Conformed Copy - L3218 - Structural Adjustment Loan - Amendment

Page 1 October 19, 1990 The Minister for Finance and Planning Ministry for Finance and Planning Department of Finance and Planning Post Office Wards Strip Waigani, N.C.D. Papua New Guinea Re: Loan No.3218-PNG (Structural Adjustment Loan) Amendment of the Loan Agreement We refer to the above referenced Loan Agreement (Structural Adjustment Loan) dated August 24, 1990, between the Independent state of Papua New Guinea (the Borrower) and the International Bank for Reconstruction and Development (the Bank). We also refer to your letter dated October 17, 1990, requesting amendments to the Loan Agreement. We are pleased to inform you that, after due consideration, the Bank has agreed to the above request. Accordingly, the Loan Agreement is hereby amended as follows: 1. Section 1. 02 (a) of the Loan Agreement is amended by deleting the word "and" at the end of the paragraph. 2. Section 1.02 (b) of the Loan Agreement 's amended by replacing the period at the end of the paragraph by "; and". 3 . A new Section 1. 02 (c) is added as follows: " (c) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement. " . Section 2.02 is amended to read as follows: "Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement . (b The Borrower shall, for the purposes of the Program, open and maintain in dollars a special deposit account in the Bank of Papua New Guinea (its Central Bank) on terms and conditions satisfactory to the Bank. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 5 to this Agreement. ". Section 3.03 (b) (i) is amended by adding after the words "this Section" the following words "including those for the Special Account". 6. The following Schedule 5 is added after Schedule 4 to the Loan Agreement: SCHEDULE 5 For the purposes of this Schedule: (a) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods required during the execution of the Program and to be financed out of the proceeds of the Loan in accordance with the provisions of Schedule 1 to this Agreement; and Page 2 (b) the term "Authorized Allocation" means an amount equivalent to $10,000,000 to be withdrawn from the Loan Account and deposited in the Special Account pursuant to paragraph 3 (a) of this Schedule. 2.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 Bank 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 Bank 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 Bank shall, on behalf of the Borrower, withdraw from 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 Bank requests for deposits into the Special Account at such intervals as the Bank shall specify. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Bank 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 Bank shall, on behalf of the Borrower, withdraw from 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 Bank from the Loan Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said document.s and other evidence. 4. For each payment made by the Borrower out of t:he Special Account, the Borrower shall, at such time as the Bank shall reasonably request, furnish to the Bank such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Bank shall not be required to make further deposits into the Special Account: (a) if, at any time, the Bank shall have determined that all further withdrawals should be made by the Borrower directly from the Loan Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (b) once the total unwithdrawn amount of the Loan, less the amount of any outstanding special commitment entered into by the Bank pursuant to Section 5 . 02 of the General Conditions with respect to the Program, shall equal the equivalent of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Loan Account of t:he remaining unwithdrawn amount of the Loan follow such procedures as the Bank shall specify by notice to the Borrower. Such further Page 3 withdrawals shall be made only after and to the extent that the Bank 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 Bank 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; or (ii) was not justified by the evidence furnished to the Bank, the Borrower shall, promptly upon notice from the Bank: (A) provide such additional evidence as the Bank may request; or (B) deposit into the Special Account (or, if the Bank shall so request, refund to the Bank) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Bank shall otherwise agree, no further deposit by the Bank 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 Bank 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 Bank, refund to the Bank such outstanding amount. (c) The Borrower may, upon notice to the Bank, refund to the Bank all or any portion of the funds on deposit in the Special Account. (d) Refunds to the Bank made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Loan Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions. Please confirm your agreement with the foregoing amendments by signing and dating the enclosed letter of confirmation and returning it to us. Yours sincerely, Izzet zincir Acting Director Country Department V Asia Region CONFIRMED: THE INDEPENDENT STATE OF PAPUA NEW GUINEA By: Authorized Representative Date: 13/11/90 Date