Madagascar - Second Agricultural Institutions Project : Credit 1709 - Credit Agreement - Conformed

FF1AL CREDIT NUMBER 1709 MAG DOCUMENTS Development Credit Agreement (Second Agricultural Institutions Project) between DEMOCRATIC REPUBLIC OF MADAGASCAR and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated A, 1986 CKZDIT NUMBER 1709 NAG DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated / , 1986, between DEMOCRATIC REPUBLIC OF MADAGASCAR (the Borrower) and INTERNA- TIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS (A) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Association to assist in the financing of the Project; (B) the Borrower intends to contract from the US Agency for International Development (USAID) a grant in an amount of $500,000 to assist in financing the Project on the terms and conditions set forth in an agreement to be entered into between the Borrower and USAID; 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 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 Develop- ment Credit Agreements" of the Association, dated January 1, 1985, with the last sentence of Section 3.02 deleted (the General Conditions), constitute an integral part of this Agreement. 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) "Special Account" means the account referred to in Section 2,02 (b) of this Agreement; (b) "Project Preparation Advance" means the project prepa- ration advance granted by the Association to the Borrower pursuant to an exchange of letters dated September 4, 1985, -2- September 13, 1985, and October 22, 1985, between the Borrower and the Association; (c) "MPFE" means the Borrower's Ministry of Finance and Economy; (d) "MPARA" means the Borrower's Ministry of Agricultural Production and Agrarian Reform; (e) "MPAEF" means the Borrower's Ministry of Livestock, Fisheries and Forestry; (f) "MRSTD" means the Borrower's Ministry of Scientific and Technological Research; and (g) "FOFIFA" means the National Center for Applied Research on Rural Development. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Bor- rower, on the terms and conditions set forth or referred to in the Development Credit Agreement, an amount in various currencies equivalent to eight million seven hundred thousand Special Drawing Rights (SDR 8,700,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule I to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Association, for expenditures made (or, if the Association 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 Credit. (b) 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 Association. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 4 to this Agreement. -3- (c) Promptly after the Effective Date, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and pay to itself the amount required to repay the principal amount of the Project Preparation Advance withdrawn and outstanding as of such date and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amount of the Project Preparation Advance shall thereupon be cancelled. Section 2.03. The Closing Date shall be December 31, 1990, or such later date as the Association shall establish. The Asso- ciation shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to the Association a commitment charge at the rate of one-half of one percent (1/2 of 1%) per annum on the principal amount of the Credit not with- drawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agree- ment to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without re- strictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the 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 the Association a service charge at the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Commitment charges and service charges shall be payable semiannually on May 15 and November 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each May 15 and November 15 commencing November 15, 1996, and ending May 15, 2036. Each installment to and including the installment payable on May 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. -4- Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the Gen- eral Conditions. ARTICLE III Execution of the Project Section 3.01. The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement and, to this end, shall carry out Parts A through E.3 of the Project through the respective Mini,'tries as indicated in Schedule 2 to this Agreement and shall cause FOFIFA to carry out Parts E.4 through E.6 of the Project, all with due diligence and efficiency and in conformity with appropriate administrative and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. Section 3.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agreement. Section 3.03. (a) By September 30 of each year of execution of the Project, the Borrower shall prepare and furnish to the Association for approval annual work programs for MPARA, MPAEF, XRSTD and MPFE setting forth the activities to be carried out by any such Ministry in respect of the Project during the follow- ing calendar year and a list of items to be financed under the Credit. Such work programs to include a budget and to specify the amount of the contribution needed from the Borrower for the carrying out of such activities. (b) By September 30 of each year of execution of the Project, the Borrower shall cause FOFIFA to prepare and to furnish to the Association for approval annual work programs setting forth the activities to be carried out by FOFIFA in respect of Parts E.4 through E.6 of the Project during the following calendar year. Such work programs to include a budget and to specify the amount of the contribution needed from the Borrower for the carrying out of such activities. Section 3.04. (a) By December 31 of each year of execution of the Project, the Borrower shall cause FOFIFA to review with -5- the Association: (i) the studies being carried out on its staffing and the appropriateness of its field station network; (ii) FOFIFA's budget; and (iii) proposals for the streamlining of FOFIFA's research program. (b) During execution of the Project, the Borrower shall provide adequate funds to finance FOFIFA's research program and FOFIFA's administrative budget. Section 3.05. The Borrower shall, promptly upon preparation of the agricultural research master plan: (i) submit all doeu- ments relating to its implementation to the Association aha national and international agencies interested in financing agri- cultural research; and (ii) consult with the Association and such agencies to coordinate the financing of the implementation of the agricultural research master plan. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower shall maintain through MPARA, MPAEF, MRSTD and MPFE, and shall cause FOFIFA to maintain, separate records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project. (b) The Borrower shall, and shall cause FOFIFA to: (i) have the accounts referred to in paragraph (a) of this Section, including the Special Account for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association, as soon as available, but in any case not later than six months after the end of each such year, a certified copy of the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning said accounts and the audit thereof -6- and said records as the Association shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of statements of expenditure, the Borrower shall, and shall cause FOFIFA to: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, separate records and accounts reflecting such expenditures; (ii) retain, until at least one year after completion of the audit for the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Association's representatives to examine such records; and (iv) ensure that such separate accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report thereof contains, in respect of such separate accounts, a separate opinion by said auditors as to whether the proceeds of the Credit withdrawn in respect of such expenditures were used for the purposes for which they were provided. ARTICLE V Effective Date Section 5.01. 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. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Minister responsible for Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. -7- Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministgre aupras de la Presidence de la Rfpublique chargg des Finances et de 1'Economie Antananarivo, Madagascar Cable address: Telex: MINFIN 22489 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. 248423 (RCA) or 64145 (WUI) -8- 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. DEMOCRATIC REPUBLIC OF MADAGASCAR By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By B Regional Vice President Eastern and Southern Africa -9- SCHEDUILE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Ex-?ressed in Expenditures Category SDR Equivalent) to be Financed (1) Part A of the Project: (a) Consultants' 2,390,000 100% of foreign services and expenditures and training 80% of local expenditures (b) Equipment and 480,000 100% of foreign vehicles expenditures and 80% of local expenditures (2) Part B of the Project: (a) Consultants' 1,300,000 100% of foreign services and expenditures and training 80% of local expenditures (b) Equipment and 220,000 100% of foreign vehicles expenditures and 80% of local expenditures (3) Part C of the Project: (a) Consultants' 1,140,000 100% of foreign services and expenditures and training 80% of local expenditures - 10 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (b) W1jrks, equip- 560,000 100% of foreign mInt and expenditures and vo,hicles 80% of local expenditures (c) Incremental 250,000 80% of local operating expenditures costs (4) Part D of the Project: (a) Consultants' 140,000 100% of foreign services and expenditures and training 80% of local expenditures (b) Equipment 30,000 100% of foreign expenditures and 80% of local expenditures (5) Parts E.1 through E.3 of the Project: (a) Consultants' 490,000 100% of foreign services and expenditures and training 80% of local expenditures (b) Equipment and 150,000 100% of foreign vehicles expenditures and 80% of local expenditures (c) Incremental 32,000 80% of local operating expenditures costs - 11 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (6) Parts E.4 through E.6 of the Project: (a) Consultants' 630,000 100% of foreign services and expenditures and training 80% of local expenditures (b) Equipment and 8,000 100% of foreign vehicles expenditures and 80% of local expenditures (7) Refunding of 760,000 Amount due pur- Project Prepara- suant to Sec- U,on Advance tion 2.02 (c) of this Agreement (8) Unallocated 120,000 TOTAL 8,700,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement; and (b) payments made for expenditures under Category (3) before the Borrower has nominated adequate national staff in sufficient numbers for the carrying out of Part C of the Project. - 12 - SCHEDULE 2 Description of the Project The objectives of the Project are to strengthen overall management of the agricultural sector, to improve its policy and economic analysis, and to strengthen market development and export performance. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Association may agree upon from time to time to achieve such objectives: Part A: Ministry of Agricultural Production and Agrarian Reform (MPARA) 1. Training of managers of MPARA. 2. Strengthening of the Finance and Personnel Department in regular and temporary staff management, administration and monitoring of financial resource flows, and training therefor. 3. Provision of technical assistance in computer planning and information management. 4. Provision of technical assistance to the Programming and Finance Departments to develop public investment programs, monitor and evaluate projects and parastatal performance. 5. Carrying out of sector planning studies on export crops, foodcrops and fertilizer. 6. Further development of pilot extension operation and plan- ning of future reforms of the national extension system. 7. Strengthening of economic analysis capacity for the monitor- ing of the rice subsector. Part B: Ministry of Livestock, Fisheries and Forestry (MPAEF) 1. Strengthening of the Department of Studies, Programming and Finance in project preparation, evaluation, economic analysis, monitoring, accounting, and parastatal restructuring. 2. Development of a medium-term computer and information system. - 13 - 3. Strengthening of the personnel and management capability of MPAEF. 4. Improvement of the management and maintenance of the vehicle fleet. Part C: National Resources Inventory (MRSTD) 1. Collection and analysis of existing documentation, informa- tion, and remote sensing data. 2. Preparation of inventories f or land, water resources, and land use. 3. Training of staff to support execution of Part C of the Project. 4. Preparation of the institution building program for National Resources Inventory. Part D: Ministry of Planning, Finance and Economy (MPFE) 1. Strengthening of an interministerial resource management task force. 2. Strengthening of the counterpart fund working group. Part E: Agricultural Research Ministry of Scientific Research and Technology (MRSTD) 1. Preparation of an international symposium on agricultural research in Madagascar. 2. Preparation of a long-term master plan for agricultural research. 3. Preparation of a research project to execute the first five- year tranche of the master plan. National Center for Applied Research on Rural Development (FOFIFA) 4. Preparation of a complete inventory of past research results. - 14 - 5. Strengthening of FOFIFA's financial and research management. 6. Training of FOFIFA's staff including training in research and station management. The Project is expected to be completed by June 30, 1990. - 15 - SCHEDULE 3 Procurement and Consultants' Services Section I. Procurement of Goods Part A: International Competitive Bidding Except as provided in Part C hereof, goods shall be procured under contracts awarded 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). Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the pro- cedures described in Part A hereof, goods manufactured in Madagascar may be granted a margin of preference in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraphs 1 through 4 of Appendix 2 thereto. Part C: Other Procurement Procedures 1. Contracts for goods, estimated to cost less than the equi- valent of $200,000, and contracts for works may be procured under contracts awarded on the basis of the Borrower's competitive bidding procedures set forth in the Borrower's Decree No. 70-089 of January 28, 1970, provided, however, that: (a) registration of bidders in the Registry of Commerce shall not be required for the acceptance of their bids; (b) no procurement shall be made on the basis of selected tendering or direct contracting, except in the case of rejection of all bids; (c) bids shall be opened in public, i.e., bidders or their representatives should be allowed to be present; and (d) no special preference will be given to local bidders in the evaluation of bids. 2. Contracts estimated to cost the equivalent of 10 million Malagasy francs, may be procured on the basis of local price - 16 - quotations received from at least three suppliers eligible under the guidelines. Part D: Review by the Association of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract estimated to cost the equivalent of $40,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contracts are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of each contract required to be fur- nished to the Association pursuant to paragraph 2 (d) of said Appendix shall be furnished to the Association prior to the making of the first payment out of the Special Account in respect of such contracts. (b) With respect to each contract not governed by the pre- ceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contracts are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of each contract, together with the other information required to be furnished to the Association pursuant to said paragraph 3, shall be furnished to the Association as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 4 to this Agreement. (c) The provisions of the preceding subparagraphs (a) and (b) shall not apply to contracts on account of which the Associa- tion has authorized withdrawals from the Credit Account on the basis of statements of expenditure. Such contracts shall be retained in accordance with Section 4.01 (c) (ii) of this Agree- ment. 2. The figure of 15% is hereby specified for purposes of para- graph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants In order to assist the Borrower in carrying out the Project, the Borrower shall employ consultants whose qualifications, experience, and terms and conditions of employment shall be - 17 - satisfactory to the Association. Such consultants shall be selected in accordance with principles and procedures satisfac- tory to the Association 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. - 18 - SCHEDULE 4 Special Account 1. For the purposes of this Schedule: (a) the term "Eligible Categories" means Categories (1) through (6) set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "Eligible Expenditures" means expenditures in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit allocated from time to time to the Eligible Categories in accord- ance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $800,000 to be withdrawn from the Credit Account and deposited into the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. 'xcept as the Association 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 Association 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 Association shall, on behalf of the Borrower, withdraw from the 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 Association requests for replenishment of the Special Account at such intervals as the Association shall specify. On the basis of such requests, the Association shall withdraw from the 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. All such deposits shall be withdrawn by the - 19 - Association from the Credit Account under the respective Eligible Categories, and 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. 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 Association, prior to or at the time of such request, such documents and other evidence as the Association shall reasonably request, showing that such payment was made for Eligible Expen- ditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into the Special Account shall be made by the Association when either of the following situations first arises: (i) the Association shall have determined that all further withdrawals should be made directly by the Borrower from the Credit Account in accordance with the provisions of paragraph (a) of Section 2.02 of this Agreement; or (ii) the total unwithdrawn amount of the Credit allocated to the Eligible Categories, minus the amount of any outstanding special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions with respect to the Project, shall be equal to the equivalent of twice the amount of the Authorized Allocation. (b) Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to the Eligible Categories shall follow such procedures as the Associa- tion shall specify by notice to the Borrower. Such further with- drawals shall be made only after and to the extent that the Association shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice.have been or will be utilized in making payments for Eligible Expenditures. 6. (a) If the Association shall have determined at any time that any payment out of the Special Account: (i) was made for any - 20 - 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 Association, deposit into the Special Account (or, if the Association shall so request, refund to the Association) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. No further deposit by the Association into the Special Account shall be made until the Borrower has made such deposit or refund. (b) If the Association 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 Association, refund to the Association such outstanding amount for crediting to the 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