Conformed Copy - C2133 - Seventh Population Project - Development Credit Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 2133 IN (Seventh Population Project) between INDIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated October 23, 1990 CREDIT NUMBER 2133 IN DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated October 23, 1990, between INDIA, acting by its President, (the Borrower) and INTERNATIONAL 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 has also requested the International Bank for Reconstruction and Development (the Bank) to provide additional assistance towards the financing of the Project and by an agreement of even date herewith between the Borrower and the Bank (the Loan Agreement as herein further defined), the Bank is agreeing to provide such assistance in an aggregate principal amount equivalent to ten million dollars ($10,000,000) (the Loan); Page 2 (C) the Borrower and the Association intend, to the extent practicable, that the proceeds of the Credit provided for in this Agreement be disbursed on account of expenditures in respect of the Project before disbursements of the proceeds of the Loan are made; (D) Parts B (1), (2) and (4) of the Project will be carried out by the Borrower, Parts A, C, D, and E of the Project will be carried out jointly by the Borrower and the Project States (as herein defined), and Part B (3) of the Project will be carried out by the Project States severally with the Borrower's assistance and, as part of such assistance, the Borrower will make available to the Project States the proceeds of the Credit as provided in this Agreement and the proceeds of the Loan as provided in the Loan Agreement; 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 and in the Project Agreement of even date herewith among the Association, the Bank and the Project States; 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 the Association, 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 have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Loan Agreement" means the agreement of even date herewith between the Borrower and the Bank for the Project, as such agreement may be amended from time to time; and such term includes the "General Conditions Applicable to Loan and Guarantee Agreements" of the Bank, dated January 1, 1985, as applied to such agreement, and all schedules and agreements supplemental to the Loan Agreement; (b) "Project Agreement" means the agreement among the Association, the Bank and the Project States of even date herewith, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the Project Agreement; (c) "Project States" mean the States of Bihar, Gujarat, Haryana, Jammu and Kashmir and Punjab and any other State or States, selected by the Borrower in consultation with the Association, which has or have entered into an agreement, on terms and conditions satisfactory to the Association, for the carrying out of the Project; and (d) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement. ARTICLE II Page 3 The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions set forth or referred to in this Agreement, an amount in various currencies equivalent to sixty seven million one hundred thousand Special Drawing Rights (SDR 67,100,000). 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 reasonable cost of goods and services required for the Project 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 deposit account in the Reserve Bank of India on terms and conditions satisfactory to the Association. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 4 to this Agreement. Section 2.03. The Closing Date shall be June 30, 1998 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 on the principal amount of the Credit not withdrawn from time to time at a rate to be set by the Association as of June 30 of each year, but not to exceed the rate of one-half of one percent (1/2 of 1%) per annum. (b) The commitment charge shall accrue: (i) from the date sixty days after the date of this Agreement (the accrual date) to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or cancelled; and (ii) at the rate set as of the June 30 immediately preceding the accrual date and at such other rates as may be set from time to time thereafter pursuant to paragraph (a) above. The rate set as of June 30 in each year shall be applied from the next date in that year specified in Section 2.06 of this Agreement. (c) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without restrictions 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 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 January 15 and July 15 in each year. Section 2.07. (a) Subject to paragraphs (b) and (c) below, the Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each January 15 and July 15 commencing July 15, 2000 and Page 4 ending January 15, 2025. Each installment to and including the installment payable on January 15, 2010 shall be one and one-fourth percent (1-1/4%) of such principal amount, and each installment thereafter shall be two and one-half percent (2-1/2%) of such principal amount. (b) Whenever (i) the Borrower's gross national product per capita, as determined by the Association, shall have exceeded $790 in constant 1985 dollars for five consecutive years and (ii) the Bank shall consider the Borrower creditworthy for Bank lending, the Association may, subsequent to the review and approval thereof by the Executive Directors of the Association and after due consideration by them of the development of the Borrower's economy, modify the terms of repayment of installments under paragraph (a) above by requiring the Borrower to repay twice the amount of each such installment not yet due until the principal amount of the Credit shall have been repaid. If so requested by the Borrower, the Association may revise such modification to include, in lieu of some or all of the increase in the amounts of such installments, the payment of interest at an annual rate agreed with the Association on the principal amount of the Credit withdrawn and outstanding from time to time, provided that, in the judgment of the Association, such revision shall not change the grant element obtained under the above-mentioned repayment modification. (c) If, at any time after a modification of terms pursuant to paragraph (b) above, the Association determines that the Borrower's economic condition has deteriorated significantly, the Association may, if so requested by the Borrower, further modify the terms of repayment to conform to the schedule of installments as provided in paragraph (a) above. 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. (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, without any limitation or restriction upon any of its other obligations under this Agreement, shall (i) carry out Parts B (1), (2) and (4) of the Project individually and Parts A, C, D, and E of the Project jointly with the Project States with due diligence and efficiency and in conformity with appropriate administrative, financial, health and family welfare practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project, and (ii) cause the Project States to perform in accordance with the provisions of the Project Agreement all the respective obligations of the Project States therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable the Project States to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) Without limitation upon the provisions of paragraph (a) (i) of this Section and except as the Borrower and the Association shall otherwise agree, the Borrower shall carry out Parts B (1), (2) and (4) of the Page 5 Project individually and Parts A, C, D, and E of the Project jointly with the Project States in accordance with the Implementation Program set forth in Schedule 3 to this Agreement. (c) The Borrower shall make part of the proceeds of the Credit available to the Project States for such parts of the Project as are to be carried out by each Project State in accordance with the Borrower's standard arrangements for development assistance to the States of India. Section 3.02. Except as the Association shall otherwise agree, procurement of the goods, works and services required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 1 to the Project Agreement. Section 3.03. The Borrower and the Association hereby agree that the obligations set forth in Section 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of Parts A, C, D and E and Part B (3) of the Project shall be carried out respectively by the Borrower and the respective Project States jointly and the respective Project States severally pursuant to Section 2.03 of the Project Agreement. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower shall maintain and cause to be maintained records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of Parts B (1), (2) and (4) and Parts A, C, D, and E of the Project of the departments or agencies of the Borrower and the Project States responsible for carrying out Parts B (1), (2) and (4) and Parts A, C, D, and E of the Project respectively or any part thereof. (b) The Borrower shall: (i) have and cause to have the records and accounts referred to in paragraph (a) of this Section including those for the Special Account for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish and cause to be furnished to the Association, as soon as available, but in any case not later than nine 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 to be furnished to the Association such other information concerning such records, accounts and the audit thereof as the Association shall from time to time reasonably request. Section 4.02. (a) For all expenditures with respect Page 6 to which withdrawals from the Credit Account were made on the basis of statements of expenditures, the Borrower shall: (i) maintain or cause to be maintained in accordance with sound accounting practices, records and accounts reflecting such expenditures; (ii) ensure that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures are retained until at least one year after the Association has received the audit report for the fiscal year in which the last withdrawal from the Credit Account was made; and (iii) enable the Association's representatives to examine such records. (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) (i) of this Section and those for the Special Account 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 nine months after the end of each such year the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested, including a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals; and (iii) furnish to the Association such other information concerning said records and accounts and the audit thereof as the Association shall from time to time reasonably request. 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) Any of the Project States shall have failed to perform any of its respective obligations under the Project Agreement. (b) As a result of events which have occurred after the date of this Agreement, an extraordinary situation shall have arisen which shall make it improbable that any of the Project States will be able to perform its respective obligations under the Project Agreement. Page 7 Section 5.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional event is specified, namely, that 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. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of this Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) fulfillment of all conditions precedent to the effectiveness of the Loan Agreement, other than those related to the effectiveness of this Agreement; and (b) establishment of an Empowered Committee and designation of a Project Director by each of the Project States. Section 6.02. The following is specified as an additional matter, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association, namely, that the Project Agreement has been duly authorized or ratified by each of the Project States, and is legally binding upon them in accordance with its terms. Section 6.03. 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 6.04. The obligations of the Borrower under Section 3.03 of this Agreement and the provisions of Section 5.02 of this Agreement shall cease and determine on the date on which this Agreement shall terminate or on the date twenty years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. The Secretary, Additional Secretary, Director, Deputy Secretary or Under Secretary of the Department of Economic Affairs in the Ministry of 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: The Secretary to the Government of India Ministry of Finance Department of Economic Affairs New Delhi, India Cable address: Telex: ECOFAIRS 953-3166175 New Delhi Page 8 For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 197688 (TRT) Washington, D.C. 248423 (RCA) 64145 (WUI) or 82987 (FTCC) 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. INDIA By /s/ A. Hussain Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ A. Karaosmanoglu Regional Vice President Asia SCHEDULE 1 Withdrawal of the Proceeds of the Credit and of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit and of the Loan, the allocation of the amounts of the Credit and of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of Amount of the Credit the Loan Allocated Allocated (Expressed (Expressed % of in SDR in Dollar Expenditures Category Equivalent) Equivalent) to be Financed (1) Civil works 31,900,000 __ 77% and related professional fees (2) Equipment, 12,700,000 __ 100% of foreign vehicles, expenditures, furniture, 100% of local books and expenditures, materials (ex-factory cost) and 70% of local expenditures Page 9 for other items procured locally (3)Consultants' 15,500,000 7,400,000 60% services and training Amount of Amount of the Credit the Loan Allocated Allocated (Expressed (Expressed % of in SDR in Dollar Expenditures Category Equivalent) Equivalent) to be Financed (4)Incremental 5,000,000 2,300,000 80% of local Operating expenditures Costs until March 31, 1992, 60% of local expendi- tures until March 31, 1995, and 50% there- after (5)nallocated 2,000,000 300,000 __________ __________ TOTAL 67,100,000 10,000,000 ========== ========== 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; (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; (c) the term "Incremental Operating Costs" means the incremental costs for salaries of additional staff, operation and maintenance costs, compensation to acceptors, medicines and medical and other supplies. The dates in Category (4) of the table set forth in paragraph 1 above refer to dates of receipt by the Association of applications for withdrawal from the Credit Account. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement except that withdrawals, in an aggregate amount not exceeding the equivalent of SDR 1,600,000, may be made on account of payments made for expenditures before that date but after July 31, 1989. SCHEDULE 2 Description of the Project The objectives of the Project are to support the voluntary Family Welfare Program of the Borrower and to specifically (a) expand the supply of family welfare services, (b) increase the demand for these services, (c) improve the quality of the services being delivered, and (d) improve the management and operation of the family welfare program. Page 10 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: Expansion of Supply 1. Upgrading and expanding the facilities through which family welfare services are delivered through the provision of medicines, medical and related supplies and new and/or repair of medical equipment at about 1,100 Community Health Centers/Primary Health Centers, and about 5,000 Subcenters in the Project States. 2. Construction and furnishing of about 3,000 Subcenters; establishment of maternity wards/delivery rooms and living quarters for female health visitors and female health workers. 3. Enhancing medical supplies for family planning and for maternal and child health programs. 4. Provision of vehicles necessary for carrying out the Project. Part B: Demand Generation 1. Promotion of programs for the social marketing of contraceptives. 2. Increasing support to private voluntary organizations by strengthening their involvement in family welfare. 3. Strengthening of programs for the information, education and communication in the Project States. 4. Compensation to acceptors of family planning methods. Part C: Quality Improvement 1. Expanding and upgrading all forms of pre-service, in-service and on-the-job training of all levels of health personnel and workers in other health related Government departments. 2. Establishment of Institutes of Health and Family Welfare and District Training Teams in the Project States. Part D: Efficiency Improvement 1. Strengthening of Departments of Health and Family Welfare in the Project States through measures including the establishment of Construction Cells and Human Resources Development Cells. 2. Designing and improving the use of management information and evaluation systems. Part E: Training and Studies Provision of consultants, fellowships and training to undertake Parts A through D of the Project including preparation of special studies concerning innovative schemes. * * * The Project is expected to be completed by December 31, 1997. Page 11 SCHEDULE 3 Implementation Program 1. The Borrower shall, in conjunction with the Project States, by January 31 of each year commencing in 1991, (a) undertake an annual review of Project progress and prepare and furnish to the Association an Annual Summative and Comparative Report on Project implementation in respect of the preceding fiscal year, and (b) prepare and furnish to the Association, for its review and comment (i) an annual social marketing of contraceptives program; (ii) an annual report on the activities of the private voluntary organizations in the family welfare program including an assessment of the level and form of grants supported by the Standing Committee on Voluntary Agencies and the participation of small private voluntary organizations in the family welfare program; (iii) an annual training plan which would include details of pre-service, in-service and on- the-job training programs; and (iv) an annual civil works program, each in respect of the succeeding fiscal year. 2. The Borrower shall maintain the Administrative Cell, established by it in its Ministry of Health and Family Welfare for the purpose of coordinating the Project activities between the Center and the Project States, in accordance with a key staffing plan agreed to by the Borrower and the Association. 3. The Borrower shall, by December 31, 1991, review and revise the job descriptions and work routines of health workers and health assistants. 4. The Borrower shall review the existing procedures for providing grants to private voluntary organizations involved in the family welfare program and, by January 31, 1992, take appropriate action to enable such organizations to participate more effectively in the national family welfare program. 5. The Borrower shall, by December 31, 1991, as a part of its concurrent evaluation of the national family welfare program, review the impact of method specific incentives in the strategy to increase the use of temporary methods of contraception amongst lower parity couples. The findings of this review shall be made available to the Association for discussion during the annual review the following year. SCHEDULE 4 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1), (2), (3) and (4) 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 or the Loan allocated from time to time to the eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $5,000,000 to be withdrawn from the Credit Account or the Loan Account and deposited into the Page 12 Special Account pursuant to paragraph 3 (a) of this Schedule. 2. 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 shall be made as follows: (a) For withdrawals of the Authorized Allocation, the Borrower shall furnish to the Association a request or requests for a deposit or deposits which do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or requests, the Association shall, on behalf of the Borrower, withdraw from the Credit Account or the Loan Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of the Special Account, the Borrower shall furnish to the Association requests for deposits into the Special Account at such intervals as the Association shall specify. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Association the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Association shall, on behalf of the Borrower, withdraw from the Credit Account or the Loan Account and deposit into the Special Account such amount as the Borrower shall have requested and as shall have been shown by said documents and other evidence to have been paid out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Association from the Credit Account or the Loan Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of the Special Account, the Borrower shall, at such time as the Association shall reasonably request, furnish to the Association such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, the Association shall not be required to make further deposits into the Special Account: (i) if, at any time, 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 Conditions and paragraph (a) of Section 2.02 of this Agreement or from the Loan Account in Page 13 accordance with the provisions of Section 2.02 of the Loan Agreement and Article V of the General Conditions applicable thereto; or (ii) once the total unwithdrawn amount of the Credit and the Loan allocated to the eligible Categories less the amount of any outstanding special commitment entered into by the Association or the Bank pursuant to Section 5.02 of the respective General Conditions with respect to the Project, shall equal the equivalent of twice the amount of the Authorized Allocation. (b) Thereafter, withdrawal from the Credit Account and the Loan Account of the remaining unwithdrawn amount of the Credit and the Loan allocated to the eligible 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 an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; (ii) was not justified by the evidence furnished to the Association, the Borrower shall, promptly upon notice from the Association: (A) provide such additional evidence as the Association may request; or (B) deposit into the Special Account (or, if the Association shall so request, refund to the Association or the Bank) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Association shall otherwise agree, no further deposit by the Association into the Special Account shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case may be. (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 or the Bank such outstanding amount. (c) The Borrower may, upon notice to the Association, refund to the Association or the Bank all or any portion of the funds on deposit in the Special Account. (d) Refunds to the Association or the Bank made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Credit Account or the Loan Account, as the case may be, for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement or the Loan Agreement, including the General Conditions applicable thereto.