Conformed Copy - C1834 - Industry and Trade Policy Adjustment Credit - Japanese Grant Agreement

Page 1 AFRICAN FACILITY CREDIT AGREEMENT A-32 MAG JAPANESE GRANT AGREEMENT A-32 MAG Japanese Grant Agreement (Industry and Trade Policy Adjustment Operation) between DEMOCRATIC REPUBLIC OF MADAGASCAR and INTERNATIONAL DEVELOPMENT ASSOCIATION as ADMINISTRATOR on behalf of the GOVERNMENT OF JAPAN Dated October 20, 1987 AFRICAN FACILITY CREDIT AGREEMENT A-32 MAG JAPANESE GRANT AGREEMENT A-32 MAG JAPANESE GRANT AGREEMENT AGREEMENT, dated October 20, 1987, between DEMOCRATIC REPUBLIC OF MADAGASCAR (the Beneficiary) and INTERNATIONAL DEVELOPMENT ASSOCIATION, as Administrator (the Administrator) on behalf of the GOVERNMENT OF JAPAN (Japan). WHEREAS (A) the Executive Directors of the International Development Association (IDA) have established by their Resolution No. IDA 85-1 of May 21, 1985 (the Resolution), a Special Facility for Sub-Saharan Africa (the African Facility) constituted by the funds which shall be contributed by the International Bank for Reconstruction and Development (the Bank) and other donors and administered by IDA, for the purpose of, and in accordance with, the provisions of the Resolution; (B) pursuant to Section F of the Resolution, Japan has agreed to provide Japanese funds in the form of grants (the SJF Contribution) in support of programs of structural change, policy reform and institutional improvement in countries which are eligible for financing from the African Facility's resources; (C) by the agreement set forth in the letter of Japan and confirmed by IDA on July 21, 1987 (the Letter), concerning the SJF Contribution, Japan and IDA agreed that IDA will act as Administrator of the Japanese funds in accordance with the provisions of the Letter; (D) the Administrator has received a letter, dated May 29, 1987, from the Beneficiary describing a program of actions, objectives and policies designed to improve the efficiency of the industry and trade policy of the Beneficiary (hereinafter called the Program), declaring the Beneficiary's commitment to the execution of the Program and requesting Page 2 assistance from the resources of the African Facility in the financing of urgently needed imports required during such execution, and the Adminis- trator has determined that such assistance would be in accordance with the provisions of the Resolution; (E) the Beneficiary has requested Japanese funds from the Administrator for the financing of imports in support of the Program, and the Administrator has determined that the provision of such funds, in an amount of one billion yen (Y 1,000,000,000) (the Japanese Grant), would be in accordance with the provisions of the Resolution and the Letter; (F) the Beneficiary has also requested IDA to provide additional assistance towards the financing of the Program and, by an agreement, dated July 10, 1987, between the Beneficiary and IDA (the Development Credit Agreement), IDA is agreeing to provide such assistance in an amount of twelve million five hundred thousand Special Drawing Rights (SDR 12,500,000) (the IDA Credit); (G) the Beneficiary has requested IDA, acting as Administrator of the African Facility, to provide additional assistance in support of the Program and, by an agreement dated July 10, 1987, between the Beneficiary and IDA, acting as Administrator of the African Facility (the African Facility Credit Agreement), IDA is agreeing to provide out of the resources of the African Facility, a financial contribution in an aggregate principal amount equivalent to fifty-two million two hundred thousand Special Drawing Rights (SDR 52,200,000) (the African Facility Credit); (H) the Beneficiary intends to contract from the Saudi Fund for Development a loan, under the Special Joint Financing Program for the Special African Facility, in an amount equivalent to twelve million Saudi Rials (SRls 12,000,000) in support of the Program; and (I) the Beneficiary intends to contract from the Japan Over-seas Economic Cooperation Fund (hereinafter called OECF), under the Special Joint Financing Agreement for the Special African Facility, a loan (the OECF Loan) in an amount of one billion yen (Y 1,000,000,000) to assist in supporting the Program on the terms and conditions set forth in an agreement (the OECF Loan Agreement) to be entered into between the Borrower and OECF. WHEREAS, IDA has agreed on the basis, inter alia, of the foregoing, to act as Administrator of the Japanese Grant; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Development Credit Agreements" of IDA, dated January 1, 1985, with the modifications set forth below (the General Conditions), constitute an integral part of this Agreement: (a) the term "Association", whenever used in the General Conditions, means IDA acting as Administrator of the Japanese Grant, except in the phrase "member of the Association" in Sections 2.01 (5) and 6.02 (e) (i); (b) the term "Borrower", wherever used in the General Conditions, means the Beneficiary; (c) the terms "Credit", "Development Credit Agreement" and "Credit Account", whenever used in the General Conditions, are amended to read "Japanese Grant", "Japanese Grant Agreement" and "Japanese Grant Account", respectively; (d) Section 4.01 shall be modified to read: "Withdrawals from the Japanese Grant Account shall be made in Japanese Yen; provided, however, that if the expenditures to be financed out of the proceeds of the Japanese Grant have been paid or are payable in another currency, the Administrator shall, at the Page 3 request of the Beneficiary and at the time of a withdrawal from the Japanese Grant Account, purchase such currency with the proceeds of such withdrawal." (e) Sections 3.02, 3.03, 3.04, 3.05, 4.02, 4.03, 4.04, 4.06, 6.05, 7.01, 8.01 (a), 12.02, 12.05 and the second sentence of Section 5.01 are deleted; (f) in Section 6.02, the term "Association" shall include also the International Development Association acting in its own capacity; (g) paragraph 9 of Section 2.01 is modified to read as follows: "The term "Project" means the imports that may be financed out of the proceeds of the Japanese Grant in accordance with Section 2.02 (a) of this Agreement." Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions, in the Preamble to this Agreement and in the African Facility Credit Agreement have the respective meanings therein set forth and the terms "yen" and "y" mean the currency of Japan. ARTICLE II The Japanese Grant Section 2.01. The Administrator agrees to extend to the Beneficiary, on the terms and conditions set forth or referred to in this Agreement, a grant in various currencies equivalent to one billion yen (Y 1,000,000,000). Section 2.02. (a) The amount of the Japanese Grant may be withdrawn from the Japanese Grant Account in accordance with the provisions of paragraphs 1 and 2 of Schedule 1 to the African Facility Credit Agreement, mutatis mutandis, as such schedule may be amended from time to time by agreement between the Beneficiary and IDA, for expenditures made (or, if the Administrator shall so agree, to be made) in respect of the reasonable cost of goods required for the Project. (b) Without limitation upon the provisions of paragraph (a) above, each application of the Borrower for withdrawal of funds from the Special Facility Credit Account shall be deemed to be a request to withdraw funds from the Japanese Grant Account, and the funds to be withdrawn pursuant to such application shall be apportioned by the Administrator, as nearly as practicable in the circumstances, between the African Facility Credit and the Japanese Grant in the ratio 85:15 or such other ratio as shall be agreed between the Administrator and Japan. (c) Withdrawals shall be made only on account of expenditures for goods produced in, or services supplied from, the territories of: (i) any Part II member of IDA; and (ii) any country designated by IDA, acting as Administrator of the African Facility, as meeting the provisions set forth in paragraphs 4 (f) (ii) or (iii) of the Resolution. (d) The Beneficiary shall, for the purposes of the Project, open and maintain in dollars a special account (Special Account B) in its Central Bank on terms and conditions, satisfactory to the Administrator. Deposits into, and payments out of, Special Account B shall be made, mutatis mutandis, in accordance with the provisions of Schedule 4 to the African Facility Credit Agreement. (e) Notwithstanding the provisions of subparagraph (a) above, the Administrator shall, at the request of Japan, suspend the Beneficiary's right to make withdrawals under this Agreement if an event shall have occurred which would have entitled IDA to suspend the Beneficiary's right to make withdrawals under the African Facility Credit Agreement (whether or not the full amount of the African Facility Credit has then been withdrawn). Section 2.03. Except as the Administrator shall otherwise agree, procurement of goods required for the Project and to be financed out of the proceeds of the Japanese Grant shall be governed by the provisions of Schedule 2 to the African Facility Credit Agreement. Page 4 Section 2.04. The Closing Date shall be December 31, 1989, or such later date as the Administrator shall establish. The Administrator shall promptly notify the Beneficiary of such later date. ARTICLE III Effective Date; Termination; Representatives Section 3.01. The following event is specified as an additional condition to the effectiveness of this Agreement within the meaning of Section 12.01 (b) of the General Conditions, namely, that all conditions precedent to the release of the second tranche of the African Facility Credit Agreement, except for the effectiveness of this Agreement, have been fulfilled in accordance with the provisions of paragraph 3 (A) of Schedule 1 to the African Facility Credit Agreement. Section 3.02. 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. Section 3.03. This Agreement and all obligations of the Beneficiary and the Administrator thereunder shall terminate on the date five (5) years after the date of this Agreement or on the date of the last disbursement of the proceeds of the Grant, whichever shall be the earlier. Section 3.04. The minister of the Beneficiary responsible for finance shall be the representative of the Beneficiary for the purposes of Section 11.03 of the General Conditions. Section 3.05. The addresses specified in Section 6.02 of the African Facility Credit Agreement shall be the addresses specified for the purposes of Section 11.01 of the General Conditions. 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 /s/ Leon Rajaobelina Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION as Administrator on behalf of the GOVERNMENT OF JAPAN By /s/ Paul Isenman Acting Regional Vice President Africa