Madagascar - Accounting And Management Training Project : Credit 1661 - Credit Agreement - Conformed

CREDIT NUMBER 1661 HAG OFFICIAL DOCUMENT9 Development Credit Agreement (Accounting and Management Training Project) between DEMDCRATIC REPUBLIC OF MADAGASCAR and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated L \ 1986 CREDIT NUMBER 1661 MAG DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated , 1986, between DEMOCRATIC REPUBLIC OF MADAGASCAR (the Borrower) and INTER- NATIONAL 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 French Republic a contribution (the French Contribution) to assist in financing part of the Project on the terms and conditions set forth in an agreement (the French Agreement) to be entered into between the Borrower and the Republic of France; 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 Ak :eement; 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 second sentence of Section 3.02 deleted (the General Conditions) constitute an integral part of this Agreement. Section 1.02. Unless the context otherwise -equires, the several terms defined in the General Conditions have the respec- tive meanings therein set forth and the following terms have the following meanings: (a) "INSCA" means the Institut National des Sciences, de la Comptabilitt et de l'Administration d'Entreprises to be established by the Borrower pursuant to Section 6.01 (a) of this Agreement; and (b) "CCM" means the Commission Centrale des March6s of the Borrower. -2- 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 nine million five hundred thousand Special Drawing Rights (SDR 9,500,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule I to this Agreement, as such Schedule may be amended from time to time by agreement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. Section 2.03. The Closing Date shall be December 31, 1992 or such later date as the Association shall establish. The Associa- tion 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 per cent (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 per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. -3- Section 2.06. Commitment charges and service charges shall be payable semiannually on April 1 and October 1 in each Tear. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each April 1 and October 1 commencing April 1, 1996, and ending October 1, 2035. Each installment to and including the installment payable on October 1, 2005 shall be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter shall be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General 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, through INSCA under the tutelle of the ministry responsible for finance, Part A of the Project and, through CCM, Part B of the Project; both with due diligence and efficiency and in conformity with appropriate administrative, educational, financial, accounting and auditing 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. By September 30 of each year of execution of the Project, the Borrower shall submit to the Association for approval an annual training program to be carried out during the following year under Part B.2 of the Project. Section 3.04. By December 31, 1987, the Borrower shall enact a new accounting legislation. -4- Section 3.05. The Borrower shall take all necessary measures to ensure that INSCA shall, at all times, have at its disposition adequate premises for carrying out of its responsibilities. Section 3.06. Any change of the legal arrangements for INSCA referred to in Section 6.01 (a) of this Agreement shall be sub- ject to prior approval by the Association. Section 3.07. (a) The Borrower shall, during execution of the Project and thereafter, take all measures necessary, or shall cause INSCA to take all measures necessary, to ensure that the students enrolled in the evening accounting courses and the students enrolled in the management training program, or the sponsors of any such student, shall pay a tuition fee adequate to cover the total cost of salaries of teachers for any such program but exclusive of the salaries of technical assistants. (b) By June 30, 1987 the Borrower shall submit to the Asso- ciation for review a proposal on the feasibility of the introduc- tion of tuition fees to be paid by the students enrolled in the day time accounting program of INSCA. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower shall maintain through INSCA and CCM 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: (i) have the accounts of INSCA referred to in para- graph (a) of this Section 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 5 - (iii) furnish to the Association such other information concerning the said accounts and 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, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Se:tion, separate records and accounts reflecting such expenditures; (ii) retain, until at least one year after the comple- tion 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 the accounts of INSCA are included in the annual audit referred to in paragraph (b) of this Section and that the report thereof contains, in respect of such 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 Remedies of the Association Section 5.01. (a) Pursuant to Section 6.02 (h) of the General Conditions, the following additional event is specified, namely, that subject to paragraph (b) of this Section, the right of the Borrower to benefit from the French Contribution made to the Borrower for the financing of part of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the French Agreement. -6- (b) Paragraph (a) of this Section shall not apply if the Borrower establishes to the satisfaction of the Association that: (1) such suspension, cancellation or termination is not caused by the failure of the Borrower to perform any of its obligations under such agreement; and (2) adequate funds for the Project are available to the Borrower from other sources on terms and condi- tions consistent with the obligations of the Borrower under this Agreement. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as addi- tional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) INSCA has been established by the Borrower under legal arrangements satisfactory to the Association, a board of direc- tors and a pedagogical committee have been appointed for INSCA, the composition of both to be acceptable to the Association; (b) the Borrower has made available to INSCA adequate premises for the carrying ou# of Part A of the Project. (c) the Borrower has submitted to the Association a techni- cal assistance program for INSCA and an implementation schedule therefor, both to be acceptable to the Association; and (d) all conditions precedent to the effectiveness of the French Contribution, other than the effectiveness of this agreement, have been fullfilled. Section 6.02. The date ninety (90) days after the date of this Agreement is hereby specified for the purposes of Sec- tion 12.04 of the General Conditions. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. 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 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministere aupres de la Presidence de la Republique Charge des Finances et de l'Economie Cable address: Telex: MINFINPLAN 22339 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 Athorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Isl " Regional Vice President Eastern and Southern Africa -9- SCHEDULE 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 (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) Civil works 165,000 90% (2) Construction 920,000 100% of foreign materials; expenditures or furniture, 90% of local ex- equipment and penditures for vehicles items procured locally (3) Consultants' 4,860,000 100% services, fellowships and training (4) Professional 20,000 100% of foreign services expenditures and 90% of local expenditures (5) Operating 2,290,000 80% up to an costs aggregate amount of SDR 760,000 60% up to an aggregate amount of SDR 1,520,000 and 40% there- after (6) Unallocated 1,245,000 TOTAL 9,500,000 - 10 - 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 I above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement. - 11 - SCHEDULE 2 Description of the Project The objectives of the Project are to upgrade the level of expertise of accountants, auditors and managers so as to improve the management planning and financial control of enterprises in Madagascar and to improve the procurement procedures of the Borrower. 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 1. Establishment and operation of an accounting and management training institution (INSCA) in Antananarivo which shall absorb the activities of the Centre de Formation en Comp- tabilit6. 2. Adaptation and extension of facilities for INSCA and equip- ping of, inter alia, classrooms, seminar and laboratory rooms, a library and administration and teachers' offices; acquisition of furniture, equipment and vehicles therefor. 3. Staffing of INSCA and training of, including provision of fellowships for, teachers and selected personnel. Part B 1. Provision of technical assistance and equipment for the establishment of a unit attached to CCM. 2. Training of staff of public agencies in procurement proce- dures. 3. Assistance of public agencies in procurement. 4. Gathering of statistical data on procurement and analysis thereof. - 12 - 5. Preparation of recommendations for the improvement of pro- curement regulations and procedures. The Project is expected to be completed by June 30, 1992. - 13 - SCHEDULE 3 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: International Competitive Bidding Except as provided in Part C hereof, goods and works 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 furniture, equipment and vehicles, estimated to cost less than the equivalent of $50,000 after grouping into bid packages, and contracts for civil works, may be procured under contracts awarded on the basis of the Borrower's competi- tive bidding procedures set forth in the Borrower's Decree 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. - 14 - 2. Contracts for goods estimated to cost less than 10 million Malagasy francs and contracts for civil works estimated to cost less than 30 million Malagasy francs may be procured directly. 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 $50,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. (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. (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 and experts in procurement and accounting and management training whose qualifications, experience and terms and conditions of employment shall be satis- factory to the Association. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Association on the basis of the "Guidelines for the Use of Con- sultants by World Bank Borrowers and by the World Bank as Execut- ing Agency" published by the Bank in August 1981. 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 L day of 198 L. FOR SECRETARY