Conformed Copy - C1841 - Second Rehabilitation Credit - Agreement 1

Page 1 CONFORMED COPY CREDIT NUMBER 1841 MOZ for the Administration of Certain Funds to be made available by the DANISH INTERNATIONAL DEVELOPMENT AGENCY in conjunction with the Second Rehabilitation Credit in PEOPLE'S REPUBLIC OF MOZAMBIQUE Dated March 17, 1989 AGREEMENT AGREEMENT, dated March 17, 1989, between THE DANISH INTERNATIONAL DEVELOPMENT AGENCY (hereinafter referred to as DANIDA) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter referred to as the Association) to provide for the administration, by the Association, of certain funds to be made available by DANIDA to PEOPLE'S REPUBLIC OF MOZAMBIQUE (hereinafter referred to as PRM). WHEREAS (A) DANIDA wishes to make available to PRM a grant in an aggregate amount of twenty million Danish Kroner (DK Kroner 20,000,000), to be payable in one tranche (hereinafter referred to as the Grant) to assist PRM in financing part of the cost of goods related to the Second Rehabilitation Credit (the Program); WHEREAS (B) DANIDA has requested, and the Association has agreed, to administer the Grant in conjunction with the Credit made by the Association to PRM under the Second Rehabilitation Credit Agreement entered into between PRM and the Association on October 5, 1987 (hereinafter referred to as the Development Credit Agreement); Page 2 NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Section 1.01. The Association, as administrator on behalf of DANIDA, shall enter into such agreements with PRM as it may deem appropriate but consistent with the terms and conditions of the Development Credit Agreement (excluding the debt service provi- sions thereof) for the purpose of assisting in the financing of the Program. Such agreements with PRM shall, inter alia, provide that the proceeds of the Grant may be withdrawn by PRM to finance procurement in Denmark or in Part II member countries of the Association of goods and services under the Program and shall also provide that the amounts to be withdrawn need not be repaid and shall bear no interest or other charges. Section 1.02. The Association, as administrator on behalf of DANIDA, shall have the sole responsibility for the supervision of the Program and shall keep DANIDA informed of the progress of the Program. Before sending missions to review the progress of the Program, the Association shall inform DANIDA on the timing of such missions so as to enable DANIDA to participate and to exchange views on the results of such missions. Section 1.03. The administration and enforcement of any pro- visions of any agreement entered into between PRM and the Associa- tion for the purposes of this Agreement shall be handled solely by the Association, and the Association specifically reserves the right, at its discretion and without notice to DANIDA, to exer- cise, refrain from exercising or waive any rights under such agreement or to modify any provision thereof, provided, however, that before suspending the right of PRM to make withdrawals of funds under such agreement, the Association shall inform DANIDA and afford DANIDA a reasonable opportunity for consultation with the Association. Section 1.04. The Association shall exercise the same care in the discharge of its functions under this Agreement as it exer- cises with respect to the administration and management of its own affairs. ARTICLE II Section 2.01. For the purpose of this Agreement, DANIDA shall deposit in DN Kroner an aggregate amount of twenty million Danish Kroner (DN Kroner 20,000,000) in one tranche into a trust account maintained with the Danmarks Nationalbank, in the name of the Association (hereinafter called the T-Account). The funds shall be payable in full upon effectiveness of this Agreement. The funds in the T-Account shall be freely exchangeable by the Association with other currencies as may facilitate its administration. Section 2.02. The Association shall withdraw from the T- Account such amounts as, from time to time, shall be needed to meet the reasonable cost of goods financed or to be financed pur- suant to Section 1.01 of this Agreement, such withdrawals to be effected through the normal disbursement procedures of the Asso- ciation. Section 2.03. Subject to Section 1.01 of this Agreement and except as DANIDA and the Association shall otherwise agree, pro- curement contracts financed from the proceeds of the Grant shall be 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 International Bank for Reconstruction and Development (hereinafter called IBRD) in May 1985. Section 2.04. In order to assist in the defrayment of the costs of administration and other expenses incurred by the Asso- ciation under this Agreement, DANIDA shall pay the Association an Page 3 administration fee of two percent of the amount of the Grant. ARTICLE III Section 3.01. The Association shall: (a) maintain separate records and accounts in respect of the funds in the T-Account and disbursed by the Association pursuant to the provisions of this Agreement; (b) cause such accounts and records to be audited and certi- fied by the Association's external auditors for each fiscal year at completion of disbursements; (c) ensure that the costs incurred to pay external auditors are covered by the remaining funds in the T-Account or by other funds specially provided for that purpose by DANIDA; (d) furnish the report of such audit by said auditors to DANIDA immediately after the completion of the Program; (e) maintain an updated record of procurement contracts financed from the proceeds of the Grant; and (f) furnish to DANIDA, upon its request, the following information: (i) overall description of goods procured in accordance with the provisions of Section 2.03 of this Agreement; (ii) list of enterprises having received assistance from the proceeds of the Grant; (iii) total amount of contracts procured; and (iv) suppliers' country of origin. ARTICLE IV Section 4.01. DANIDA and the Association shall consult, from time to time, at the request of either party, on all matters arising out of this Agreement and on other matters of common interest to them in the administration of the T-Account or the carrying out of the Program. ARTICLE V Section 5.01. This Agreement shall become effective as of the date first above written and, subject to the provisions of this Article, shall continue in effect until the entire proceeds of the Grant have been withdrawn. Section 5.02. If at any time it appears to either party that the purposes of this Agreement cannot effectively or appropriately be carried out, this Agreement may be terminated at the initiative of such party on ninety (90) days' notice in writing to the other party. Section 5.03. Upon termination of the Agreement, unless the parties agree on another course of action, any funds including any accrued interest on such funds or other property of DANIDA held hereunder by the Association shall be returned to DANIDA and the Association's administration shall be considered terminated. Section 5.04. Promptly after termination of the Agreement, the Association shall furnish to DANIDA a final report and a financial statement on the T-Account, together with an opinion of the Association's external auditors on such statement. ARTICLE VI Page 4 Section 6.01. This Agreement may be amended only by written agreement of the parties hereto. Section 6.02. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by 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 rapifax 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 addresses as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For DANIDA: DANIDA Asiatisk Plads 2, 1448 Kabenhavn K Denmark Cable address: Telex: ETRANGERES 31292 Kabenhavn 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) IN WITNESS WHEREOF, the undersigned duly authorized thereto have signed this Agreement. DANISH INTERNATIONAL DEVELOPMENT AGENCY By /s/ Te. Bjork Pedersen Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Sven Sandstrom Acting Regional Vice President Africa