Haiti - Technical Assistance Project : Credit 1786 - Credit Agreement - Conformed

CREDIT NUMBER 1786 HA Development Credit Agreement (Technical Assistance Project) between REPUBLIC OF HAITI and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1987 CREDIT NUMBER 1786 RA DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated VLC) , 1987, between REPUBLIC OF HAITI (the BorroweV) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS 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; 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 Agreement; 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 last sentence of Section 3.02 deleted (the General Condi- tions) constitute an integral part of this Agreement. Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "FDI" means Fonds de Developpement Industriel, an indus- trial development fund created and operating under the Decree of the Borrower of March 20, 1981 published in Le Moniteur No. 25 dated March 26, 1981; (b) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (c) "Project Preparation Advances" means: (i) the project preparation advance granted by the Association to the Borrower pursuant to an exchange of letters dated August 27, 1985 and September 15, 1985 between the Borrower and the Association; and (ii) the project preparation advance granted by the Association to the Borrower pursuant to an exchange of letters dated October 31, 1986 and November 13, 1986 between the Borrower and the Association; -2- (d) "Central Bank" means the Borrower's Banque de la Republique d'Haiti; (e) "Technical Assistance Contract" means a contract to be entered into between the Central Bank, acting through FDI, and a Private Enterprise whereby: (a) the Private Enterprise agrees to the analysis and preparation of restructuring and development plans referred to in Part D (2) of the Project in respect of such Private Enterprise; (b) 80% of the cost of such plans will be financed by FDI out of the proceeds of the Credit allocated for that purpose and transferred to FDI pursuant to Section 3.03 (a) of this Agreement; and (c) the Private Enterprise undertakes to pay to FDI the remaining 20% of the cost of such restructuring plans; and (f) "Private Enterprise" means a private industrial enterpri se to which the Central Bank, acting through FDI, has agreed to provide the technical assistance referred to in Part D (2) of the Project. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Development Credit Agreement, an amount in various currencies equivalent to two million four hundred thousand Special Drawing Rights (SDR 2,400,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement for expenditures made (or, if the Association shall so agree, to be made) in respect of the reason- able 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. (b) The Borrower shall, for the purposes of the Project, open and maintain in dollars a special account in a commercial bank satisfactory to the Association on terms and conditions satisfactory to the Association. Deposits into, and payments out of, the Special Account shall be made in accordance with the pro- visions of Schedule 4 to this Agreement. (c) Promptly after the Effective Date, the Association shall, on behalf of the Borrower, withdraw from the Credit Account -3- and pay to itself the amount required to repay the principal amount of the Project Preparation Advances withdrawn and outstand- ing as of such date and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amount of the Project Preparation Advances shall thereupon be cancelled. Section 2.03. The Closing Date shall be March 31, 1989 or such later date as the Association shall establish. The Association 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 percent (1/2 of 1%) per annum on the principal amount of the Credit not withdrawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agveement 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 restric- tions of any kind imposed by, or in the territory of, the Bor- rower; 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 percent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Commitment charges and service charges shall be payable semiannually on April 15 and October 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each April 15 and October 15 commencing October 15, 1997, and ending April 15, 2037. Each installment to and including the installment payable on April 15, 2007 shall be one-half of one percent (1/2 of 1%) of such principal amount, and each installment thereafter shall be one and one-half percent (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. -4- ARTICLE III Execution of the Project Section 3.01. (a) 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: (i) carry out Parts A through C of the Project through its Ministry of Economy and Finance; and (ii) cause the Central Bank, acting through FDI, to carry out Part D of the Project, all with due diligence and efficiency and in conformity with appropriate administrative, financial and management practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section, the Borrower shall appoint and thereafter maintain until the Closing Date, a project manager with terms of reference, qualifications and experience satisfactory to the Association for purposes of supervising the carrying out of Parts A through C of the Project. Section 3.02. Except as the Association shall otherwise agree, procurement of the goods 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. (a) The Borrower shall enter into an agreement with the Central Bank for purposes of Part D of the Project providing, inter alia, for: (i) the Central Bank's obligation to carry out Part D of the Project through FDI; (ii) the Borrower's obligation to transfer the proceeds of the Credit allocated for Part D of the Project to FDI on terms and conditions satisfactory to the Association; and (iii) the auditing, reporting, procurement and other applicable obligations set forth or referred to in this Agreement in respect of such part of the Project. (b) The Borrower shall enter into a contractual arrangement, satisfactory to the Association, with an agent, satisfactory to -5- the Association, for handling contracting of consultants under Parts A through C of the Project. (c) The Borrower shall exercise its rights under the agreement and the contractual arrangement referred to in paragraphs (a) and (b) of this Section, and in the Technical Assistance Coperacts in such a manner so as to protect the interests of th Borrower and the Association and to accomplish the purposes of the Credit and, except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive such agreement, arrangement or contracts or any provision thereof. Section 3.04. The Borrower shall carry out all studies included in the Project in accordance with terms of reference satisfactory to the Borrower and the Association. Section 3.05. The Borrower shall, for purposes of Part D.2 of the Project, cause the Central Bank, through FDI: (a) to establish, and thereafter maintain, in FDI a technical assistance account to be operated under terms and conditions satisfactory to the Association; and (b) before commencing the analysis and restructuring plans referred to in such part of the Project in respect of any Private Enterprise, to enter into, with such Private Enterprise, a Technical Assistance Contract satisfactory to the Association. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower shall: (i) 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 Parts A through C of the Project of the departments or agencies of the Borrower responsible for carrying out such parts of the Project; and (ii) cause the Central Bank, acting through FDI, to maintain separate records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of Part D of the Project. -6- (b) The Borrower shall: (i) (A) have the records and accounts referred to in paragraph (a) (i) of this Section including those for the Special Account for each fiscal year audited, and (B) cause the Central Bank to have FDI's records and accounts referred to in paragraph (a) (ii) of this Section audited; all in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish, and cause the Central Bank, acting through FDI, to 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 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 (iii) furnish, and cause the Central Bank, acting through FDI, to furnish, to the Association such other information concerning said records, accounts and the audit thereof 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 Section, records and accounts reflecting such expenditures; (ii) retain, or cause to be retained, until at least one year after the completion 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 such records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit -7- contain a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the proce- dures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. ARTICLE V Remedies of the Association Section 5.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional events are specified: (a) the Central Bank shall have failed to perform any of its obligations under the agreement referred to in Section 3.03 (a) of this Agreement. (b) The decree referred to in paragraph (a) of Section 1.02 of this Agreement shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of the Central Bank, acting through FDI, to perform any of its obligations under the agreement referred to in Section 3.03 (a) of this Agreement. (c) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of the Central Bank or for the suspension of its operations. Section 5.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional events are specified: (a) the event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower; and (b) the events specified in paragraphs (b) and (c) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement withip the meaning of Section 12.01 (b) of the General Conditions: -8- (a) that the project manager refer7ed to in paragraph (b) of Section 3.01 of this Agreement has been appointed in accordance with the provisions of such Section; and (b) that the Borrower has employed, under terms of reference and with qualifications and experience satisfactory to the Association, an advisor to assist the Borrower's Ministry of Finance in the selection of the consultants required for the carrying out of Part A of the Project. Section 6.02. The date q4 / ?i L7 is hereby specified for the purposes of Section 12.A of the General Conditions. Section 6.03. The obligations of the Borrower under Articles III and IV of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on the date fifteen years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Minister of Economy and Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Minist?re de 1'Economie et des Finances Port-au-Prince, Haiti Telex: 30490347 For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America -9- Cable address: Telex:*, INDEVAS 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. REPUBLIC OF HAITI By//74 S Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By/s t4 2trA(A Regional Vice President Latin America and the Caribbean - 10 - 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) Goods for Part 76,000 100% A (2) of the Project (2) Consultants' Services (a) for Part A of the Project 356,000 100% (b) for Part B 143,000 100% of the Project (c) for Part C 65,000 100% of the Project (3) Consultants' 430,000 80% services for Part D (2) of the Project (4) Other con- 297,000 100% sultants' services for Part D of the Project - 11 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (5) Operating 63,000 37% of local Costs of expenditures FDI in 1987 (6) Refunding of 970,000 Amount due pur- Project Prepara- suant to Section tion Advances 2.02 (c) of this Agreement TOTAL 2,400,000 2. For the purposes of this Schedule 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 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement except that withdrawals, in an aggregate amount not exceeding the equivalent of SDR 198,000 may be made in respect of Category (2) (a) on account of payments made for expenditures before that date but after April 1, 1987; (b) expenditures under Parts A through C of the Project unless the Borrower shall have entered into the contractual arrangement referred to in Section 3.03 (b) of this Agreement; (c) expenditures under Part D of the Project, unless the Borrower shall have entered into the agreement referred to in Section 3.03 (a) of this Agreement; and (d) expenditures under Category (3) unless: (i) the Central Bank, acting through FDI, shall have established a technical assistance account in FDI pursuant to the provi.ions of Section 3.05 of this Agreement; and (ii) the Association shall have approved the terms and conditions of a sample Technical Assistance Contract. - 12 - SCHEDULE 2 Description of the Project The objectives of the Project are to: (a) strengthen the 2jr- rower's capacity to carry out its program of economic recovery; (b) develop information about, and assist in the development of, a strategy to deal with the deteriorating natural environment in the Borrower's territory; and (c) assist: (i) private industrial enterprises affected by changes in the Borrower's trade regime to raise their productivity and to become more competitive; and (ii) private enterprises to develop export activities and to improve their performance in the market. 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: Strengthening of the Borrower's Public Sector (1) Strengthening the capacity of the Borrower's Ministry of Economy and Finance and its National Promotion and Public Service Commission in: (a) macro-economic analysis and; (b) analysis, programming, control and monitoring of public investments and expenditures. (2) Acquisition, expansion and utilization of computer capacity of the Borrower's Ministry of Economy and Finance and its National Promotion and Public Service Commission and the hardware and software required by such computer capacity. (3) Review of the Borrower's public sector salary and incentive policies and preparation of a plan of action to reorganize and make more effective its civil service. (4) Strengthening the capacity of the Borrower's Ministry of Economy and Finance in: (a) financial monitoring of public enterprises; (b) subjects related to the restructuring of the Borrower's Ciment d'Haiti; and (c) the implementation of a trade drawback scheme to complement the Borrower's trade regime. (5) Review and implementation of a scheme to raise rentals on state lands and review of alternatives to sugarcane production in the Plaine du Nord region. - 13 - Part B: Environmental Protection Carrying out of a study designed to assess the extent of land degradation in the Borrower's territory and recommend interven- tions to arrest and reverse such degradation, using an approach which integrates environmental and natural resource management directly into economic and social policy. Part C: Other Studies and Technical Assistance (1) Carrying out of studies of: (a) the financial sector; (b) the scope for cotton and textile development; and (c) the improvement of the Borrower's economic and social statistics and its national accounts, the number and scope of which will be determined by agreement between the Borrower and the Association. (2) Carrying out of such other studies and training and provision of such other technical assistance as shall be required to achieve the objectives of the Project; and with scope and terms as shall be determined by agreement between the Borrower and the Association. Part D: Restructuring and Developing of Private Industry (1) Carrying out of a diagnosis designed to assess the strengths and weaknesses of selected private enterprises and to indicate functional areas where an in-depth study is warranted. (2) Based on the diagnosis carried out under Part D (1) above, carrying out of an analysis of identified problems, and preparation of a restructuring and development plan as required, for each such enterprise. The Project is expected to be completed by December 31, 1988. -14- SCHEDULE 3 Procurement and Consultants' Services Section I. Procurement of Goods Part A: International Shopping Goods shall be procured under contracts awarded through international shopping procedures on the basis of evaluation and comparison of bids invited from a list of at least three qualified suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Association. Part B: 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 or group of contracts for goods 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. 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 required to be furnished to the Association pursuant to said paragraph 2 (d) shall be furnished to the Association 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 Association pursuant to said paragraph 3 shall be furnished to the Association as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 4 to this Agreement. (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 Agreement. - 15 - 2. The figure of i5% is hereby specified for purposes of para- graph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consult,ints 1. In order to assist the Brrower in carrying out the Project, the Borrower shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory 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 Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. 2. Without limitation to the provisions of paragraph 1 of this Section, the Borrower shall not later than October 31, 1987 employ the consultants required to assist the Central Bank, acting through FDI, in the carrying out of Part D (2) of the Project. - 16 - SCHEDULE 4 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1), (2), (3), (4) and (5) of the Categories set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit allocated from time to time to the eligible Categories in accord- ance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equiva- lent to SDR 396,000 to be withdrawn from the Credit Account and deposited in the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Except as the Association shall otherwise agree, payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Association has received evidence satisfactory to it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Special Account may be made as follows: (a) On the basis of a request or requests by the Borrower for a deposit or deposits which add up to the aggregate amount of the Authorized Allocation, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) The Borrower shall furnish to the Association requests for replenishment of the Special Account at such intervals as the Association shall specify. On the basis of such requests, the Association shall withdraw from the Credit Account and deposit into the Special Account such amounts as shall be required to replenish the Special Account with amounts not exceeding the amount of payments made out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Associa- tion from the Credit Account under the respective eligible Cate- gories, and in the respective equivalent amounts, as shall have *h1 - 17 - been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. 4. For each payment made by the Borrower out of the Special Account for which the Borrower requests replenishment pursuant to paragraph 3 (b) of this Schedule, the Borrower shall furnish to the Association, prior to or at the time of such request, such documents and other evidence as the Association shall reasonably request, showing that such payment was made for eligible expen- ditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into the Special Account shall be made by the Association when either of the following situations first arises: (i) the Association shall have determined that all further withdrawals should be made by the Borrower directly from the Credit Account in accordance with the provisions of Article V of the General Condi- tions and paragraph (a) of Section 2.02 of this Agreement; or (ii) the total unwithdrawn amount of the Credit allo- cated to the eligible Categories minus the amount of any outstanding special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions with respect to the Project, shall be equal to the equivalent of twice the amount of the Authorized Allocation. (b) Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to the eligi- ble Categories shall follow such procedures as the Association shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Association shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice will be utilized in making payments for eligible expenditures. 6. (a) If the Association shall have determined at any time that any payment out of the Special Account (i) was made for any expenditure or in any amount not eligible pursuant to paragraph 2 of this Schedule, or (ii) was not justified by the evidence furn- ished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Association deposit into the Special Account (or, if the Association shall so request, refund - 18 - to the Association) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. No further deposit by the Association into the Special Account shall be made until the Borrower has made such deposit or refund. (b) If the Association shall have determined at any time that any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Association, refund to the Association such outstanding amount for crediting to the Credit Account. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Development Association. FOR SECRETARY