Conformed Copy - L2876 - Manpower Training Project - Guarantee Agreement

Page 1 CONFORMED COPY LOAN NUMBER 2876 ME (Manpower Training Project) between UNITED MEXICAN STATES and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated October 13, 1987 LOAN NUMBER 2876 ME GUARANTEE AGREEMENT AGREEMENT, dated October 13, 1987, between UNITED MEXICAN STATES (the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). WHEREAS (A) the Guarantor and Nacional Financiera, S.N.C. (the Borrower), having been satisfied as to the feasibility and priority of the Project described in Schedule 1 to this Agreement, have requested the Bank to assist in the financing of the Project; and (B) by the Loan Agreement of even date herewith between the Bank and the Borrower, the Bank has agreed to extend to the Borrower a loan in various currencies equivalent to eighty million dollars ($80,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guarantor agree to guarantee the obligations of the Borrower in respect of such loan and to undertake such other obligations as provided in this Agreement; and Page 2 WHEREAS the Guarantor, in consideration of the Bank's enter- ing into the Loan Agreement with the Borrower, has agreed so to guarantee such obligations of the Borrower and to undertake such other obligations as stipulated 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 Loan and Guarantee Agreements" of the Bank, 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 and Section 1.02 of the Loan Agreement have the respective meanings therein set forth. ARTICLE II Guarantee Section 2.01. Without limitation or restriction upon any of its other obligations under the Guarantee Agreement, the Guarantor hereby unconditionally guarantees, as primary obligor and not as surety merely, the due and punctual payment of the principal of, and interest and other charges on, the Loan, and the premium, if any, on the prepayment of the Loan and the punctual performance of all the other obligations of the Borrower, all as set forth in the Loan Agreement. ARTICLE III Execution of the Project Section 3.01. The Guarantor declares its commitment to the objectives of the Project as set forth in Schedule 1 to this Agreement and, to this end, shall carry out the Project, through STPS, with due diligence and efficiency, and in conformity with appropriate administrative, financial, economic and educational practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. Section 3.02. The Guarantor shall enter into the contractual arrangements referred to in Section 3.01 of the Loan Agreement with the Borrower. Except as the Bank shall otherwise agree, the Guarantor shall not change or fail to enforce any provision of such arrangements. Section 3.03. Except as the Bank shall otherwise agree, pro- curement of the goods and consultant services required for the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 2 to this Agreement. Section 3.04. Unless the Bank shall otherwise agree, the Guarantor shall not modify the STPS Retraining Program in such a manner which would materially and adversely affect the carrying out of the Project, or fail to comply with any of the provisions of such Program. Section 3.05. The Guarantor shall, through STPS until the completion of the Project: (i) cause CET to be regularly informed of the progress in the execution of Parts A and B of the Project; and (ii) take into account the views expressed by CET in carrying out such Parts of the Project. Section 3.06. The Guarantor shall: (a) not later than March 31 of each year: (i) select, in Page 3 accordance with criteria acceptable to the Bank, the training institutions which will assist the Guarantor in carrying out Part A of the Project; and (ii) enter into appropriate arrangements with such institutions for the provision of such assistance; and (b) select, in accordance with criteria satisfactory to the Bank, the training institutions to be upgraded under Part D of the Project as follows: (i) not later than December 31, 1987, the first 150 training institutions; (ii) not later than December 31, 1988, an additional 200 training institutions; and (iii) not later than December 31, 1989, the remaining 150 training institutions. Section 3.07. The Guarantor shall establish and maintain the SIP not later than March 31, 1988. Section 3.08. The Guarantor shall cause at least five GATES to be established not later than June 30, 1988, and the remaining GATES to be established not later than March 31, 1989. ARTICLE IV Financial Covenants Section 4.01. (a) The Guarantor shall maintain or cause to be maintained separate records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of the departments or agencies of the Guarantor responsible for carrying out the Project or any part thereof. (b) The Guarantor shall: (i) have the accounts referred to in paragraph (a) of this Section for each fiscal year audited, in accordance with generally accepted auditing standards and procedures consistently applied, by independent and qualified auditors; (ii) furnish to the Bank as soon as available, but in any case not later then 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 Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concern- ing said accounts and the audit thereof, and said records, as the Bank shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of statements of expenditures, the Guarantor shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, separate records and accounts reflecting such expenditures; (ii) retain, or cause to be retained, until at least one year after the Bank has received the audit report for the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Bank's representatives to examine such Page 4 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 Loan withdrawn in respect of such expenditures were used for the purposes for which they were provided. ARTICLE V Representative of the Guarantor; Addresses Section 5.01. The Director General de Credito Publico of the Secretaria de Hacienda y Credito Publico of the Guarantor is designated as representative of the Guarantor for the purposes of Section 11.03 of the General Conditions. Section 5.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Guarantor: Direccion General de Credito Publico Secretaria de Hacienda y Credito Publico Palacio Nacional - Edificio 10, P.B. 06066 Mexico, D.F., Mexico Telex: 01774300 For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) 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 MEXICAN STATES By /s/ Jorge Pinto-Masal Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Rainer B. Steckhan Acting Regional Vice President Page 5 Latin America and the Caribbean SCHEDULE 1 Description of the Project The objectives of the Project are to: (a) strengthen the Guarantor's employment services and improve the effectiveness of the Guarantor's retraining programs for displaced and unemployed workers; (b) assist private enterprises, particularly Small- and Medium-Scale Enterprises, in selected sectors of the economy and geographical areas of the Guarantor in developing their own capacity for in-service training of skilled workers and technicians; (c) strengthen STPS in order to enable it to improve its support and monitoring of training activities and its information system for coordination and linkage of training with labor market needs; and (d) increase training capacity through the upgrading of selected training institutions. The Project consists of the following parts, subject to such modifications thereof as the Bank and the Borrower may agree upon from time time to achieve such objectives: Part A: Retraining (a) Strengthening and expansion of employment support services at the State level through the provision of technical assistance through STPS, including the acquisition and utilization of computer equipment. (b) Strengthening of STPS Retraining Program in the areas of planning, content and implementation, including the establishment of systematic arrangements for the monitoring and evaluation of the effectiveness of the STPS Retraining Program. (c) Retraining of about 160,000 economically disadvantaged and displaced or unemployed workers. Part B: In-service Training Implementation of a system for promoting and supporting in-service training, including, inter alia: (i) establishment and operation of about 20 GATES and the SIP to promote and assist in the delivery of in-service training to workers, particularly in Small- and Medium-Scale Enterprises; (ii) provision of produc- tivity promotion services for Small- and Medium-Scale Enterprises; and (iii) provision of short-term training to about 75,000 workers in Small- and Medium-Scale Enterprises, including acquisition and utilization of training materials. Part C: STPS Strengthening Strengthening the technical and administrative capabilities of STPS's directorate responsible for national employment and related programs including: (i) training of about 100 staff in the area of project and program design and evaluation, statistical analysis related to labor markets and manpower, and training topics related to labor productivity and occupational structures; (ii) development of improved labor market and manpower information systems, including acquisition and utilization of computer equipment; and (iii) carrying out a study on the costs and benefits of retraining and in-service training programs, to assess options for the development of training systems for STPS. Part D: Upgrading of Training Institutions Page 6 Increasing the training capacity of about 500 existing train- ing institutions in critically needed specialties, including acquisition and utilization of equipment inputs and staff upgrad- ing in training-facility management and general administration of training programs. * * * * This Project is expected to be completed by June 30, 1993. SCHEDULE 2 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 procedures described in Part A hereof, goods manufactured in Mexico 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 between $40,000 and $250,000, up to an aggregate amount not to exceed the equivalent of $5,000,000, may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Bank. 2. Items or groups of items estimated to cost less than the equivalent of $40,000 per contract, up to an aggregate amount not to exceed the equivalent of $4,000,000, may be procured under contracts awarded on the basis of comparison of price quotations solicited from a list of at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Bank. Part D: Review by the Bank 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 $250,000 or more, the procedures set forth in para- graphs 2 and 4 of Appendix 1 to the Guidelines shall apply. When payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Bank pursuant to said paragraph 2 (d) shall be furnished to the Bank prior to the making of the first payment out of the Special Account in respect of such contract. (b) With respect to each contract not governed by the preceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract together with the other information required to be furnished to the Bank pursuant to said paragraph 3 shall be furnished to the Bank as part of the evidence to be fur- Page 7 nished pursuant to paragraph 4 of Schedule 3 (the Special Account Schedule) to the Loan Agreement. (c) The provisions of the preceding subparagraphs (a) and (b) shall not apply to contracts on account of which the Bank has authorized withdrawals from the Loan Account on the basis of statements of expenditure. Such contracts shall be retained in accordance with Section 4.01 (c) (ii) of this Agreement. 2. The figure of 25% is hereby specified for purposes of para- graph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants In order to carry out the Project, the Guarantor shall, as and when appropriate, employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Bank on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981.