Barbados - Industrial Credit Project : Loan 2260 - Project Agreement - Conformed

NFFTC LOAN NUMBER 2260 BAR Project Agreement (Industrial Credit Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and CENTRAL BANK OF BARBADOS Dated 1983 LOAN NUMBER 2260 BAR PROJECT AGREEMENT AGREEMENT, dated 6Z7AC 2 , 1983, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (herein- after called the Bank) and CENTRAL BANK OF BARBADOS, a body corporate established and operating under the Central Bank of Barbados Act (Cap. 323 C) (hereinafter called the Central Bank). WHEREAS (A) by the Loan Agreement of even date herewith between Barbados (hereinafter called the Borrower) and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to ten million five hundred thousand dollars ($10,500,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Central Bank agrees to undertake such obligations toward the Bank as are hereinafter set forth; (B) by a subsidiary financing agreement to be entered into between the Borrower and the Central Bank, the proceeds of the loan provided for under the Loan Agreement will be made available to the Central Bank on the terms and conditions therein set forth; and WHEREAS the Central Bank, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Loan Agreement, the Preamble to this Agreement and the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project; Establishment, Management and Operations of ICF Section 2.01. (a) The Central Bank shall through ICF carry out the Project, described in Section 3.01 (a) of the Loan -2- Agreement and conduct its operations and affairs in accordance with sound financial standards and practices, with qualified management and personnel, and in accordance with the Statement of Policies. (b) The Central Bank shall: (i) establish and thereafter maintain, in a form and with staffing and functions satisfactory to the Bank, a special fund (hereinafter called ICF); (ii) appoint, and assign to ICF, a manager whose qualifications and experience and terms and conditions of employment shall be satisfactory to the Bank; and (iii) assign to ICF responsibility for the carrying out of the Project. (c) The Central Bank shall open a special account to be managed by ICF to which shall be credited: (i) the proceeds of the Loan made available to the Central Bank by the Borrower; (ii) the Central Bank's counterpart fund contribution to the costs of the Project in an amount equivalent to two million dollars ($2,000,000); and (iii) such other amounts as shall accrue to ICF under the Project. (d) The Central Bank shall, under a participating agree- ment, the terms and conditions of which shall have been approved by the Bank, lend to a Financial Intermediary such amount or amounts of the proceeds of the Loan made available to it pursuant to Section 3.01 (b) of the Loan Agreement as the Financial Inter- mediary shall require to make Sub-loans. The Participating Agree- ment shall, among other things, provide for: (i) a discount rate to be charged by ICF on its loans, which shall be a rate two percentage points below the commercial banks' weighted average prime rate, as calculated from time to time by the Central Bank; (ii) repayment of principal by the Financial Intermediary in not more than 15 years; and (iii) the Financial Intermediary to fur- nish to ICF: (A) detailed technical, financial, marketing and economic data with respect to every Sub-loan in an amount exceed- ing one hundred fifty thousand dollars ($150,000) equivalent; and (B) information showing the viability of the Investment Enter- prise and the Investment Project (including the investment plan of the Investment Enterprise) with respect to every Sub-loan in the amount of one hundred fifty thousand dollars ($150,000) equi- valent or less. (e) The Central Bank shall exercise its rights under the Participating Agreement in such manner as to protect the interests of the Central Bank and the Bank and to accomplish - 3 - the purposes of the Loan, and except as the Bank shall other- wise agree, the Central Bank shall not assign, amend, abrogate or waive the Participating Agreement or any provision thereof. Section 2.02. (a) In accordance with and subject to the provisions of the Loan Agreement, the Central Bank shall submit Investment Projects to the Bank for approval or authorization for withdrawals to be made from the Loan Account. (b) When presenting a Sub-loan (other than a free-limit Sub-loan) to the Bank for approval, the Central Bank shall fur- nish to the Bank an application, in form satisfactory to the Bank, together with: (i) a description of the Investment Enter- prise and an appraisal of the Investment Project, a description of the expenditures proposed to be financed out of the proceeds of the Loan and a calculation of the financial and economic rates of return of the Investment Project; (ii) the proposed terms and conditions of the Sub-loan, including the schedule of amortiza- tion of the Sub-loan and a description of the procedures (which shall be satisfactory to the Bank) proposed by the Financial Intermediary for the procurement of goods and civil works re- quired for the Investment Project; (iii) a copy of the applicable Participating Agreement unless it has already been furnished to the Bank; and (iv) such other information as the Bank shall rea- sonably request. (c) Each request by the Central Bank for authorization to make withdrawals from the Loan Account in respect of a free-limit Sub-loan shall contain: (i) a summary description of the Invest- ment Enterprise and the Investment Project, including a descrip- tion of the expenditures proposed to be financed out of the proceeds of the Loan; (ii) a copy of the applicable Participating Agreement unless it has already been furnished to the Bank; and (iii) the terms and conditions of the Sub-loan, including the Schedule of Amortization therefor. (d) Except as the Bank and the Central Bank shall otherwise agree, applications and requests made pursuant to the provisions of paragraphs (b) and (c) of this Section shall be presented to the Bank on or before June 30, 1987. (e) Except as the Bank shall otherwise agree, applications and requests made pursuant to the provisions of the said para- graphs (b) and (c) shall not be approved or authorized by the Bank if after the joint yearly review of interest rates held -4- pursuant to Section 2.07 (c) of this Agreement: (i) the Bank and the Central Bank shall be unable to agree on the appropriate level of interest rates; and (ii) such disagreement shall continue unresolved for a period of at least 60 days. Section 2.03. (a) The Central Bank undertakes that, unless the Bank shall otherwise agree, any Sub-loan will be made on terms whereby the Financial Intermediary shall obtain, by written contract with the Investment Enterprise or by other appropriate legal means, rights adequate to protect the interests of the Bank and the Central Bank, including the right of the Finan;ial Intermediary to: (i) require the Investment Enterprise to carry out and operate the Investment Project with due diligence and efficiency and in accordance with sound technical, financial and managerial standards and to maintain adequate records; (ii) require that: (1) the goods and services to be financed out of the proceeds of the Loan shall be purchased at a reasonable price, account being taken also of other relevant factors such as time of delivery and efficiency and reliability of the goods and availability of maintenance facilities and spare parts therefor, and, in the case of services, of their quality and the competence of the parties rendering them, and (2) such goods and services shall be used exclusively in the carrying out of the Investment Project; (iii) inspect, by itself or jointly with representatives of the Bank or ICF if either shall so request, such goods and the sites, works, plants and construction included in the Investment Project, the operation thereof, and any relevant records and documents; (iv) require that: (1) the Investment Enterprise shall take out and maintain with responsible insurers such insurance, against such risks and in such amounts, as shall be consistent with sound business practice; and (2) without any limitation upon the foregoing, such insurance shall cover hazards incident to the acquisition, transportation and delivery of goods financed out of the proceeds of the Loan to the place of use or installation, any indemnity thereunder to be made payable in a currency freely usable by the Investment Enterprise to replace or repair such goods; (v) obtain all such information as the Bank or the Central Bank shall reasonably request relating to the foregoing and to the administration, operations and financial condition of the Investment Enterprise and to the benefits derived from the Investment Project; and (vi) suspend or terminate the right of the Investment Enterprise to the use of the proceeds of the Loan upon failure by such Investment Enterprise to perform its obliga- tions under its contract with the Financial Intermediary. -5- (b) The Central Bank shall exercise, and shall cause each Financial Intermediary to exercise, its rights in relation to each Investment Project in such manner as to: (i) protect the interest of the Bank and the Central Bank; (ii) comply with its obligations under this Agreement; and (iii) achieve the purposes of the Project. Section 2.04. (a) The Central Bank shall furnish to the Bank at regular intervals all such information as the Bank shall reasonably request concerning the expenditure of the proceeds of the Loan, the Project, the Investment Enterprises, the Investment Projects, Sub-loans and the Financial Intermediarier and, where appropriate, the benefits to be derived from the foregoing. (b) Within six months following the last withdrawal from the Loan Account, the Central Bank shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reasonably request, on the execution and initial operation of the Investment Projects, the costs thereof and the benefits derived and to be derived therefrom, the performance by the Central Bank and the Bank of their respective obligations under this Agreement, the performance by the Central Bank and the Financial Intermediaries of their respective obligations under the Participating Agreements and the accomplishment of the purposes of the Loan. Section 2.05. (a) In order to assist the Central Bank in carrying out the technical assistance components of the Project, the Central Bank shall employ consultants, experts and specia- lists whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank, such consul- tants, experts and specialists to be selected in accordance with principles and procedures satisfactory to the Bank on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. (b) The Central Bank: (i) shall furnish to the Bank for its prior approval sufficient details of any studies or training programs to be carried out under the Project; and (ii) shall as soon as possible after the completion of such studies or of training included in such programs send the results thereof to the Bank. -6 - Section 2.06. Except as the Bank shall otherwise agree, procurement of the goods and civil works required for the Project and to be financed out of the proceeds of the Loan shall be governed by the following provisions: (i) goods shall be procured from member countries and territories referred to in the current edition of the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March, 1977; and (ii) contracts for goods estimated to cost the equiva- lent of $150,000 or more shall only be entered into after prior solicitation of price quotations from competitive suppliers. Section 2.07. (a) The Central Bank shall calculate at least once in every quarter the commercial banks' weighted average prime rate, using statistics collected on commercial banks' prime rates, and adjust, as necessary, and in accordance with Section 2.01 (d) of this Agreement ICF's discount rate for Loans. (b) The Central Bank shall exempt all Sub-loans from its reserve requirements. (c) The Central Bank shall review with the Bank at least yearly interest rates in Barbados with a view to determining appropriateness of interest rates for ICF lending. Such review shall take into account domestic and international credit market conditions including inflation levels. ARTICLE III Financial Covenants Section 3.01. (a) The Central Bank shall maintain for ICF separate accounts, procedures and records adequate to monitor and record the progress of the Project and of each Investment Project (including the cost thereof and the benefits to be derived there- from) and to reflect in accordance with consistently maintained appropriate accounting practices the operations and financial condition of ICF, including, without limitation to the foregoing, separate accounts reflecting all expenditures on account of which withdrawals are requested from the Loan Account on the basis of statements of expenditures. -7- (b) The Central Bank shall retain for ICF until one year after the Closing Date, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing the expenditures on account of which withdrawals are requested from the Loan Account on the basis of statements of expenditure, and shall enable the Bank's representatives to examine such records. Section 3.02. The Central Bank shall: (i) have ICF's accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles con- sistently applied, by independent auditors acceptable to the Bank; (ii) 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 ICF's financial statements 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, including without limitation to the foregoing, separate opinions by said auditors in respect of the expenditures and records refered to in Section 3.01 (b) of this Agreement, as to whether the proceeds of the Loan withdrawn from the Loan Account on the basis of statements of expenditure have been used for the purpose for which they were provided; and (iii) furnish to the Bank such other information concerning the accounts and financial statements of ICF and the audit thereof, as the Bank shall from time to time reasonably request. Section 3.03. The Central Bank shall: (i) cause each Financial Intermediary to establish and maintain separate accounts on its records to be used exclusively for the Project and to register in such accounts all its receipts and payment for, and in connection with, the carrying out of the Project, in accordance with appropriate accounting principles consistently applied; and (ii) inspect at least once every year. the accounts referred to in this Section and the financial statements relating thereto and furnish to the Bank a report of such inspection by the Central Bank of such scope and in such detail as the Bank shall reasonably request. Section 3.04. The Central Bank shall not make any repayment in advance of maturity in respect of any outstanding ICF debt - 8 - which, in the judgment of the Bank, would materially affect ICF's ability to meet financial obligations with funds from time to time deposited in the account referred to in Section 2.01 (c) of this Agreement. Section 3.05. The Central Bank shall take such steps satis- factory to the Bank as shall be necessary to protect ICF against risk of loss resulting from changes in the rates of exchange between the various currencies (including Barbados Dollars) used in its operations. Section 3.06. The Bank and the Central Bank shall from time to time, at the request of either party, exchange views through their representatives with regard to the administration, opera- tions and financial condition of ICF, and of the Financial Inter- mediaries, and the Central Bank shall furnish to the Bank all such information as the Bank shall reasonably request concerning the administration, operations and financial condition of ICF, and of the Financial Intermediaries. Section 3.07. The Central Bank shall enable the Bank's representatives to inspect the records referred to in Section 3.01 of this Agreement and any other relevant documents. ARTICLE IV Effective Date; Termination; Cancellation and Suspension Section 4.01. This Agreement shall come into force and effect on the date upon which the Loan Agreement becomes effective. Section 4.02. This Agreement and all obligations of the Bank and of the Central Bank thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms, and the Bank shall promptly notify the Central Bank thereof. Section 4.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancella- tion or suspension under the General Conditions. -9- ARTICLE V Miscellaneous Provisions Section 5.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: 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) For the Central Bank: Central Bank of Barbados P.O. Box 1016 Treasury Building Bridgetown Barbados Cable Address: Telex: CENTRABANK 2251 CENBANK WB Barbados Section 5.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of the Central Bank may be taken or executed - 10 - by the Governor of the Central Bank or such other person or persons as the Central Bank shall designate in writing, and the Central Bank shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 5.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. 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. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Regional Vice President Latin America and the Caribbean CENTRAL BANK OF BARBADOS By Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this =2e day of A , 1983 FOR SECRETARY