Conformed Copy - L2991 - Fourth Agricultural Credit Project - Amendment

Page 1 June 11, 1993 Lic. Rene Ardon Matute Secretario de Estado en el Despacho de Hacienda y Credito Publico Tegucigalpa, Honduras Lic. Roberto Galvez Presidente Banco Central de Honduras Tegucigalpa, Honduras Lic. Daniel Carvajal Presidente Federacion de Asociaciones Cooperativas de Ahorro y Credito de Honduras Ltda. Tegucigalpa, Honduras Re: Loan 2991-HO (Fourth Agricultural Credit Project) Amendment to Loan Agreement BCH and FACACH Project Agreements Dear Sirs: Please refer to the Loan Agreement dated November .21, 1 988, between Republic of Honduras (the Borrower) and the International Bank for Reconstruction and Development (the Bank), and to the Project Agreements between the Bank and Banco Central de Honduras (BCH Project Agreement), and between the Bank and Federacion de Asociaciones Cooperativas de Ahorro y Credito de Honduras Ltda. (FACACH Project Agreement), respectively, both also dated November 21, 1988. In response to the letters of the Minister of Hacienda y Credito Publico and the General Manager of the Banco Central de Honduras, dated March 16 and 24, 1 993, respectively, in which the Borrower and the Banco Central de Honduras requested: (a) not to execute Part A.2 of the Project; (b) to reallocate the funds allocated to the execution of Part A.2 of the Project to Part A.1 of the Project; (c) to add a new study to Part C of the Project concerning the evaluation of methods to divest BANADESA; (d) to extend the closing date until June 30, 1994; and (e) to remove UPCA as the Project Unit, the Bank, therefore, hereby proposes to amend the Loan Agreement and the BCH and FACHCA Project Agreements, as follows: I. Loan Agreement 1. Section 2.03 is hereby amended to read as follows: "Section 2.03. The Closing Date shall be June 30, 1 994 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date.". 2. All the rights and obligations of the Bank and the Borrower under the Loan Agreement with respect to Part A.2 of the Project are hereby terminated. 3. The table in paragraph 1 of Schedule 1 is hereby amended to read as set forth in Annex 1 to this letter. 4. Part C of Schedule 2 is hereby amended to read as follows: "Part C: Studies The carrying out of studies by Banco Central: (i) to evaluate methods to encourage financial intermediaries to on-lend to low-income producers under competitive terms; (ii) to determine and propose legal, regulatory and procedural changes aimed at increasing the Page 2 effectiveness of utilization of chattel mortgages and mortgages and reducing the costs of establishing both types of mortgages; (iii) to analyze and review the system of property rights and title recording in order to improve the ways and means to resort to the use of mortgages to secure, inter alia, agricultural credits; (iv) to analyze transaction costs of Financial Intermediaries and Beneficiaries so as to identify financial intermediation costs and ways to reduce them or to review margins and spreads, or both; and (v) to evaluate methods to divest BANDESA.". II. BCH Project Agreement 1. All the rights and obligations of the Bank and BCH under the BCH Project Agreement with respect to Part A.2 of the Project are hereby terminated. 2. Section 2.08 is hereby amended to read as follows: "Section 2.08. Banco Central shall: (a) not later than February 28, 1 994 carry out the studies under Part C (i), (ii); and (v) of the Project; and lb) not later than March 31, 1 994 furnish to the Bank for its review, the findings and recommendations of each of such studies referred to in (a) herein.". 3. Paragraph 2 (c) of Section 1 of Schedule 2 is hereby amended to read as follows: "c) Interest on the amount withdrawn and outstanding under each Project Administration Loan will be available and adjusted every six months during the life of the Project Administration Loan. The initial rate will be set at 12% per annum and will be reviewed and adjusted as necessary to reflect the marginal cost of funds to commercial banks, for the period in question.". 4. Substitute the term "UPCA" by the term "Banco Central" in paragraphs 6 and 14 (l) of Section II of Schedule 2. III. FACACH Project Agreement All the rights and obligations of the Bank and FACACH under the FACACH Project Agreement are hereby terminated. Please confirm your agreement to the foregoing amendments by signing and dating this letter in the space provided below. This amendment letter shall be executed in three counterparts, each of which shall be an original. Upon your confirmation, please return one fully executed original to us. Very truly yours INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT /s/ Edilberto L. Segura Director Country Department II Latin America and the Caribbean AGREED AND CONFIRMED: Republic of Honduras /s/ Lic. Rene Ardon Matute Page 3 By Authorized Representative Ministro de Hacienda y Credito Publico Date: June 28, 1993 Banco Central de Honduras /s/ Roberto Galvez Barnes By: Authorized Representative Presidente Banco Central de Honduras Date: June 28, 1993 Federacion de Asociaciones Cooperativas de Ahorro y Credito de Honduras Ltda. /s/ Daniel N. Carvajal By: Authorized Representative Gerente General Date: June 28, 1993 Annex "1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent to be Financed (1) Subloans 4,100,000 90% of amounts Small-Scale Farmers disbursed by by Financial Inter- Banco Central mediaries other under correspond- than FACACH Credit ing Project Unions under Administration Part A(1) of the Loans Project (2) Subloans to other 19,900,000 90% of amounts Beneficiaries by disbursed by Financial Inter- Banco Central mediaries other under corres- than FACACH Credit ponding Project Unions under Administration Part A(1) and Loans Part A(3) of the Project (3) Subloans made by 0 FACACH Credit Unions to Bene- ficiaries under Part A(2) of the Project (4) Extension Services, 1,000,000 100% Training and Studies under Parts B(2), B(3) and C of the Project Page 4 TOTAL 25,000,000 ===========