Bolivia - Reconstruction Import Credit Project : Credit 1703 - Project Agreement - Conformed

CREDIT NMER 17,03 BO Project Agreement (Reconstruction Import Credit Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and BANCO CENTRAL DE BOLIVIA Dated 1986 CREDIT NUMBER 1703 BO PROJECT AGREEMENT AGREEMENT, dated aJA-L.4 ." , 1986, between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and BANCO CENTRAL DE BOLIVIA (Central Bank). WHEREAS (A) by the Development Credit Agreement of even date herewith between Republic of Bolivia (the Borrower) and the Asso- ciation, the Association has agreed to make available to the Bor- rower an amount in various currencies equivalent to forty-eight million four hundred thousand Special Drawing Rights (SDR 48,400,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that Central Bank agree to undertake such obligations toward the Association as are set forth in this Agreement; (B) by a Subsidiary Loan Agreement to be entered into bet- ween the Borrower and Central Bank, the proceeds of the credit provided for under the Development Credit Agreement will be made available to Central Bank to carry out Parts A, B, C and D of the Project on behalf of the Borrower, as the financial agent of the Borrower, and to carry out Parts E and F of the Project, on the terms and conditions set forth in said Subsidiary Loan Agreement; and WHEREAS Central Bank, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations set forth in this Agree- ment; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Development Credit Agreement, the Preamble to this Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. Central Bank declares its commitment to the objectives of the Project as set forth in Schedule 2 to the -2- Development Credit Agreement and to this end, shall carry out Parts A, B, C and D of the Project on behalf of the Borrower, as the financial agent for the Borrower, with the participation of the Public Enterprises, and shall carry out Parts E and F of the Project, with the participation of BAMIN and the Financial Intermediaries, with due diligence and efficiency and in con- formity with appropriate administrative and financial practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the Project. Section 2.02. (a) Central Bank shall, in its capacity as the financial agent of the Borrower, enter into Financing Agreements, satisfactory to the Association, with each of the Public Enter- prises and the Borrower, in accordance with the provisions of Schedule 4 to the Development Credit Agreement for purposes of carrying out of Parts A through D of the Project. (b) Central Bank shall exercise its rights under each of the Financing Agreements in such manner as to protect the interests of the Borrower, Central Bank and the Association and to accomplish the purposes of the Credit, and except as the Asso- ciation shall otherwise agree, Central Bank shall not assign, amend, abrogate or waive any Financing Agreement, or any pro- vision thereof. Section 2.03. (a) Central Bank shall, for purposes of carry- ing out Parts E and F of the Project, enter into Participating Agreements, satisfactory to the Association, with BAMIN and each Financing Intermediary, respectively, in accordance with the terms of Schedule 3 to this Agreement. (b) Central Bank shall exercise its rights under each of the Participating Agreements in such a manner as to protect the interests of the Borrower, Central Bank and the Association, and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, Central Bank shall not assign, amend, abrogate or waive any Participating Agreement or any provision thereof. Section 2.04. Except as the Association shall otherwise agree, Central Bank shall ensure that procurement of the goods required for: (i) Parts A through E of the Project and to be financed from the proceeds of the Credit shall be governed by the provisions of Schedule 2 to this Agreement; and (ii) Part F -3- of the Project and to be financed from the proceeds of the Credit shall be governed by the provisions of Schedule 1 to this Agreement. Section 2.05. Central Bank shall carry out the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of the Project. Section 2.06. Central Bank shall enter into and duly perform all its obligations under the Subsidiary Agreement. Except as the Association shall otherwise agree, Central Bank 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 2.07. (a) Central Bank shall, at the request of the Association, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement, the Subsidiary Agreement, the Financing Agreements and the Participating Agreements, and other matters relating to the purposes of the Credit. (b) Central Bank shall promptly inform the Association of any condition which interferes, or threatens to interfere, with the progress of the Project, the accomplishment of the purposes of the Credit, or the performance by Central Bank of its obligations under this Agreement, the Subsidiary Agreement, the Financing Agreements and the Participating Agreements. Section 2.08. Central Bank shall: (a) establish a Project Coordinating Committee with membership and responsibilities acceptable to the Association for purposes of coordinating and supervising the implementation of the Project; (b) provide the Project Coordinating Committee with adequate personnel, funds, resources and facilities to carry out its coordinating, supervising, and other responsibilities under the Project; and (c) maintain the Project Coordinating Committee through Project completion. -4- Article III Financial Covenants Section 3.01. (a) Central Bank shall maintain separate records and accounts adequate to reflect, in accordance with consistently maintained sound accounting practices, the opera- tions, resources and expenditures in respect of each Part of the Project and shall enable the Association's representatives to examine such records. (b) Central Bank shall: (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 four months after the end of each such year: (A) certified copies of the aforesaid accounts 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 Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning said accounts as well as the audit thereof 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, Central Bank shall: (i) maintain, in accordance with paragraph (a) of this Section, separate records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Association has received the audit report 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; -5- (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, among other factors, whether the proceeds of the Credit with- drawn in respect of such expenditures were used for the purposes for which they were provided. 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 Development Credit Agreement becomes effective. Section 4.02. (a) This Agreement and all obligations of the Association and of Central Bank thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) the date 17 years after the date of this Agree- ment. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in para- graph (a) (ii) of this Section, the Association shall promptly notify Central Bank of this event. 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. 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 -6- the parties referred to in 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 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) For Central Bank: Banco Central Casilla 3188 La Paz, Bolivia Telex: 2575 NAVIANA BV 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 Central Bank, or by Central Bank on behalf of the Borrower under the Development Credit Agreement, may be taken or executed by the President of Central Bank or such other person or persons as the President of Central Bank shall designate in writing, and Central Bank shall furnish to the Asso- ciation sufficient evidence of the authority and the authenti- cated 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. -7- 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. INTERNATIONAL DEVELOPMENT ASSOCIATION By /S/ Regional Vice President Latin America and the Caribbean BANCO CENTRAL DE BOLIVIA By Authorized Representative - 8 - SCHEDULE 1 Terms and Conditions for Sub-loans under Part F of the Project Section I. General Terms and Conditions for all Sub-Loans I. Except as the Association shall otherwise agree, each Finan- cial Intermediary shall obtain, inter alia, in respect of Sub- loans, the right to: (a) require the Eligible Exporter or Eligible Importer to carry out its business with due diligence and efficiency, in accordance with sound technical, financial and managerial stand- ards, and to maintain adequate records including separate records and accounts adequate to reflect, in accordance with consis- tently maintained sound accounting practices, the operations, resources and expenditures in respect of the Project; (b) require that: (i) the goods to be financed by the proceeds of the Credit 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 (ii) such goods shall be used exclusively for the purposes for which the Sub-loan was requested; (c) inspect, by itself, or jointly with representatives of the Association, if the Association shall so request, the goods financed under the Sub-loan, and any relevant records and docu- ments; (d) require that the Eligible Exporter or Eligible Importer 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 in order to cover hazards incident to the acquisition, transportation and delivery of goods (financed from the proceeds of the Credit) to the place of use or installation, any indemnity thereunder to be made payable in a currency freely usable by the Eligible Exporter or Eligible Importer to replace or repair such goods; (e) obtain all such information as the Association, Central Bank or the Borrower shall reasonably request regarding the foregoing and to the administration, operations and financial -9- condition of the Eligible Exporter or Eligible Importer and the benefits to be derived from the goods financed from the Sub-loan; and (f) suspend or terminate the right of the Eligible Exporter or Eligible Importer to the use of the proceeds of the Credit upon failure by such Eligible Exporter or Eligible Importer to perform its obligations under its contract with the Financial Intermediary. 2. Sub-loans shall be denominated in dollars and repayable in national currency, the exchange rate to be determined as of the date each payment is made. 3. The Financial Intermediary may charge up to an aggregate of two percentage points (2%), per annum as additional interest, commissions, or fees, above the interest rate payable by it to the Central Bank set forth in Section III, paragraph 1 (a) of Schedule 3 to this Agreement, to Eligible Exporters and Eligible Importers. The interest rate charged by the Financial Inter- mediary on each Sub-loan shall be fixed for the term of the Sub- loan. Any commissions or fees charged by the Financial Inter- mediary shall be charged a maximum of one time for each such Sub-loan and no additional commissions or fees may be charged for such Sub-loan. 4. The terms for repayment of Sub-loans shall be a maximum of one year from the date of purchase of locally produced goods, or imports, as applicable. Section II. Specific Terms and Conditions for Sub-loans under Part F (1) of the Project 1. The proceeds of Sub-loans shall be used only to finance the reasonable cost of locally produced goods to be used as inputs in the operations of the respective Eligible Exporter. 2. No Sub-loans shall finance more than 75% of the cost of such locally produced goods. 3. The maximum Sub-loan, or Sub-loans, under Part F (1) of the Project, when aggregated together with all other Sub-loans under the Project, that shall be made to any one Eligible Exporter is $500,000 equivalent. - 10 - Section III. Specific Terms and Conditions for Sub-loans under Part F (2) of the Project 1. The proceeds of Sub-loans shall be used only to finance the importation of eligible goods, including spare parts, supplies and materials, tools and equipment, but excluding those goods listed in Schedule 1, paragraph 3 (b), (g) and (h) to the Development Credit Agreement, to be used as inputs in the operations of the respective Eligible Importers. With respect to Sub-loans to Eligible Importers for importation of agricultural products, the proceeds of Sub-loans shall be used only to finance goods set forth in the agricultural products plan submitted by the Borrower, which may be revised from time to time, but only upon prior approval of the Association. 2. Sub-loans shall finance only foreign costs of imported goods procured in accordance with the provisions of Schedule 2 to this Agreement. 3. The maximum Sub-loan, or Sub-loans, under Part F (2) of the Project, when aggregated together with all other Sub-loans under the Project, that can be made to any one Eligible Importer shall not exceed ten percent (10%) of the aggregate amounts of the Credit proceeds allocated under Categories (5) through (9) of the table set forth in paragraph 1 of Schedule 1 to the Development Credit Agreement, as of the time the latest Sub-loan is made, or such other amount as the Association shall determine from time to time. - 11 - SCHEDULE 2 Procurement under Parts A, B, C, D and E of the Project 1. Contracts for the procurement of goods estimated to cost the equivalent of $1,000,000 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 Association in May 1985 (the Guidelines), subject to the following modifications: (a) 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." (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 specified in the bidding documents." - 12 - (c) Paragraphs 2.55 and 2.56 of the Guidelines are deleted. 2. Contracts for goods estimated to cost the equivalent of $100,000 or more, but not to exceed the equivalent of $1,000,000, may be procured under contracts awarded through limited interna- tional bidding procedures, on the basis of evaluation and comparison of bids invited from a list of at least three qualified suppliers eligible under the Guidelines, from at least two qualified countries, in accordance with the procedures set forth in Sections I and II of the Guidelines (excluding paragraphs 2.8, 2.9, 2.55 and 2.56 thereof). 3. Contracts for goods estimated to cost the equivalent of less than $100,000 each, shall be awarded to suppliers of such goods on the basis of comparison of price quotations from at least three suppliers eligible under the Guidelines, in accordance with Section I and Section II, paragraph 3.4 of the Guidelines, or with procedures acceptable to the Association. 4. Contracts for goods for which there is a .sole source of supply, or that are for proprietary goods, may be purchased by direct contracting with the supplier or manufacturer, in accordance with procedures acceptable to the Association. 5. With respect to each contract referred to in paragraphs 1 and 2 of this Schedule, Central Bank shall furnish to the Association, prior to the submission to the Association of the first application for withdrawal of funds from the 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 Association shall reasonably request. 6. With respect to each contract referred to in paragraphs 3 and 4 of this Schedule, Central Bank shall furnish to the Association, prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect thereof, such documentation and information as the Association may reasonably request to support withdrawal applications in respect of such contract. 7. Notwithstanding the provisions of paragraphs 5 and 6 of this Schedule, when payments under a contract are to be made out of the proceeds of the Special Account, the copies of such contract - 13 - or the documentation and the information to be furnished to the Association pursuant to the provisions of paragraphs 5 and 6 of this Schedule shall be furnished to the Association as part of the evidence required under paragraph 4 of Schedule 3 to the Development Credit Agreement. 8. The provisions of the preceding paragraphs 5, 6 and 7 shall not apply to contracts on account of which the Association has authorized withdrawals from the Credit Account on the basis of statements of expenditure. 9. Notwithstanding the provisions of paragraphs 5 and 6, with respect to contracts for the procurement of goods by COMIBOL under Part A of the Project, estimated to cost the equivalent of $100,000 or more, COMIBOL shall submit to the Association for its review and comment the first ten of such proposed contracts prior to the final award thereof. COMIBOL shall, to the extent practicable, consolidate its procurement of goods financed by the proceeds of the Credit into contracts estimated to cost the equivalent of $100,000 or more each. - 14 - SCHEDULE 3 Terms and Conditions of Participating Agreements Section I. Terms Applicable to BAMIN and Financial Intermediaries. 1. The Central Bank shall enter into Participating Agreements with BAMIN, and each Financial Intermediary, for purposes of carrying out Parts E and F of the Project, respectively, that shall provide the terms and conditions for, and procedures to be followed in, carrying out the import plan of BAMIN under Part E of the Project, the purchase of locally produced goods by Eligible Exporters under Part F (1) of the Project, and the importation of goods by Eligible Importers under Part F (2) of the Project. 2. The procedures to be followed under each Participating Agreement shall be satisfactory to the Association, and shall include, inter alia: (a) notification to Central Bank by BAMIN and the Financial Intermediaries of the goods to be procured, the dollar equivalent of the amount to be paid for such goods, the name of the purchaser of such goods, and when applic- able, the amount of the Sub-loan; (b) review and verification of eligibility by the Central Bank of proposed expenditures for goods under the import plan of BAMIN, the locally produced goods to be procured by each Eligible Exporter, and the importation of goods by Eligible Importers; and (c) authorization by Central Bank of: (i) credit to BAMIN under Part E of the Project; (ii) the making of Sub- loans by Financial Intermediaries to Eligible Exporters under Part F (1) of the Project; and (iii) the making of Sub-loans by Financial Intermediaries to Eligible Importers under Part F (2) of the Project. Section II. Terms and Conditions Applicable to the Participating Agreement with BAMIN 1. The terms and conditions of the Participating Agreement between the Central Bank and BAMIN shall be satisfactory to the Association, and shall include, inter alia: - 15 - (a) the credit received by BAMIN from the Central Bank shall be denominated in dollars and repaid in national currency, the rate of exchange to be determined as of the date each payment is made; (b) such credit shall bear a fixed interest rate of four- teen and one-half percent (14.5%) per annum on princi- pal amounts withdrawn and outstanding from time to time, or such other rate and on such other terms as shall be acceptable to the Association; and (c) such credit shall be repaid within one year from the date of purchase of imported goods. 2. The list of specific goods to be imported by BAMIN that shall form part of the Participating Agreement entered into between it and the Central Bank, may be revised from time to time, but only upon prior approval by the Association, such list constituting the plan of eligible imported goods. 3. The Central Bank shall not authorize financing of eligible imported goods by BAMIN under the Project, which exceeds in the aggregate for all imported goods so financed, the amount alloca- ted to Category (5) of paragraph 1 of Schedule 1 to the Develop- ment Credit Agreement. 4. Except as the Association shall otherwise agree, BAMIN shall: (a) carry out its business with due diligence and effi- ciency in accordance with sound financial and managerial standards and shall maintain adequate records, including separate records and accounts adequate to reflect, in accordance with consistently maintained sound accounting practices, its opera- tions, resources and expenditures in respect of the Project; (b) ensure that the goods to be financed from the proceeds of the Credit shall be procured in accordance with Schedule 2 to this Agreement, and such goods shall be used exclusively for the purposes of the Project; (c) permit inspection by Central Bank, by itself, or jointly with representatives of the Association, if the Associa- tion shall so request, of the goods financed from the proceeds of the Credit, and any relevant records and documents; - 16 - (d) take out and maintain with responsible insurers, such insurance against such risk and in such amounts, as shall be consistent with sound business practice in order to cover hazards incident to the acquisition, transportation and delivery of goods financed from the proceeds of the Credit to the place of use or installation, any indemnity thereunder to be made payable in a currency freely usable by BAMIN to replace or repair such goods; and (e) provide all such information as the Association, Central Bank or the Borrower shall reasonably request regarding the foregoing expenditures and the benefits to be derived from the imported goods financed under the Project. 5. Central Bank shall have the right to suspend or terminate the right of BAMIN to use the proceeds of the Credit upon failure by BAMIN to perform its obligations under the Participating Agreement. Section III. Terms and Conditions Applicable to Participating Agreements with Financial Intermediaries 1. The terms and conditions of each Participating Agreement between the Central Bank and a Financial Intermediary, shall be satisfactory to the Association, and shall include, inter alia: (a) credit received by the Financial Intermediaries from the Central Bank to be used for Sub-loans under Part F of the Project shall: (i) be denominated in dollars; (ii) be repaid in national currency, the rate of exchange to be determined as of the date each payment is made; and (iii) bear a fixed interest rate of twelve and one-half percent (12.5%) per annum on the principal amounts withdrawn and outstanding from time to time, or such other rate and on such other terms as shall be acceptable to the Association; (b) Central Bank shall provide credit to the Financial Intermediary sufficient to cover one hundred percent (100%) of the amount of each Sub-loan; (c) the Financial Intermediary shall make all Sub-loans to be financed by the proceeds of the Credit in accordance with Schedule 1 to this Agreement; - 17 - (d) all Sub-loans under Part F of the Project shall be made pursuant to written agreements with Sub-borrowers or Eligible Importers; (e) each Financial Intermediary shall exercise its rights with respect to the written agreements referred to in sub-para- graph (d) above, in such a manner as to: (i) protect the interests of Central Bank, the Association and the Borrower; (ii) comply with its obligations under the Participating Agreement; and 'iii) achieve the purposes of the Project; and (f) Central Bank shall have the right to suspend the right to the use of the proceeds of the Loan by the Financial Inter- mediary upon the failure of said Intermediary to perform any of its obligations under the Participating Agreement. 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 I day of aa , 198 FOR SECRETARY