Tanzania - Multisector Rehabilitation Credit : Credit 1741 - Credit Agreement - 6 - Conformed

AFRICAN FACILITY CREDIT NUMBER -J TA African Facility Credit Agreement (Multisector Rehabilitation Project) between UNITED REPUBLIC OF TANZANIA and INTERNATIONAL DEVELOPMENT ASSOCIATION as ADMINISTRATOR of the SPECIAL FACILITY FOR SUB-SAHARAN AFRICA Dated , 1986 AFRICAN FACILITY CREDIT AGREEMENT AGREEMENT, dated I, 1986, between UNITED REPUBLIC OF TANZANIA (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION as ADMINISTRATOR of the SPECIAL FACILITY FOR SUB-SAHARAN AFRICA (the Administrator). WHEREAS: (A) the-Executive Directors of the International DevelopTqent Association (IDA) have established by their Resolu- tion No. IDA 85-1 of May 21, 1985 (the Resolution), a Special Facility for Sub-Sahararn Africa (the African Facility) consti- tuted by the funds which shall be contributed by the Inter- national Bank for Reconstruction and Development (the Bank) and other donors and administered by IDA, acting as Administrator of the African Facility, for the purpose of, and in accordance with, the provisions of the Resolution; (B) the Administrator has received a letter, dated October 29, 1986, from the Borrower describing a program of actions, objectives and policies designed to bring about appropriate changes to the Borrower's economy (hereinafter called the Program), declaring the Borrower's commitment to the execution of the Program, and requesting assistance from the Association in the financing of urgently needed imports required during such execution; (C) the Borrower, on the basis, inter alia, of the fore- going to this Agreement, has requested assistance from the resources of the African Facility in the financing of the Program, and the Administrator has determined that such assistance would be in accordance with the provisions of the Resolution; (D) the Borrower-has also requested IDA to provide addi- tional assistance towards the financing of the Program and by an agreement of even date herewith between the Borrower and IDA (the Development Credit Agreement), IDA is agreeing to provide such assistance in an aggregate principal amount equivalent to forty-one million three hundred thousand Special Drawing Rights (SDR 41,300,000) (the IDA Credit); (E) the Borrower intends to obtain from the United Kingdom a grant in an amount of five million pounds sterling (05,000,000) equivalent out of the Special Joint Financing provided under paragraph 9 of the Resolution to assist in financing the Program; -2- (F) the Borrower intends to obtain from the Federal Republic of Germany a grant in an amount of thirty-five million deutsche mark (DM 35,000,000) equivalent out of the Special Joint Financing provided under paragraph 9 of the Resolution to assist in financing the Program; and (G) the Borrower intends to obtain from the Swiss Confederation a grant in an amount of fifteen million Swiss Francs (Sw F 15,000,000) equivalent out of the Special Join: Financing provided under paragraph 9 of the Resolution to assist in financing the Program; and WHEREAS the Administrator has agreed on the basis, inter alia, of the foregoing, by making the African Facility Credit available in three tranches to the Borrower upon the terms and conditions set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Development Credit Agreements" of the International Development Association, dated January 1, 1985, with the modifications set forth below (the General Conditions), constitute an integral part of this Agreement: (a) the term "Association", when used in the General Conditions, means the International Development Association acting as Administrator of the African Facility, except in the phrase "member of the Association" in Sections 2.01 (5), 4.02 (b) and 6.02 (e) thereof; (b) the terms "Development Credit Agreement", "Credit" and "Credit Account", when used in the General Conditions, are amended to read "African Facility Credit Agreement", "African Facility Credit" and "African Facility Credit Account", respectively; (c) the last sentence of Section 3.02 and the second sentence of Section 5.01 are deleted; -3- (d) in Sections 6.02 and 7.01, the term "Association" shall also include the International Development Association acting in its own capacity; (e) Section 2.01, paragraph 9, shall be modified to read l'Project' means the imports and other activities that may be financed out of the proceeds of the Credit pursuant to the provisions of Schedule 1 to the Development Credit Agreement."; and (f) Section 9.06 (c) shall be modified to read: "(c) 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 of the Program referred to in the Preamble to the Development Credit Agreement, the performance by the Borrower and the Association of their respective obligations under the Development Credit Agreement and the Accomplish- ment of the purposes of the Credit." Section 1.02. 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) "Part II member of IDA" means a member of IDA with respect to which the terms and conditions of membership are those prescribed in the Articles of Agreement of IDA for countries whose names are listed in Part II of Schedule A to those Articles; (b) "Development Credit Agreement" means the agreement of even date heret-ith between the Borrower and IDA for the Project, as such agreement may be amended from time to time; and such term includes the "General Conditions Applicable to Development Credit Agreements" of IDA, dated January 1, 1985, as applied to such agreement, and all schedules and agreements supplemental to the Development Credit Agreement; (c) "SITC" means the United Nations Standards International Trade Classification, 1974 Revision (SITC, Rev. 2), published -4- in Commodity Indexes for the Standard International Trade Classi- fication, Revised, Statistical Papers, Series M, No. 38/Rev. 2 (1981); (d) "T Sh" means Tanzania Shillings, the currency of the Borrower; (e) "Special Account" means the account referred to in Section 2.02 (c) of this Agreement; and (f) "Cooperative" means cooperative unions and primary cooperative societies registered under the Borrower's Cooperative Societies Act, No. 14 of 1982. ARTICLE II The African Facility Credit Section 2.01. The Administrator agrees to lend to the Bor- rower on the terms and conditions set forth or referred to in the African Facility Credit Agreement, an amount in various cur- rencies equivalent to thirty-eight million one hundred thousand Special Drawing Rights (SDR 38,100,000). Section 2.02. (a) The amount of the African Facility Credit may be withdrawn from the African Facility Credit Account in accordance with the provisions of Schedule 1 to this Agreement for expenditures made (or, if the Administrator shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the African Facility Credit. (b) Withdrawals shall be made only on account of expendi- tures for goods produced in, or services supplied from, the territories of: (i) any Part II member of IDA; and (ii) any country designated by the Administrator as meeting the provi- sions set forth in paragraphs 4 (M) (ii) and 4 (f) (iii) of the Resolution. (c) The Borrower shall, for the purposes of the Project, open and maintain in dollars a special account in its Central Bank on terms and conditions satisfactory to the Administrator. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 4 to this agreement. -5- Section 2.03. The Closing Date shall be December 31, 1988, or such later date as the Administrator shall establish. The Administrator shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to IDA a commitment charge at the rate of one-half of one percent (1/2 of 1%) per annum on the principal amount of the African Facility Credit not withdrawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the African Facility Credit Agreement to the respective dates on which amounts shall be withdrawn by the Borrower from the African Facility Credit Account or shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as IDA shall reasonably request; (ii) without restrictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. Section 2.05. The Borrower shall pay to IDA a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the amount withdrawn from the African Facility Credit Account and outstanding from time to time. Section 2.06. Commitment charges and service charges shall be payable semiannually on April 15 and October 15 in each year. Section 2.07. The Borrower shall repay to IDA the principal amount of the African Facility Credit in semiannual installments payable on each April 15 and October 15 commencing April 15, 1997, and ending October 15, 2036. Each installment to and including the installment payable on October 15, 2006, shall be one-half of one percent (1/2 of 1%) of such principal amount, and each installment thereafter shall be one and one-half percent (1-1/2%) of such principal amount. Section 2.08. The currency of the United Kingdom of Great Britain and Northern Ireland is hereby specified for the purposes of Section 4.02 of the General Conditions. Section 2.09. (a) The Bank of Tanzania is designated as representative of the Borrower for the purposes of taking any -6- action required or permitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions. (b) Without limitation or restrictions to the foregoing, the Borrower hereby entrusts the Bank of Tanzania with respon- sibility for the preparation of withdrawal applications under the African Facility Credit and the collection of documents and other evidence to be furnished to the Administrator in support of such applications. Such withdrawal applications shall, to the extent practicable, be consolidated into aggregate amounts of not less than fifty thousand Special Drawing Rights (SDR 50,000) equivalent. ARTICLE III Particular Covenants Section 1.01. (a) The Borrower and the Administrator shall from time to time, at the request of either party, exchange views on the progress achieved in carrying out the Program and the actions specified in Schedule 3 to this Agreement. (b) Prior to each such exchange of views, the Borrower shall furnish to the Administrator for its review and comment a report on the progress achieved in carrying out the Program, in such detail as the Administrator shall reasonably request. Section 3.02. Except as the Administrator shall otherwise agree, procurement of the goods to be financed out of the proceeds of the African Facility Credit shall be governed by the provisions of Schedule 2 to this Agreement. Section 3.03. (a) The Borrower shall maintain or cause to.be maintained records and accounts adequate to reflect, in accor- dance with consistently maintained sound accounting practices, the expenditures financed out of the proceeds of the African Facility Credit. (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) of this Section including those for the Special Account for each fiscal year audited, in accordance with appropriate auditing principles -7- consistently applied, by independent auditors accetable to the Administrator; (ii) furnish to the Administrator as soon as available, but in any case not later than six months after the end of such year, a certified copy of the report of such audit by said auditors, of such scope and in such detail as the Administrator shall have reasonably requested; and (iii) furnish to the Administrator such other informa- tion concerning said records and accounts and the audit thereof as the Administrator shall from time to time reasonably request. ARTICLE IV Additional Events of Suspension Section 4.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional event is specified, namely, that an event has occurred which shall make it improbable that the Program, or a significant part thereof, will be carried out. ARTICLE V Effective Date; Termination; Designation of Administrator Section 5.01. The following event is specified as an addi- tional condition to the effectiveness of the African Facility Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions, namely, that all conditions precedent to the effectiveness of the Development Credit Agreement, except for the effectiveness of this Agreement, have been fulfilled. Section 5.02. The date ninety (90) days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.03. In the event that the Executive Directors of IDA decide to terminate the functions of IDA as Administrator of the African Facility pursuant to paragraph 10 of the Resolution, the Administrator may, by notice to the Borrower, designate another party which, on the date specified in such notice, shall -8- assume part or all of the rights and obligations of the Adminis- trator under this Agreement in accordance with the Resolution and such decision of the Executive Directors, as specified in such notice. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. Except as provided in Section 2.09 (a) 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 Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministry of Finance, Economic Affairs and Planning P.O. Box 9111 Dar es Salaam Tanzania Cable address: Telex: Treasury 41329 Dar es Salaam For the Administrator: Administrator of the African Facility (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) -9- IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, 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 Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION as ADMINISTRATOR of the SPECIAL FACILITY FOR SUB-SAHARAN AFRICA By10 Regional Vice President Eastern and Southern Africa - 10 - SCHEDULE 1 Withdrawal of the Proceeds of the African Facility Credit 1. Subject to the provisions set forth or referred to in this Schedule, the proceeds of the African Facility Credit may be withdrawn from the African Credit Account for expenditures made (or, if the Administrator shall so agree, to be made) in respect of the reasonable cost of goods required during the execution of the Program and to be financed out of such proceeds. 2. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) expenditures for goods included in the following SITC groups or sub-groups: Group Sub-group Description of Items 112 - Alcoholic beverages 121 - Tobacco, unmanufactured tobacco refuse 122 - Tobacco, manufactured 667 - Pearls, precious and semi- precious stones, unworked or worked 668 - Uranium depleted in U235 and thorium, and their alloys, unwrought or wrought, e.nd articles therefor, n.e.s.; waste and scrap of uranium depleted in U235 and thorium 718 718.7 Nuclear reactors, and parts .thereof, n.e.s. - 11 Group Sub-group Description of Items 897 897.3 Jewelr,: of gold, silver or platinum group metals (except watches and watch cases) and goldsmiths' or silversmiths' wares (including set gems) 971.0 Gold, non-monetary (excluding gold ores and concentrates) (b) expenditures in the currency of the Borrower or for goods supplied from the territory of the Borrower; (c) payments made for expenditures prior to the date of this Agreement, except that withdrawals in an aggregate amount not exceeding the equivalent of ten million dollars ($10,000,000) may be made on account of payments made for such .enditures before that date but after July 23, 1986; (d) expenditures for goods procured under contracts costing less than five thousand dollars ($5,000) equivalent; (e) expenditures for goods supplied under a contract which any national or international financing institution or agency other than the Administrator shall have financed or agreed to finance; (f) expenditures for goods intended for a military or para- military purpose or for luxury consumption; and (g) expenditures in excess of an aggregate amount equiva- lent to twelve million five hundred thousand dollars ($12,500,000) for petroleum products. 3. No withdrawal shall be made and no commitment shall be entered into to pay amounts to the Borrower or others in r-.spect of expenditures to be financed out of the proceeds of the African Facility Credit after the aggregate of the proceeds of the African Facility Credit withdrawn from the African Facility Credit Account and the total amount of such commitments shall - 12 - have reached the equivalent of twenty-six million two hundred thousand dollars ($26,200,000), unless the Administrator shall be satisfied, after an exchange of views as described in Section 3.01 of this Agreement: (a) with the progress achieved by the 13orrower in the carrying out of the Program; and (b) that the actions described in Schedule 3 to this Agreement have been taken. 4. Notwithstanding the provisions of paragraph 3 above, with- drawals may be made in respect of expenditures to be financed out of the proceeds of the African Facility Credit in an aggregate amount not exceeding fifteen million dollars ($15,000,000) squivalent, when the Administrator shall be satisfied that the Borrower shall have: (a) made available a meaningful portion of its foreign exchange resources to be freely allocated in the 1987/1988 fiscal year to users in selected import categories; (b) established the modalities for the non-administrative allocation of such resources; and (c) completed an action plan and the initial measures to rationalize its external trade regime based on the results of its tariff study. - 13 - SCHEDULE 2 Procurement 1. Contracts for the procurement of goods estimated to cost the equivalent of two million dollars ($2,000,000) or more each shall be awarded through international competitive bidding in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits",published by the Bank in May 1985 (the Guidelines), subject to the following modifications: (a) For purposes of the African Facility Credit Agreement, all references in the Guidelines to the Bank and to loans shall be deemed to be referernces to the Administrator and to the African Facility Credit, respectively. (b) The eligibility requirements set forth in Section 2.02 (b) of this Agreement shall be stated in the tender documents for the procurement of such goods and works. (c) Paragraph 2.8 of the Guidelines is deleted and the following is substituted therefor: "2.8 Notification and Advertising The international community should be notified in a timely manner of the opportunity to bid. This will be done by advertising invitations to apply for inclusion in a bidder's invitation list, to apply for prequalification, or to bid; such advertisements should be placed in at least one newspaper of general circulation in the Borrower's country and, in addition, in at least one of the following forms: (i) a notice in the United Nations publication, Development Forum, Business Edition; or (ii) an advertisement in a newspaper, periodical or technical journal of wide international circula- tion; or (iii) a notice to local representatives of countries and territories referred to in the Guidelines, that are potential suppliers of the goods required. - 14 - (b) The following is added at the end of paragraph 2.21 of the Guidelines: "As a further alternative, bidding documents may require the bidder to state the bid price in a single currency widely used in international trade and speci- fied in the bidding documents." (c) Paragraphs 2.55 and 2.56 of the Guidelines are deleted. 2. Contracts for goods estimated to cost the equivalent of less than two million dollars ($2,000,000) each shall be awarded on the basis of the normal procurement procedures of the purchaser of such goods. 3. With respect to each contract referred to in paragraph 1 of this Schedule, the Borrower shall furnish to the Administrator, prior to the submission to the Administrator of the first application for withdrawal of funds from the African Facility Credit Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids and recommendations for award, a description of the advertising and tendering procedures followed and such other information as the Administrator shall reasonably request. 4. With raspect to each contract referred to in paragraph 2 of this Schedule, the Borrower shall furnish to the Administrator, prior to the submission to the Administrator of the first application for withdrawal of funds from the African Facility Credit Account in respect thereof, such documentation and information as the Administrator may reasonably request to support withdrawal applications in respect of such contract. 5. Notwithstanding the provisions of paragraphs 3 and 4 of this Schedule, where payments under a contract are to be made out of the proceeds of the Special Account, the copies of such contract or the documentation and the information to be furnished to the Administrator pursuant to the provisions of paragraph 3 or para- graph 4 of this Schedule, as the case may be, shall be furnished to the Administrator as part of the evidence required under paragraph 4 of Schedule 4 to this Agreement. - 15 - SCHEDULE 3 Actions Referred to in Paragraph 3 (b) of Schedule 1 to this Agreement 1. The Borrower shall: (i) complete a review of its export retention scheme; and (ii) agree with the Administrator on a plan of action to implement the results of such review. 2. The Borrower shall abolish the remaining permit requirements for the internal movement of foodgrains. 3. The Borrower shall permit cooperative and private institu- tions to import and retail agricultural inputs other than fertilizer and seeds. 4. The Borrower shall: (i) adjust intra-regional trucking rates to cover the full costs of operations; and (ii) raise rail tariffs to a level satisfactory to the Administrator, with a view to achieving full cost recovery. 5. The Tanzania Railways Corporation shall complete its action plan, covering its operations for the next two years. - 16 - SCHEDULE 4 Special Account 1. For the purposes of this Schedule: (a) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods required during the execution of the Program and to be financed out of the proceeds of the African Facility Credit in accordance with the provisions of Schedule 1 to this Agreement; and (b) the term "Authorized Allocation" means an amount equivalent to fifteen million dollars ($15,000,000) to be withdrawn from the African Facility Credit Account and deposited into the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Except as the Administrator shall otherwise agree, payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Administrator has received evidence satisfactory to it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Special Account may be made as follows: (a) On the basis of a request or requests by the Borrower for a deposit or deposits which add up to the aggregate amount of the Authorized Allocation, the Administrator shall, on behalf of the Borrower, withdraw from the African Facility Credit Account and deposit into the Special Account such amount or amounts as the Borrower shall have requested. (b) The Borrower shall furnish to the Administrator requests for replenishment of the Special Account at such intervals as the Administrator shall specify. On the basis of such requests, the Administrator shall withdraw from the African Facility Credit Account and deposit into the Special Account such amounts as shall be required to replenish the Special Account with amounts not exceeding the amount of payments made out of the Special Account for eligible expenditures. Each such deposit shall be withdrawn by the Administrator from the African Facility Credit Account in the respective equivalent amounts as shall have been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. - 17 - 4. For each payment made by the Borrower out of the Special Account for which the Borrower requests replenishment pursuant to paragraph 3 (b) of this Schedule, the Borrower shall furnish to the Administrator, prior to or at the time of such request, such documents and other evidence as the Administrator shall reason- ably request, showing that such payment was made for eligible expenditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into the Special Account shall be made by the Administrator when either of the following situations first arises: (i) the Administrator shall have determined that all further withdrawals can be made by the Borrower directly from the African Facility Credit Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (ii) the total unwithdrawn amount of the African Facility Credit shall be equal to the equivalent of twice the amount of the Authorized Allocation. (b) Thereafter, withdrawal from the African Facility Credit Account of the remaining unwithdrawn amount of the African Facility Credit shall follow such procedures as the Administrator shall specify by notice to the Borrower. Such further withdrarals shall be made only after and to the extent that the Administrator shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice will be utilized in making payments for eligible expenditures. 6. (a) If the Administrator shall have determined at any time that any payment out of the Special Account: (i) was made for any expenditure or in any amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Administrator, deposit into the Special Account (or, if the Administrator shall so request, refund to the Administrator) an amount equal to the amount of such payment or the porpion thereof not so eligible or justi- fied. No further deposit by the Administrator into the Special Account shall be made until the Borrower has made such deposit or refund. - 18 - (b) If the Administrator shall have determined at any time that any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Administrator, refund to the Administrator such outstanding amount for crediting to the African Facility Credit Account. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Development Association. FOR SECRETARY