Rwanda - Second BRD Project : Credit 0896 - Credit Agreement - Conformed

CONFORMED COPY CRf -T NUBER 896 RW Development Credit Agreement (Second BRD Project) between REPUBLIC OF RWANDA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated July 13, 1979 CREDIT NUMBER 896 RW DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated July 13, 1979, between REPUBLIC OF RWANDA (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) the Borrower has requested the Association to assist in the financing of the Project described in Schedule 1 to this Agreement by extending the Credit as hereinafter provided; (B) Part A of the Project will be carried out by Banque Rwandaise de D6veloppement with the Borrower's assistance and, as part of such assistance, the Borrower will make available to Banque Rwandaise de Developpement a portion of the proceeds of the Credit as hereinafter provided; and WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth and in the Project Agreement of even date herewith between the Association and Banque Rwandaise de D6velopp'ment; 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 Association, dated March 15, 1974, with the same force and effect as if they were fully set forth herein, subject, however, to the modifications thereof set forth in Schedule 3 to this Agreement (said General Conditions Appli- cable to Development Credit Agreements of the Association, as so modified, 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) "BRD" means Bangue Rwandaise de Developpement, established by the Borrower's Law of August 5, 1967, -2- as amended by the Borrower's Decree-Law of October 8, 1974, and as said Law may be further amended from time to time; (b) "Project Agreement" means the agreement of even date herewith between the Association and BRD, as such agreement may be amended from time to time, and such term includes all agreements supplemental to the Project Agreement; (c) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and BRD 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, if any; (d) "Sub-loan" means a loan or credit made or proposed to be m"de by BRD to an Investment Enterprise for an Investment Project out of the equivalent of the proceeds of the Credit relent to BRD under the Subsidiary Loan Agreement, 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 2.02 (b) of this Agreement; (e) "Investment" means an investment other than a Sub-loan, made or proposed to be made by BRD in an Investment Enterprise for an Investment Project out of the equivalent of the proceeds of the Credit relent to BRD under the Subsidiary Loan Agreement; (f) "Investment Enterprise" means an enterprise to which BRD proposes to make or has made a Sub-loan or in which it pro- poses to make or has made an Investment, and "Small-scale Invest- ment Enterprise" means an Investment Enterprise, as so defined, with: (i) net assets (calculated as total assets minus amorti- zation) of less than RwFl5,000,000; (ii) annual sales of less than RwF8,000,000; and (iii) except as the Association shall otherwise agree, less than 20 employees; (g) "Investment Project" means a specific development project to be carried out by an Investment Enterprise utilizing the proceeds of a"Sub-loan or Investment; (h) "Rwandese Francs" and "RwF" mean the currency of the Borrower; (i) "foreign currency" means any currency other than the currency of the Borrower; FT -3 - (j) "Statutes" means the Borrower's Law of August 5, 1967, referred to in paragraph (a) of this Section, as amended by the Borrower's Decree-Law of October 8, 1974, and as said Law may be further amended from time to time; (k) "Statement of Policy" means the Motion de Politique Generale of BRD approved by the Board of Directors of BRD on January 20, 1975, and the Principes d'Intervention of BRD approved by the Board of Directors of BRD on January 28, 1976, both as amended to the date of this Agreement, and as the same may be further amended from time to time in mutual agreement between the Association and BRD; (1) "Prior Credit Agreement" means the development credit agreement (Credit Number 655 RW) between the Borrower and the Association dated August 20, 1976, and "Prior Credit" means the credit provided for therein; and (m) "Subsidiary" means any company of which a majority of the outstanding voting stock or other proprietary interest is owned or effectively controlled by BRD or by any one or more subsidiaries of BRD or by BRD and one or more of its subsidiaries. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equiva- lent to five million, two hundred thousand dollars ($5,200,000). Section 2.02. (a) Subject to the provisions of paragraphs (b), (c) and (d) of this Section, BRD, on behalf of the Borrower pursuant to Section 2.09 of this Agreement, may withdraw from the Credit Account, up to an aggregate amount of five million dollars ($5,000,000) equivalent, the equivalent of amounts paid (or, if the Association shall so agree, amounts to be paid) by the Borrower on account of withdrawals made by an Investment Enter- prise under a Sub-Loan or Investment to meet: (i) the reasonable foreign-currency cost of imported goods (except goods described in paragraph (c) of this Section) and services required for the Invest- ment Project in respect of which the withdrawal is requested; -4- (ii) eighty per cent (80%) of the invoiced price paid for goods purchased for Investment Projects as set forth in paragraph (c) (i) of this Section; (iii) eighty per cent (80%) of the invoiced price paid for goods purchased for Investment Projects as set forth in paragraph (c) (ii) of this Section; and (iv) sixty-five per cent (65%) of the costs of construc- tion works included in such Investment Projects and carried out by national contractors; provided, however, that no amount shall b:. withdrawn from the Credit Account in respect of an Investment 1"'oject unless (A) the Sub-loan or Investment for such Investment Project shall have been 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 for an Invest- ment Project in an amount to be financed under the Development Credit Agreement which, together with any other amount or amounts previously financed for the same Investment Project under the Development Credit Agreement or under the Prior Credit Agreement, and not repaid, shall not exceed in the aggregate the equivalent of $200,000 and which, when added to all other free-limit Sub- loans financed under the Development Credit Agreement, shall not exceed in the aggregate the equivalent of $2,000,000, the fore- going amounts being subject to change from time to time as deter- mined by the Association. (c) Except as the Association shall otherwise agree, withdrawals from the Credit Account may be made on account of expenditures in the currency of the Borrower only for: (i) goods previously imported into its territory through normal trade channels and from countries which are members of the Bank (or from Switzerland); (ii) goods produced in the territory of the Borrower to a substantial extent from components or raw materials so imported, and purchased by Investment Enterprises to carry out Investment Projects; and (iii) constre!tion works as described in subparagraph (iv) of paragraph k-a) of this Section. (d) Except as the Association shall otherwise agree, no withdrawals shall be made on account of: (i) expenditures made ilt by an Investment Enterprise prior to the date of this Agreement; or (ii) expenditures made in respect of a Sub-loan subjct to the Association's approval, or of an Investment, more than ninety days prior to the date on which the Association shall have received the application and information,required under Section 2.03 (b) of the Project Agreement; or (iii) expenditures made in respect of a free-limit Sub-loan more than ninety days prior to the date on which the Association shall have received the request and information required by Section 2.03 (b) of the Project Agreement. (e) The Borrower shall be entitled to withdraw from the Credit Account: (i) amounts expended in foreign currency (or, if the Association shall so agree, such amounts as shall be required to meet expenditures in foreign currency to be made) to finance, up to an aggregate amount of $20,000 equivalent, the reasonable cost of the services of consultants under Part B (1) of the Project; (ii) amounts expended in foreign currency (or, if the Association shall so agree, such amounts as shall be required to meet expenditures in foreign currency to be made) to finance, up to an aggregate amount of $145,000 equivalent, the reasonable cost of training under Part B (2) of the Project; and (iii) amounts expended in foreign currency or eighty per cent (80%) of amounts expended in local currency (or if the Associ- ation shall so agree, such amounts as shall be required to meet expenditures in foreign currency to be made, or eighty per cent (80%) of amounts required to meet expenditures in local currency to be made) to finance up to an aggregate of $35,000 equivalent, the reasonable cost of equipment and furniture under Part B (2) of the Project. (f) Notwithstanding the provisions of paragraph (e) of this Section, no withdrawals shall be made in respect of payments made, on account of Part B of the Project, for expenditures prior to the date of this Agreement. (g) In the event that Part B (2) of the Project is not carried out, the amounts specified in paragraph (e) (ii) and (iii) of this Section will be added to the amount to be relent to BRD pursuant to Section 3.01 (b) of this Agreement for the carrying out of Part A of the Project. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods to be financed out of the proceeds of the Credit for Part B (2) (a) of the Project shall be governed -6- by the provisions set forth or referred to in Schedule 2 to this Agreement. Section 2.04. The Closing Date shall be June 30, 1983, or such later date as the Association shall establish. The J1 Association shall promptly notify the Borrower of such later date. Section 2.05. 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 2.06. Service charges shall be payable semiannually on April 15 and October 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each April 15 and October 15 commencing October 15, 1989, and ending April 15, 2029, each installment to and including the installment payable on April 15, 1999 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. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. Section 2.09. BRD 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 with respect to Part A of the Project. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out or cause to be carried out Part B of the Project with due diligence and efficiency and in conformity with appropriate accounting, finan- cial and administrative practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purp,se. -77.- (b) Under a subsidiary loan agreement, to be entered into between the Borrower and BRD on terms and conditions which shall 0 have been approved by the Association, the Borrower shall relend to BRD the sum of five million dollars ($5,000,000) or the equiv- alent thereof out of the proceeds of the Credit to assist BRD in carrying out Part A of the Project; the Subsidiary Loan Agreement shall provide, inter alia, that the amounts so relent pursuant to this paragraph shall bear interest at the rate of 6.0% per annum on the principal amount withdrawn and outstanding from time to time. (c) The Borrower shall exercise its rights under the Subsid- iary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, nor amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. Section 3.02. In order to assist the Borrower in the prepara- tion of the feasibility study and plans under Part B (1) of the Project and in the training of local staff under Part B (2) of the Project, the Borrower shall, by September 30, 1979 or such later date as may be agreeable to the Association, employ account- ing consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Section 3.03. (a) By March 30, 1980 or such later date as may be agreeable to the Association, the Borrower shall prepare or cause to be prepared, and shall furnish to the Association for its approval, the feasibility study under Part B (1) of the Project. (b) In the event that the feasibility study, as approved by the Association, recommends the establishment of an accounting firm, the Borrower shall, by May 31, 1980 or such later date as may be agreeable to the Association, furnish to the Association, for its approval, a training program for the intended staff of such firm and shall thereafter implement such program with such modifications as may be agreeable to the Borrower and the Associ- ation. Section 3.04. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit for Part B (2) of the Project against hazards incident to the acquisition, transpor- tation and delivery thereof to the place of use or installation, i-A -8- and for such insurance any indemnity shall be payable in a cur- rency freely usable by the Borrower to replace or repair such goods. (b) Except as the Association may otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Credit for Part B of the Project to be used exclusively for the Project. Section 3.05. (a) The Borrower shall furnish to the Associa- tion, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for Part B of the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reason- ably request. (b) The Borrower shall: (i) maintain records and procedures adequate to record and monitor the progress of Part B of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Credit for Part B of the Project, and to disclose their use in Part B of the Project; (ii) enable the Associa- tion's accredited representatives to visit the facilities included in Part B of the Project and to examine the goods financed out of the proceeds of the Credit for Part B of the Project and any relevant records and documents; and (iii) furnish to the Associ- ation at regular intervals all such information as the Association shall reasonably request concerning Part B of the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditures of such proceeds and the goods and services financed out of such proceeds. (c) 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 Association, the Borrower shall prepare and furnish to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution and initial operation of Part B of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Association of their respective obligations under this Agreement and the accomplishment of the purposes of the Credit. Section 3.06. As and when needed, the Borrower shall take or cause to be taken all such action as shall be necessary to -9- acquire, or to permit the acquisition of, all such land and rights in respect of land as shall be required for the establishment of an accounting firm in conjunction with Part B (2) of the Project. ARTICLE IV Other Covenants Section 4.01. 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 of its political subdivisions, to take any action which would prevent or materially interfere with the performance by BRD of any of its 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 BRD to perform such obligations. Section 4.02. Prior to any amendments to the Statutes, the Borrower shall inform the Association of the amendments proposed and shall afford the Association a reasonable opportunity to exchange views on the proposed amendments with the Borrower and BRD. Section 4.03. The Borrower shall bear all risk of loss resulting from changes in the rates of exchange between the various currencies (including Rwandese Francs) used in BRD's borrowing and lending operations. Section 4.04. BRD's financial assistance to a public enter- prise for any Project, including any Investment Project exceeding 20% of BRD's net worth, shall be subject to the prior approval of the Borrower. The Borrower shall provide BRD or cause BRD to be provided with adequate guarantee for the repayment of that portion of such assistance which exceeds such 20%. ARTICLE V Remedies of the Association Section 5.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) a default shall occur in the performance of any obliga- tion of BRD under the Project Agreement or under any other project agreement between the Association and BRD; - 10 - (b) the Statutes shall have been amended so as to affect materially and adversely the operations or financial condition of BRD; (c) BRD shall be unable to pay its debts as they mature or any action or proceeding shall have been undertaken whereby any of the property of BRD shall or may be distributed among its credi- tors; (d) any part of the principal amount of any loan to BRD 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 related contractual instruments, or any security for any such loar shall have become enforceable; (e) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of BRD or for the suspension of its operations; and (f) a Subsidiary or any other entity shall have been created or acquired or taken over by BRD, if such creation, acquisition or taking over would adversely affect the conduct of BRD's business, its financial situation, the efficiency of its management and personnel or the carrying out of the Project. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additonal events are specified pursuant to paragraph (d) thereof: (a) any event specified in paragraphs (a), (b) or (f) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower and BRD; and (b) any event specified in paragraphs (c), (d) or (e) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01.. The following event is specified as an addi- tional. condition to the effectiveness of the Development 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 BRD. -11 - Section 6.02. 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, BRD, and constitutes a valid and binding obligation of BRD in accor- dance with its terms; and (b) that the Subsidiary Loan Agreement has been duly autho- rized or ratified by, and constitutes a valid and binding obliga- tion of, the Borrower and BRD in accordance with its terms. Section 6.03. The date October 15, 1979 is hereby speci- fied for the purposes of Section 12.04 of the General Conditions. Section 6.04. The provisions of Section 4.02 of this Agree- ment and of Article V of this Agreement shall cease and determine on the date on which this Agreement shall terminate or on a date twenty-five years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. Subject to the provisions of Section 2.09 of this Agreement, the Minister of the Borrower at the time responsible for finance is designated as representative of the Borrower for the purposes of Section 11.03 of the General Condi- tions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministere des Finances Bolte Postale 158 Kigali Republique Rwandaise Cable address: Telex: MINIFIN CABPUB 04 Kigali -12- For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 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. REPUBLIC OF RWANDA By /s/ Bonaventure Ubalijoro Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Is/ Andre R. Gu6 Acting Regional Vice President Eastern Africa fFF - 13 - SCHEDULE 1 Description of the Project The Project is composed of two Parts as follows: Part A: The financing by BRD of economic development in the territory of the Borrower through loans for productive purposes to enterprises in such territory, and through other productive investments in such enterprises, all for specific development projects and in accordance with the Statutes and Statement of Policy of BRD. Part B: (1) Consultants' services to assist the Borrower in studying, in accordance with terms of reference acceptable to the Association, the feasibility of establishing an accounting firm in the territory of the Borrower and, in the event such establishment is justified, in preparing a plan for it; and (2) in the event an accounting firm is to be estab- lished: (a) the purchase of furniture and equipment for its premises; and (b) the training of its staff, locally with the assistance of experts, and abroad in suitable training institutions. Part B of the Project is expected to be completed by Decem- ber 31, 1982. 141 - 14 - SCHEDULE 2 Procurement under Part B (2) (a) of the Project 1. Contracts for the purchase of equipment and furniture under Part B (2) (a) of the Project estimated to cost more than the equivalent of $10,000 shall be procured on the basis of competi- tive bidding advertised locally. 2. Contracts for the purchase of equipment and furniture under Part B (2) (a) of the Project estimated to cost the equivalent of $10,000 or less shall be procured on the basis of negotiated purchases after solicitation of not less than three independent quotations obtained locally. - 15 - SCHEDULE 3 Modifications of General Conditions For the purpose of this Agreement, the provisions of the General Conditions are modified as follows: (a) The following subparagraph is added to Section 2.01: "13. The term 'Project Agreement' has the meaning set forth in paragraph (b) of Section 1.02 of the Development Credit Agreement." (b) The words "Investment Projects and Part B of the Proj- ect" are substituted for the words "the Project" at the end of Section 5.03. (c) 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 Section 2.03 (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 authori- zations 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." (d) The words "and the Project Agreement" are added after the words "the Development Credit Agreement" in Section 6.06; and (e) The words "or the Project Agreement" are added after the words "the Development Credit Agreement" in Section 10.02.