Burundi - Coffee Sector Project : Credit 2123 - Project Agreement - Conformed

CREDIT NUMBER 2123 BU Project Agreement (Coffee Sector Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and BANQUE DE LA REPUBLIQUE DU BURUNDI Dated 1990 CREDIT NUMBER 2123 BU PROJECT AGREEMENT AGREEMENT, dated z10.. AO , 1990, between the INTERNATIONAL DEVELOPMENT ASSOCIATION (the "Association") and the BANQUE DE LA REPUBLIQUE DU BURUNDI ("BRB"). WHEREAS (A) by an agreement (the Development Credit Agreement) of even date herewith between the Republic of Burundi (the "Borrower") and the Association, the Association has agreed to lend to the Borrower an amount in various currencies equivalent to twenty-one million three hundred thousand Special Drawing Rights (SDR 21,300,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that BRB agree to undertake such obligations toward the Association as are set forth in this Agreement; and (B) Parts C.1 and C.2 of the Project described in Schedule 2 to the Development Credit Agreement will be carried out by BRB with the Borrower's assistance and, as part of such assistance, the Borrower will make available to BRB part of the proceeds of the Credit under an agreement (the "Management Agreement") to be entered into between the Borrower and BRB; and WHEREAS BRB, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Development Credit Agreement including the Preamble thereto, the Preamble to this Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. - 2 - ARTICLE II Execution of the Project; Management and Operations of the Apex Project Management Unit Section 2.01. (a) BRB declares its commitment to the objec- tives of the Project as set forth in Schedule 2 to the Development Credit Agreement and, to this end, shall carry out Parts C.1 and C.2 of the Project and conduct its operations and affairs, in accordance with sound financial standards and practices, with qualified and experienced management and in accordance with the Statutes. (b) For the purposes of Parts C.1 and C.2 of the Project BRB shall: (i) maintain the Apex Project Management Unit with the management and staff and-under the terms of reference set forth in Schedule 1 to this Agreement; and (ii) allocate from the interest it receives from the Participating Financial Intermediaries under the Participation Agreements, amounts equal to one half of one percent (1/2%) per annum of the principal amount outstanding under such Participation Agreements to cover the Apex Project Management Unit's costs and expenses related to the Project. Section 2.02. BRB shall: (a) enter into Participation Agreements with Participating Financial Intermediaries under which the Franc Burundais equivalent of proceeds of the Credit withdrawn under Categories (1) (b) and (3) (b) of the table in Paragraph 1 of Schedule 1 to the Development Credit Agreement shall be lent to such Participating Financial Intermediaries for relending in the form of Sub-loans to Investment Enterprises to finance Investment Projects; such Participation Agreements shall be satisfactory to the Association and shall prQvide that Sub-loans be made in accordance with the procedures and on the terms and conditions set forth or referred to in Schedule 2 to this Agreement; (b) charge the Participating Financial Intermediaries under the Participating Agreements an interest rate established in accordance with Section 3.10 (a) (ii) and (d) of the Development Credit Agreement; (c) require that loans to Participating Financial Intermediaries under the Participation Agreements shall have the - 3 - same amortization period as the Sub-loans made using the proceeds of such loans; and (d) exercise its rights in relation to each Participation Agreement in such manner as to: (i) protect the interests of the Association, the Borrower and BRB; (ii) comply with its obligations under this Agreement and the Management Agreement; and (iii) achieve the purposes of the Project. Section 2.03. BRB shall ensure compliance with obligations set forth in Sections 9.03, 9.04, 9.05, 9.06 and 9.07 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports and maintenance) in respect of the Project Agreement and Parts C.1-and C.2 of the Project. Section 2.04. BRB shall duly perform all its obligations under the Management Agreement. Except as the Association shall otherwise agree, BRB shall not take or concur in any action which would have the effect of assigning, amending, abrogating or waiving the Management Agreement or any provision thereof. Section 2.05. (a) BRB shall, at the request of the Associa- tion, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement and the Management Agreement, and other matters relating to the purposes of the Credit. (b) BRB shall promptly inform the Association of any condi- tion which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Credit, or the performance by BRB of its obligations under this Agreement and the Management Agreement. ARTICLE III Financial Covenants Section 3.01. (a) BRB shall maintain procedures, records and accounts adequate to monitor and record the progress of Parts C.1 and C.2 of the Project and of each Investment Project (including its cost and the benefits to be derived from it) and to reflect, in accordance with consistently maintained sound accounting practices, its operations and financial condition in respect of Parts C.1 and C.2 of the Project. -4- (b) BRB shall: (i) 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 to the Association, as soon as available, but in any case not later than six 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; and (iii) furnish to the Association such other information concerning said records and accounts as well as 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, BRB shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Association has received 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 contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the -5- procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. ARTICLE IV Effective Date; Termination Cancellation and Suspension Section 4.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 4.02. (a) This Agreement and all obligations of the Association and of BRB thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate; or (ii) a date 30 years after the date of this Agreement. (b) If the Development Credit Agreement terminates before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify BRB of this event. Section 4.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. ARTICLE V Miscellaneous Provisions Section 5.01. 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 radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified - 6 - 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 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) For the Bank of the Republic of Burundi: Banque de la R6publique du Burundi B.P. 705 Bujumbura, Republic of Burundi Telex: 5071 BRB BDI Section 5.02. Any action required or permitted Co be taken, and any documents required or permitted to be executed, under this Agreement on behalf of BRB or by BRB on behalf of the Borrower under the Development Credit Agreement, may be taken or executed by the Governor of BRB, or by such other person or persons as such Governor shall designate in writing, and BRB shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 5.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collec- tively but one instrument. - 7 - IN WITNESS WHIIREOF, 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. INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President Africa BANQUE DE LA REPUBLIQUE DU BURUNDI By Authorized Representative - 8 - SCHEDULE 1 Apex Project Management Unit Staff 1. Project Analyst (Unit Chief). 2. Accountant/Financial Analyst. 3. Appropriate support staff. Functions 1. Provide guidance to Participating Financing Intermediaries in selecting eligible Private Investment Projects. 2. Ensure application of appropriate standards for appraisal of Investment Projects. 3. Review the eligibility of, and authorize financing for, Investment Projects submitted by Participating Financial Inter- mediaries. For Sub-loans of less than $80,000 equivalent, check whether the requests meet the eligibility criteria and give approval within five (5) working days from submission. For Sub-loans of or above $80,000 equivalent, review the requests in more detail, give comments on the quality of appraisal to the Participating Financing Intermediary concerned and check the eligibility for refinancing of the requests within ten (10) working days from submission. 4. Ensure proper disbursement of proceeds of the Credit, and supervise and centralize the collection and forwarding of supporting documentation. 5. Supervise the Participating Financial Intermediaries' com- pliance with their obligations under the Participation Agreements. 6. Supervise, on a sample basis and/or focusing on problem cases, the Investment Projects. 7. Ensure liaison between the Association and the Participating Financial Intermediaries on matters related to the Project. -9- SCHEDULE 2 Terms and Conditions of Sub-loans 1. Participating Financial Intermediaries shall relend the Franc Burundais equivalent of the proceeds of the Credit lent to them by BRB to Private Investment Enterprises for Investment Projects, for terms of two (2) to ten (10) years. The Sub-loans may include periods of grace of up to three (3) years, and shall include rates of interest which may be subject to change pursuant to Section 3.10 (d) of the Development Credit Agreement. 2. The interest rate to be charged by Participating Financial Intermediaries to Private Investment Enterprises under Sub-1oans shall be based on prevailing market rates and negotiated between the Participating Financial Intermediaries and the Private Investment Enterprises. 3. Private Investment Enterprises shall be assessed for eligibility for Sub-loans based on consistently applied technical, criteria generally accepted in the Borrower's coffee industry, and sound economic and financial criteria. 4. Unless the Borrower and the Association otherwise agree, Sub- loans investment may not exceed a total equivalent to $210,000. 5. Unless the Borrower and the Association otherwise agree, Participating Financial Intermediaries may apply the proceeds of loans under the Participation Agreements and their own resources to finance not more than 70% and 20%, respectively, of the cost of Investment Projects provided, however, that the contribution of the Private Investment Enterprise is not less than 30% in each case. 6. No Sub-loan granted by any Participating Financial Inter- mediary shall be eligible for refinancing by BRB out of the proceeds of the Credit without the prior verification of the Apex Project Management Unit as to its eligibility and without the approval of the Association; once two Sub-loans for each Participating Financial Intermediary shall have been so approved, however, the approval of the Association shall no longer be required for the subsequent Sub- loans granted by such Participating Financial Intermediary. 7. When presenting a Sub-loan to the Association for approval, the relevant Participating Financial Intermediary and BRB shall furnish to the Association an application, in form satisfactory to - 10 - the Association, together with: (i) a description of the Investment Enterprise and an appraisal of the Investment Project, including a description of the expenditures proposed to be financed out of the proceeds of the Sub-loan; (ii) tlhe proposed terms and conditions of the Sub-loan including its schedule of amortization; and (iii) such other information as the Association shall reasonably request. 8. Sub-loans shall be made on terms whereby the Participating Financial Intermediary concerned shall obtain, by written contract with the Private Investment Enterprise or by other appropriate legal means, rights adequate to protect the interests of the Association, BRB and the Participating Financial Intermediary including the right to: (a) require the Investment Enterprise to carry out the Investment Project and operate the coffee washing station constructed with due diligence and efficiency and in accordance with sound technical, financial, managerial and environmental standards and to maintain adequate records; (b) require that: (i) the goods and services to be financed out of the proceeds of the Credit shall be procured in accordance with Schedule 3 to the Development Credit Agreement; and (ii) such goods and services shall be used exclusively for the Investment Project and the operation and maintenance of the coffee washing stations financed. out of the proceeds of the Credit; (c) inspect, by itself or jointly with representatives of the Apex Project Management Unit, or jointly with the Association, or jointly with both, as the case may be, such goods, works, plants and construction included in the Investment Project, the operation of the coffee washing stations financed out of the proceeds of the Credit, and any relevant records and documents; (d) require that: (i) the Private Investment Enterprise take out and maintain with responsible insurers such insurance against such risks and in such amounts, as shall be consistent with sound business practice; and (ii) without any limitation upon the fore- going, such insurance cover hazards incident to the acquisition, transportation and delivery of goods financed out of the proceeds of the Credit to the place of use or installation, any indemnity thereunder to be made payable in a currency freely usable by the Private Investment Enterprise to replace or repair such goods; . L JA . - A , AA,16.o - 11 - (e) obtain all such information as the Association, the Participating Financial Intermediary or the Apex Project Management Unit, as the case may be, shall reasonably request relating to the foregoing, to the administration, operations and financial condition of the Private Investment Enterprise and to the benefits to be derived from the Investment Project; and (f) suspend or terminate the right of the Private Investment Enterprise to the use of the proceeds of the Sub-loan upon failure by such Private Investm3nt Enterprise to perform its obligations under its contract with the Participating Financial Intermediary concerned. 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