Madagascar - Industrial Development Bank Project : Credit 0977 - Credit Agreement - Conformed

'DOCa CREDIT NUMBER 977 MAG Development Credit Agreement (Industrial Development Bank Project) between DEMOCRATIC REPUBLIC OF MADAGASCAR and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1980 CREDIT NUMBER 977 MAG DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated ? , 1980, between the DEMOCRATIC REPUBLIC OF MADAGASCAR (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 Section 3.01 of this Agreement by extending the Credit as hereinafter provided; (B) The Project -4ll be carried out by Bankin'ny Indostria, the Borrower's National Industrial Development Bank, with the Borrower's assistance, and as part of such assistance, the Bor- rower will make available to such bank the proceeds of the Credit as hereinafter provided; and (C) The Association is willing to make the Credit available upon the terms and conditions set forth hereinafter and in the Project Agreement of even date herewith between the Association and Bankin'ny Indostria; 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 following modifications thereof (said General Conditions Applicable to Development Credit Agree- ments of the Association, as so modified, being hereinafter called the General Conditions): (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." - 2 - (b) The words "Investment Projects" 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 2.02 (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." (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. 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) "BNI" means Bankin'ny Indostria, the National Industrial Development Bank of the Borrower, established pursuant to Ordon- nance No. 76-047 of the Borrower dated December 27, 1976. (b) "Project Agreement" means the agreement of even date herewith between the Association and BNI, as such agreement may be amended from time to time. - 3 - (c) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and BNI pursuant to Section 3.01 (b) of this Agreement. (d) "Sub-loan" means a loan or credit made or proposed to be made by BNI to an Investment Enterprise for an Investment Project out of the equivalent of the proceeds of the Credit relent to BNI 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 BNI in an Investment Enterprise for an Investment Project out of the equivalent of the proceeds of the Credit relent to BNI under the Subsidiary Loan Agreement. (f) "Investment Enterprise" means an enterprise to which BNI 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 which is an artisan or an enterprise with fixed assets below FMGl5,000,000. (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) "FMG" and "Malagasy francs" mean the currency of the Borrower. (i) "foreign currency" means any currency other than the currency of the Borrower. (j) "Statutes" means the statuts of BNI approved by Decree No. 76-441 of the Borrower dated December 27, 1976, as amended to date and as further amended from time to time. (k) "Rules of Operations" means the Rules of Operations of BNI as adopted and approved by its Board of Directors on December 14, 1979, as amended to date and as further amended from time to time. (1) "Subordinated Loans" means subordinated loans to BNI whose terms and condition provide, inter alia, for the first -4- repayment of principal on account thereof to be made after the maturity date of the loan provided for in the Subsidiary Loan Agreement. (m) "Subsidiary" means any company whose principal activity consists of the provision of financial services and of which a majority of the outstanding voting stock or other proprietary interest is owned or effectively controlled by BNI or by any one or more subsidiaries of BNI or by BNI 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 equiv- alent to five million dollars ($5,000,000), for use by BNI. Section 2.02. (a) Subject to the provisions of this Section, the Borrower may withdraw from the Credit Account the equivalent of amounts paid (or, if the Association shall so agree, amounts to be paid) by BNI on account of withdrawals made by an Invest- ment Enterprise under a Sub-Loan or Investment to meet: (i) the reasonable foreign-currency cost of imported goods (except goods described in paragraph (d) of this Section) and services required for the Invest- ment Prcject in respect of which the withdrawal is requested; (ii) eighty-five per cent (85%) of the invoiced price paid for goods purchased as set forth in paragraph (d) (i) of this Section; (iii) seventy per cent (70%) of the invoiced price paid for goods purchased as set forth in paragraph (d) (ii) of this Section; and (iv) fifty-five per cent (55%) of the costs of construc- tion works included in such Investment Projects and carried out by national contractors; - 5 - provided, however, that no amount shall be so withdrawn from the Credit Account in respect of an Investment Project 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 Agreements, and not repaid, shall not exceed in the aggregate the equivalent of $150,000 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 $1,500,000, the foregoing amounts being subject to change from time to time as determined by the Association; provided, however, that the first five Sub-loans proposed for Small-scale Investment Enterprises shall not qualify as free-limit Sub-loans. (c) Except as the Association shall otherwise agree, the equivalent of at least $500,000 of the proceeds of the Credit shall be reserved for the financing of Sub-loans for Small-scale Investment Enterprises. (d) 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; (iii) construction works as described in subparagraph (iv) of paragraph (a) of this Section; and (iv) services of consultants employed for carrying out the feasibility studies included in the Project. (e) Except as the Association shall otherwise agree, no withdrawals shall be made on account of (i) expenditures made by an Investment Enterprise prior to the date of this Agreement or (ii) expenditures made in respect of a Sub-loan subject to the Association's approval, or of an Investment, more than ninety days prior to the date on which the Association shall have received -6- the application and information required under Section 2.02 (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 infor- mation required by Section 2.02 (c) of the Project Agreement. (f) The Borrower shall also be entitled to withdraw from the Credit Account the equivalent of 100% of amounts in foreign currency, or 80% of amounts in Malagasy francs, paid (or, if the Association shall so agree, amounts to be paid) by BNI for the reasonable costs (i) up to the equivalent of $300,000 of the studies included in the Project, (ii) up to the equivalent of $100,000, of the training so included and (iii) up to the equi- valent of $100,000, of consultants' services required for carrying out that part of the Project described in Section 3.01 (iv) of this Agreement. Section 2.03. The Closing Date shall be December 31, 1984 or such later date as the Association shall establish. The Association shall promptly notify the Borrower and BNI of such later date. Section 2.04. 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 2.05. Service charges shall be payable semiannually on June 15 and December 15 in each year. Section 2.06. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each June 15 and December 15 commencing June 15, 1990, and ending December 15, 2029, each installment to and including the installment payable on December 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 2.07. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. - 7 - ARTICLE III Description of the Project; Use of Proceeds of the Credit Section 3.01. (a) The Project for which the Credit is granted is (i) the financing by BNI of economic development in the terri- tory 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 Rules of Oper- ations of BNI, (ii) the carrying out of feasibility studies for industrial, agro-industrial and tourism projects selected by BNI, (iii) the training of staff of BNI in the promotion and appraisal of projects and (iv) establishment by BNI of a Promotion Depart- ment and improvement of its Project Preparation Department. (b) The Borrower shall relend the proceeds of the Credit or the equivalent thereof to BNI under a Subsidiary Loan Agreement to be entered into between the Borrower and BNI containing terms and j)nditions which shall have been approved by the Association, including a maximum term oF 18 years (which shall include an appropriate grace period), a commitment charge of 0.75% and interest at 7.5% per annum; provided, however, that on amounts utilized for parts of the Project other than the financing of development projects, no commitment charge shall be applicable and in lieu of interest, such amounts shall bear a service charge at the rate of 0.75% per annum. (c) The Borrower shall exercise its rights under the Sub- sidiary 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, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. Sectioin 3.02. The Borrower shall not take, or permit any of its political subdivisions, or any of its agencies or instrumen- talities, or any agency or instrumentality of any political subdivision, to take, any action which would prevent or materially interfere with the carrying out of the Project or the performance by BNI 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 BNI to carry out the Project and to perform such other obligations. -8- Section 3.03. The Borrower shall make such arrangements as shall be appropriate on its part to achieve the objectives set forth in Section 3.05 (b) of the Project Agreement. ARTICLE IV Remedies of the Association Section 4.01. 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 BNI under the Project Agreement or under any other project agreement between the Association and BNI; (b) the Statutes or the Rules of Operations of BNI shall have been amended so as to affect materially and adversely the operations or financial condition of BNI; (c) BNI 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 BNI shall or may be distributed among its credi- tors; (d) any part of the principal amount of any loan to BNI 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; (e) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of BNI 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 BNI, if such creation, acquisition or taking over would adversely affect the conduct of BNI's business, its financial situation, the efficiency of its management and personnel or the carrying out of the Project. Section 4.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: - 9 - (a) any event specified in paragraphs (a), (b) or (f) 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 Association to the Borrower and BNI; and (b) any event specified in paragraphs (c), (d) or (e) of Section 4.01 of this Agreement shall occur. ARTICLE V Effective Date; Termination Section 5.01. 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 BNI, respectively. 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 signed on behalf of, BNI, and constitutes a valid and binding obligation of BNI in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly author- ized or ratified by, and signed on behalf of, and constitutes a valid and binding obligation of, the Borrower and BNI in accor- dance with its terms. Section 5.03. The date T" i hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.04. The provisions of paragraphs (a) through (f) of Section 4.01 of this Agreement and those of paragraphs (a) and (b) of Section 4.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or upon full repayment by BNI to the Borrower of the entire principal amount of the loan provided for in the Subsidiary Loan Agreement, together with the interest and charges accrued thereon, whichever date shall be the earlier. - 10 - ARTICLE VI Repreehtative of the Borrower; Addresses Section 6.01. Subject to the provisions of Section 2.03 of this Agreement, the Minister of the Borrower responsible for finance 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: For the Borrower: Ministere aupres de la Presidence de la Republique Charge des Finances et du Plan Antananarivo Madagascar Cable address: Telex: MINFINPLAN 22339 Antananarivo 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. 24423 (RCA) or 89658 (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 - 11 - District of Columbia, United States of America, as of the day and year first above written. DEMOCRATIC REPUBLIC OF MADAGASCAR By Authorized Representati INTERNATIONAL DEVELOPMENT ASSOCIATION By 5S/ Regional Vice President Eastern Africa INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the day of 19FSL . FOR SECRETARY