Peru - Sixth Agricultural Credit Project : Loan 2302 - Guarantee Agreement - Conformed

OFFICIAL DOCUMENTS LOAN NUMBER 2302 PE Guarantee Agreement (Sixth Agricultural Credit Project) between REPUBLIC OF PERU and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and BANCO DE LA NACION Dated , 1983 LOAN NUMBER 2302 PE GUARANTEE AGREEMENT AGREEMENT, dated 1983, between REPUBLIC OF PERU (hereinafter called the Guarantor) and INTER- NATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS by the Loan Agreement of even date herewith between the Bank and Banco Agrario del Peru (hereinafter called the Borrower) the Bank has agreed to make to the Borrower a loan in various currencies equivalent to one hundred thirty million dollars ($130,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guarantor agree to guarantee the obligations of the Borrower in respect of such loan as hereinafter provided; WHEREAS part of the Project will be carried out by the Gua- rantor and therefore the Borrower will make available to the Guarantor part of the proceeds of the Loan as provided in the Loan Agreement; WHEREAS Banco de la Nacion has participated in the negotia- tion of this Agreement and has represented to the Bank that it has discharged qll of its other responsibilities as financial agent of the Guarantor pursuant to the Guarantor's Decreto Legislativo No. 5 published in El Peruano on December 31, 1980; and WHEREAS the Guarantor, in consideration of the Bank's enter- ing into the Loan Agreement with the Borrov,Ter, has agreed so to guarantee such obligations of the Borrower; 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 Loan and Guarantee Agreements of the Bank dated October 27, 1980, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agree- ments being hereinafter called the General Conditions). -2- Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions, in the Preamble to this Agreement and in Section 1.02 of the Loan Agreement, have the respective meanings therein set forth. ARTICLE II Guarantee; Provision of Funds Section 2.01. Without limitation or restriction upon any of its other obligations under the Guarantee Agreement, the Guaran- tor hereby unconditionally guarantees, as primary obligor and not as surety merely, the due and punctual payment of the principal of, and interest and other charges on, the Loan, and the premium, if any, on the prepayment of the Loan, and the punctual perform- ance of all the other obligations of the Borrower, all as set forth in the Loan Agreement. Section 2.02. Without limitation or restriction upon the provisions of Section 2.01 of this Agreement, the Guarantor specifically undertakes, whenever there is reasonable cause to believe that the funds available to the Borrower will be inade- quate to meet the estimated expenditures required for the carry- ing out of the Project, to make arrangements, satisfactory to the Bank, promptly to provide the Borrower or cause the Borrower to be provided with such funds as are needed to meet such expendi- tures. Section 2.03. Without limitation or restriction upon the provisions of Section 2.01 of this Agreement, the Guarantor shall: (a) by December 31, 1983, make arrangements, satisfactory to the Bank, providing that any loss incurred by the Borrower in connection with the payment of interest and other charges on, and the repayment of principal of, the Loan and resulting from changes in the rate of exchange between (i) dollars and soles and (ii) dollars and other currencies in the Central Disbursement Account, will be borne by the Guarantor. The Guarantor shall not change or fail to enforce any provision of such arrangements; (b) at least once in every calendar year provide the Bor- rower with such equity contributions as shall be necessary to maintain the value of the Borrower's equity in constant soles at least at the level prevailing on the date of this Agreement; and - 3 - (c) for purposes of this Section: (i) the term "Borrower's equity" means the sum of the total unimpaired paid-up capital, retained earnings and reserves of the Borrower not allocated to specific liabilities; and (ii) the term "Borrower's equity in constant soles" means the value of the Borrower's equity as of the date of this Agreement as expressed in soles and adjusted from time to time to reflect changes in the indice de precios al consumidor for the city of Lima, published by the Instituto Nacional de Estadistica. ARTICLE III Execution of the Project Section 3.01. The Guarantor shall carry out Part F of the Project, described in Schedule 2 to the Loan Agreement, with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and agricultural prac- tices. Section 3.02. In order to assist the Guarantor in carrying out Part F of the Project, the Guarantor shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank, such consultants to be selected in accordance with principles and procedures satis- factory 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 and the provisions of Part D of Schedule 4 to the Loan Agreement. Section 3.03. (a) The Guarantor shall furnish to the Bank, promptly upon their preparation, the plans, specifications, con- tract documents for Part F of the Project, and any material modi- fications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Guarantor: (i) shall maintain records and proce- dures adequate to record and monitor the progress of Part F of the Project (including its cost and the benefits to be derived from it), to identify the services financed out of the proceeds of the Loan, and to disclose their use in Part F of the Project; (ii) shall enable the Bank's representatives to examine any rele- vant records and documents; and (iii) shall furnish to the Bank at regular intervals all such information as the Bank shall rea- sonably request concerning Part F of the Project, its cost and, -4- where appropriate, the benefits to be derived from it, the expen- diture of the proceeds of the Loan and the services financed out of such proceeds. (c) Upon the award by the Guarantor of any contract for services to be financed out of the proceeds of the Loan, the Bank may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (d) Promptly after completion of Part F 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 Guarantor and the Bank, the Guarantor shall prepare and furnish to the Borrower a report for delivery to the Bank, on the execu- tion and initial operation of Part F of the Project, its cost and the benefits derived and to be derived from it, the performance by the Guarantor and the Bank of their respective obligations in respect to Part F of the Project under the Guarantee Agreement and the accomplishment of the purposes of the Loan in respect to Part F of the Project. Section 3.04. The Guarantor shall enter into and duly per- form all its obligations under the Subsidiary Agreement. Except as the Bank shall otherwise agree, the Guarantor shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Agreement or any provision thereof. Section 3.05. (a) the Guarantor shall, at the request of the Bank, exchange views with the Bank with regard to the progress of Part F of the Project, the performance of its obligations under this Agreement and under the Subsidiary Agreement, and other mat- ters in respect of Part F of the Project relating to the purposes of the Loan. (b) The Guarantor shall promptly inform the Bank of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Loan, or the performance by the Guarantor of its obligations under this Agreement and under the Subsidiary Agreement. -5- ARTICLE IV Other Covenants Section 4.01. (a) It is the policy of the Bank, in making luans to, or with the guarantee of, its members not to seek, in normal circumstances, specific 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. (b) It is the policy of the Guarantor not to grant, in normal circumstances, specific security to its lenders or to the lenders of the subdivisions or entities referred to in paragraph (e) of this Section. (c) Notwithstanding the aforesaid, if any lien shall be created on any public assets (as hereinafter defined), as securi- ty for any external debt, which will or might result in a priori- ty 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 prin- cipal of, and interest and other charges on, the Loan, and the Guarantor, in creating 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 provi- sion cannot be made with respect to any lien created on assets of any of its political or administrative subdivisions, the Guaran- tor shall promptly and at no cost to the Bank secure the princi- pal of, and interest and other charges on, the Loan by an equiva- lent lien on other public assets satisfactory to the Bank. (d) 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 or as security for the payment of debt incurred for the purpose of financing the purchase of such property; and (ii) any lien aris- ing in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. (e) As used in this Section, the term "public assets" means assets of the Guarantor, of any political or administrative sub- division thereof and of any entity owned or controlled by, or - 6 - operating for the account or benefit of, the Guarantor or any such subdivision, including gold and foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Gua- rantor. Section 4.02. (a) The Guarantor 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 Part F of the Project, of the departments or agencies of the Guarantor responsible for carrying out Part F of the Project or any part thereof. (b) Without limitation on the foregoing, the Guarantor shall: (i) maintain or cause to be maintained separate accounts reflecting all expenditures on account of which withdrawals are requested from the Loan Account for Part F of the Project; (ii) retain, until one year after the Closing Date, all records (con- tracts, orders, invoices, bills, receipts and other documents) evidencing the expenditures on account of which withdrawals are requested from the Loan Account for Part F of the Project; and (iii) enable the Bank's representatives to examine such records. (c) The Guarantor shall: (i) have the accounts referred to in paragraph (b) of this Section for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year, a certi- fied copy of the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning said separate accounts, records and expenditures and the audit thereof as the Bank shall from time to time reasonably request. ARTICLE V Representatives of the Guarantor; Addresses Section 5.01. The Minister of Economy, Finance and Commerce of the Guarantor and the Director General of Credito PUOblico are severally designated as representatives of the Guarantor for the purposes of Section 11.03 of the General Conditions. - 7 - Section 5.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Guarantor: Ministry of Economy, Finance and Commerce Avenida Abancay 5a Cuadra Lima Peru Cable address: Telex: MINDEF 20187 Lima PU-MINDEF 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 Banco de la Nacion: Banco de la Nacion Avenida Abancay 491 Lima Peru Cable address: Telex: Banco de la Nacion 25320 PE Lima 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 PERU Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By/a By7 gtRegional Vice President Latin "America and tbp Caribbean BANCO DE LA NACION Byt de AutWrized 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 Reco-struction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this 0 day of ___ 3 .FOR SECRETARY