Uganda - Agricultural Research And Research Project : Credit 2446 - Credit Agreement - Conformed

CREDIT NUMBER 2446 UG DEVELOPMENT CREDIT AGREEMENT (Agricultural Research and Training Project) between TEB REPUBLIC OF UGANDA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1993 CREDIT NUMBER 2446 UG DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated v0C-k to , 1993, between THE REPUBLIC OF UGANDA (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 Project will be carried out by National Agricultural Research Organisation (NARO) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to NARO the proceeds of the Credit as provided in this 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; 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) constitutes 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) "Project Preparation Advance" means the project preparation advance granted by the Association to the Borrower pursuant to an exchange of letters dated August 11, 1992 and August 20, 1992 between the Borrower and the Association; (b) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; -2- (c) "Subsidiary Agreement" means the agreement to be entered into between the Borrower and NARO pursuant to Section 3.01 (b) of this Agreement, as the same may be amended from time to time, and such term includes any schedules to the Subsidiary Agreement; (d) "Project Account" means the account referred to in Section 3.05 of this Agreement; (e) "NARO" means National Agricultural Research Organisation established pursuant to the National Agricultural Research Organisation Statute, 1992; and (f) "NARO Research Institutes" includes the following: (i) Kawanda Agricultural Research Institute; (ii) Namulonge Agricultural and Animal Production Research Institute; (iii) Serere Agricultural and Animal Production Research Institute; (iv) Forestry Research Institute; (v) Livestock Health Research Institute, Tororo; (vi) Fisheries Research Institute, Jinja; (vii) Food Science and Technology Research Institute; and (viii) Agricultural Engineering and Appropriate Technology Research Institute. (g) "Project Agreement" means the agreement between the Association and NARO, 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. -3- 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 this Agreement, an amount in various currencies equivalent to seventeen million eight hundred thousand Special Drawing Rights (SDR 17,800,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule I 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 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 U.S. Dollars a special deposit account in a commercial bank on terms and conditions satisfactory to the Association, including appropriate protection against set-off, seizure or attachment. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 3 to this Agreement. (c) Promptly after the Effective Date, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and pay to itself the amount required to repay the principal amount of the Project Preparation Advance withdrawn and outstanding as of such date and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amount of the Project Preparation Advance shall thereupon be cancelled. Section 2.03. The Closing Date shall be December 31, 2000, or such later date as the Association shall establish. 'he Association shall promptly notify the Borrower of such later da-e. 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. -4- (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 or 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 payment 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 March 1 and September 1 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 March 1 and September 1 commencing March 1, 2003, and ending September 1, 2032. Each installment to and including the installment payable on September 1, 2012, shall be one percent (1%) of such principal amount, and each installment thereafter shall be two percent (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 -5- 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 cause NARO to perform, in accordance with the provisions of the Project Agreement, all the obligations of NARO 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 NARO to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall make available as a grant the proceeds of the Credit to NARO under an agreement to be entered into between the Borrower and NARO, under terms and conditions which shall have been approved by the Association. (c) The Borrower shall exercise its rights under the Subsidiary Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the -6- Borrower shall not assign, amend, abrogate or waive the Subsidiary Agreement or any provision thereof. Section 3.02. Except as the Association shall otherwise agree, procurement of the goods, works 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 1 to the Project Agreement. Section 3.03. The Borrower and the Association hereby agree that the obligations set forth in Sections 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) shall be carried out by NARO pursuant to Section 2.03 of the Project Agreement. Section 3.04. The Borrower shall take all measures necessary: (a) to establish, with effect from the fiscal year 1993/94, a line item in its recurrent and development budget, and allocate appropriate funds to support NARO's activities; and (b) to make arrangements, satisfactory to the Association, to enable NARO to use income and contributions from sources other than the Borrower, as incremental NARO resources. Section 3.05. The Borrower shall: (a) establish and maintain, until the completion of the Project, a separate Project Account with a commercial bank, into which it shall deposit its contributions to the Project, in accordance with established budgetary procedures acceptable to the Association; and (b) at the beginning of each quarter deposit into said Project Account the amount required to cover its contribution during such quarter. ARTICLE IV Financial Covenants Section 4.01. (a) 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 sound accounting practices, records and accounts reflecting such expenditures; -7- (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 fisdal 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 and the Project 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: (a) nine months after the end of each such year for the first year of Project implementation; and (b) six months after the end of each such year in subsequent years, 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. -8- 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) NARO shall have failed to perform any of its 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 NARO will be able to perform its obligations under the Project Agreement. (c) The Statute establishing NARO shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of NARO to perform any of its obligations under the Project Agreement. (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of NARO 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) any 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) any event specified in paragraphs (c) and (d) of Section 5.01 of this Agreement shall occur. -9- ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectivenesb of this Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the Borrower has approved NARO's Terms and Conditions of Service for Research, the contents of which shall be satisfactory to the Association; (b) NARO has appointed a financial controller and has established a comprehensive accounting system satisfactory to the Association; (c) the Subsidiary Agreement has been signed by the Borrower and NARO; (d) the Borrower has opened the Project Account referred to in Section 3.05 of this Agreement, and deposited therein the Uganda Shillings equivalent to $5,000; (e) NARO has appointed the Director General, the Deputy Director General and a procurement specialist; and (f) the Coffee Marketing Board Ltd.'s audited accounts for the year ending on September 30, 1991, have been submitted to the Association pursuant to Section 3.05 of this Agreement for the Agricultural Sector Adjustment Credit dated December 19, 1990, between the Borroaer and the Association. 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 NARO, and is legally binding upon NARO 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. r - 10 - ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. The Minister responsible for Finance 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: Ministry of Finance and Economic Planning P.O. Box 8147 Kampala Uganda Cable address: Telex: FINSEC 61170 Kampala For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 248423 (RCA) Washington, D.C. 82987 (FTCC) 64145 (WUI) or 197688 (TRT) ~ 11 - 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. THE REPUBLIC OF UGANDA By J-J/ sk?&& d.Ka#bt ~~4 Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By J/Edi UjUX V f. Ta co- Regional Vic& President Africa - 12 - 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 CategorX SDR Equivalent) to be Financed (1) Works 1,480,000 100% of foreign expenditures and 70% of local expenditures (2) Vehicles and 1,740,000 100% of foreign Equipment expenditures and 50% of local expenditures (3) Consultants' 2,280,000 100% services (4) Training 2,950,000 100% (5) Studies 180,000 100% - 13 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (6) Incremental Recurrent Costs: (a) salaries and 5,050,000 100% of local allowances expenditures up to December 31, 1995, and 70% of local expenditures thereafter (b) operation and 2,000,000 100% of foreign maintenance expenditures; 100% of local expendi- tures up to Decem- ber 31, 1995, and 70% of local expenditures thereafter (7) Refunding of 1,060,000 Amounts due Project pursuant to Sec- Preparation tion 2.02 (c) of Advance this Agreement (8) Unallocated 1,060,000 TOTAL 17,800,000 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; and - 14 - (c) the term "incremental recurrent costs" means expenditures for salaries and allowances for NARO staff, vehicle operating costs, and maintenance of equipment and buildings. 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. - 15 - SCHEDULE 2 Description of the Project The broad objective of the Project is to improve the effectiveness of the agricultural research service in managing research programs and in responding to the production constraints facing farmers. In particular the project will strengthen the National Agricultural Research System by launching NARO to: (i) provide a rational and sustainable institutional framework for organization, administration, financing, and implementation of agricultural research programs that respond to Uganda's agricultural development objectives; (ii) support effective implementation of research programs; and (iii) strengthen the linkages and coordination among the research system, the extension services, and the agricultural and agricultural-related faculties of Makerere University. 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: Institutional Development of the National Agricultural Research System 1. Strengthening the capacity of NARO to: (i) improve the management systems for research programs, including administrative and financial procedures; and (ii) improve the capacity of researchers to implement priority research programs. 2. Preparation of designs for buildings to house the Forestry Research Institute and the design and construction of the first phase of headquarters for NARO, including the acquisition of vehicles, computers and office equipment and supplies. 3. (a) Establishment and maintenance of favorable terms and conditions of service for research; and (b) studies on the generation of funding for research. Part B: Rehabilitation of Research Institutes Rehabilitation of offices, laboratories and staff housing at research institutes at Serere, Jinja, Tororo and including the acquisition of vehicles, and office, laboratory and field equipment and supplies. - 16 - Part C: Execution of High Priority Research Programs Carrying out on-going and new high priority research programs and the acquisition of vehicles and laboratory equipment and supplies. Part D: Strengthening of Agricultural Education and Training Capacity 1. Strengthening of training and management capacity of the agricultural and agricultural-related faculties of Makerere University and support for local and foreign training of Makerere University and NARO staff. 2. Construction of staff houses, classrooms and a post-graduate women's dormitory at the Makerere University Agricultural Research Institute, Kabanyolo, and the acquisition of vehicles and field, laboratory and office equipment and supplies. The Project is expected to be completed by June 30, 2000. - 17 - SCHEDULE 3 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1) through (6) 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 accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $500,000 to be withdrawn from the Credit Account and deposited into the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Payments out of the Special Account shall be made exclu!7ively 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 and deposit into 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. - 18 - (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 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 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. Notwithstanding the provisions of paragraph 3 of this Schedule, the Association shall not be required to make further deposits into the Special Account: (a) 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 (b) once the total unwithdrawn amount of the Credit allocated to the eligible Categories, less 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 equal the equivalent of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to the eligible Categories shall follow such procedures as the Association shall -19 - 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; or (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) 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 such outstanding amount. (c) The Borrower may, upon notice to the Association, refund to the Association all or any portion of the funds on deposit in the Special Account. (d) Refunds to the Association made pursuant to paragraph 6 (a), (b) and (c) of this Schedule shall be credited to the Credit Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions. 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