under this Agreement upon payment by the Borrower of sufficient funds therefor in a currency or currencies to be specified by the Administrator from time to time. In purchasing the currencies required the Administrator shall be acting as agent of the Borrower and the Borrower shall be deemed to have made any payment required under this Agreement only when and to the extent that the Administrator has received such payment in the currency or currencies required. Section 2.07. TIB is designated as representative of the Borrower for the purposes of taking any action required or per- mitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions. ARTICLE III Description of the Project; Use of Proceeds of the Special Action Credit Section 3.01. (a) The purpose of the Project is to assist TIB in financing such productive facilities and resources in the United Republic of Tanzania as will contribute to the economic and social development of the country. The Project consists of the financing of specific development projects through loans to and investments in productive enterprises in the United Republic of Tanzania, in furtherance of the corporate purposes of TIB. (b) The Borrower shall relend the proceeds of the Special Action Credit to TIB under a Subsidiary Loan Agreement to be entered into between the Borrower and TIB containing terms and conditions which shall have been approved by the Administrator. (c) The Borrower shall exercise its rights under the Sub- sidiary Loan Agreement in such manner as to protect the interests - 10 - of the Borrower and the Administrator and to accomplish the purposes of the Special Action Credit, and except as the Admin- istrator shall otherwise agree, the Borrower shall not assign, nor amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. Section 3.02. The Borrower shall not take, or permit any of its political subdivisions, or any of its agencies or instru- mentalities, or any agency or instrumentality of any political subdivision, to take any action which would prevent or materially and adversely interfere with the carrying out of the Project or the performance by TIB of any of its other obligations under the Project Agreement or the Subsidiary Loan Agreement, and shall take or cause to be taken all reasonable action which shall be required on its part in order to enable TIB to carry out the Project and to perform such other obligations. ARTICLE IV Remedies of the Administrator Section 4.01. 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 TIB having an original maturity of one year or more shall, in accor- dance 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) a change shall have been made in the Act or in the Statement of Policy which would materially and adversely affect the operations or the financial condition of TIB; (c) a resolution shall have been passed for the dissolution or liquidation of TIB; and (d) a subsidiary or any other entity shall have been created or acquired or taken over by TIB, if such creation, acquisition or taking over would adversely affect the conduct of TIB's business or TIB's financial condition or the efficiency of TIB's management and personnel or the carrying out of the Project. - 11 - (e) (i) subject to subparagraph (ii) of this paragraph: (A) the right of TIB to withdraw the proceeds of the Bank Loan shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the agreement pro- viding therefor, or (B) the Bank Loan shall have become due and payable prior to the agreed maturity thereof. (ii) subparagraph (i) of this paragraph shall not apply if: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of TIB to perform any of its obligations under the Bank Loan Agreement, and (B) adequate funds for the Project are available to TIB from other sources on terms and condi- tions consistent with the obligations of TIB under the Project Agreement. Section 4.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) the event specified in paragraph (a), (b), (c) or (e) (i) (B) of Section 4.01 of this Agreement shall occur; and (b) the event specified in paragraph (d) of Section 4.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Administrator to the Borrower and TIB. ARTICLE V Effective Date Section 5.01. The following event is specified as an addi- tional condition to the effectivenoss of the Special Action Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions, namely, that the Subsidiary Loan Agreement has been entered into by the Borrower and TIB, respectively. - 12 - Section 5.02. The following are specified as additional matters, within the meaning of Section 12.02 (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, TIB, and constitutes a valid and binding obligation of TIB in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly authorized or ratified by, and constitutes a valid and binding obligation of, the Borrower and TIB in accordance with its terms. ARTICLE VI Miscellaneous Section 6.01. The date of November 20, 1979 is hereby speci- fied for the purposes of Section 12.04 of the General Condi- tions. Section 6.02. Subject to the provisions of Section 2.07 of this Agreement, the Minister of the Borrower at the t e respon- sible for Finance is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.03. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the F rrower: Ministry of Finance and Planning P.O. Box 9111 Dar as Salaam United Republic of Tanzania Cable address: TREASURY Dar es Salaam - 13 - For the Administrator: Administrator of the Special Action Account 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 in the District of Columbia, United States of America, as of the day and year first above written. UNITED REPUBLIC OF TANZANIA By Is/ Paul Bomani Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION as ADMINISTRATOR of the SPECIAL ACTION ACCOUNT established with funds contributed by the MEMBER STATES of the EUROPEAN ECONOMIC COMMUNITY By /s/ W. A. Wapenhans Regional Vice President Eastern Africa