Argentina - Provincial Health Sector Development Project : Loan 3931 - Loan Agreement - Conformed

LOAN NUMBER 3931-AR Loan Agreement (Provincial Health Sector Development Project) between ARGENTINE REPUBLIC and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated I, 199 (P LOANNUMBER 3931-AR LOAN AGREEMENT AGREEMENT, dated 5mud wy , 199 o, between ARGENTINE REPUBLIC (the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). WHEREAS the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Bank to assist in the financing of the Project; and WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to extend the Loan 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 Loan and Guarantee Agreements" of the Bank, dated January 1, 1985, with the modifications set forth below (the General Conditions) constitute an integral part of this Agreement: (a) The last sentence of Section 3.02 is deleted. (b) The second sentence of Section 5.01 is modified to read: "Except as the Bank and the Borrower shall otherwise agree, no withdrawals shall be made: (a) on account of expenditures in the territories of any country which is not a member of the Bank or for goods produced in, or services supplied from, such territories; or (b) for the purpose of any payment to persons or entities, or for any import of goods, if such payment or import, to the knowledge of the Bank, is prohibited by a decision of the United Nations Security Council taken under Chapter VII of the Charter of the United Nations.". (c) In Section 6.02, subparagraph (k) is relettered as subparagraph (1) and a new subparagraph (k) is added to read: -2- "(k) An extraordinary situation shall have arisen under which any further withdrawals under the Loan would be inconsistent with the provisions of Article III, Section 3 of the Bank's Articles of 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) "Autonomous Public Hospital" means a public hospital with juridical personality; (b) "BNA" means Bank of the Argentine Nation (Banco de la Naci6n Argentina), a bank owned by the Borrower; (c) "Decree No. 667/91" means Decreto No. 667/91 of the Borrower, published on April 24, 1991 which established the structure of MSAS, as such Decree has been amended to the date of this Agreement; (d) "Decree No. 578/93" means Decreto No. 578/93 of the Borrower, published on April 7, 1993 which established, inter alia, the functions of Autonomous Public Hospitals, as such Decree has been amended to the date of this Agreement; (e) "Eligible Professional" means a professional employed by MSAS or any public entity which provides health services within a Province who meets the criteria set forth in the Implementation Manual and is entitled to be benefitted by a scholarship under Part C.2 of the Project; (f) "Eligible Province" means a province within the Borrower's territory which meets the criteria set forth in the Implementation Manual to carry out Eligible Subprojects "I" and Eligible Subprojects "Il" under Parts B.2 and B.3 of the Project, and such term includes the Municipality of the city of Buenos Aires if such municipality meets such criteria; (g) "Eligible Public Hospital" means a hospital owned or controlled by an Eligible Province which meets the criteria set forth in the Implementation Manual to be benefitted by the provision of technical assistance and the works to be carried out under Part B of the Project; (h) "Eligible Subproject 'I'" means a specific project to be carried out within an Eligible Public Hospital consisting of rehabilitation of existing infrastructure and -3- acquisition and utilization of medical equipment and which meets the criteria set forth in the Implementation Manual for the inclusion in Part B.2 of the Project; (i) "Eligible Subproject 'II"' means a specific project to be carried out within the same Eligible Public Hospital benefiftd by the carrying out of an Eligible Subproject "I" consisting of rehabilitation of existing infrastructure and acquisition and utilization of medical equipment and which meets the criteria set forth in the Implementation Manual for the inclusion in Part B.3 of the Project; (j) "Implementation Manual" means the manual, satisfactory to the Bank, which sets forth, inter alia: (i) the eligibility criteria for the participation of Provinces in the Project; (ii) the eligibility criteria for the inclusion of Public Hospitals in the Project; (iii) the eligibility criteria for professionals to be entitled to scholarships under Part C.2 of the Project, and the principal terms and conditions, satisfactory to the Bank, of the scholarships to be granted to such professionals; (iv) the criteria for including Eligible Subprojects "I" and Eligible Subprojects "II" in the Project; (v) the principal terms and conditions of Infrastructure Arrangements "I" and Infrastructure Arrangements "II;" (vi) the terms of reference for the consultants to be employed under the Project; (vii) the performance and monitoring indicators that will measure the progress of the Project; and (viii) the disbursement procedures for the Project; (k) "Infrastructure Arrangement 'I'" means the agreement referred to in paragraph 2 (b)(i)(B) of Schedule 1 to this Agreement; (1) "Infrastructure Arrangement 'II" means the agreement referred to in paragraph 2 (c)(i)(B) of Schedule 1 to this Agreement; (m) "Investment Plan" means an Eligible Public Hospital's five-year investment plan, satisfactory to the Bank, consisting of a detailed description of the works to be carried out, and the medical equipment to be acquired, during the implementation of the corresponding Eligible Subproject "I" and Eligible Subproject "II;" (n) "Law No. 24.156" means Ley No. 24.156 of the Borrower dated October 26, 1992, published on October 29, 1992 which governs the Borrower's financial administration and the systems of control of the public sector, and such term includes the regulations to such law, as such law and regulations have been amended to the date of this Agreement; (o) "MOE" means the Ministry of Economy and Public Works and Services (Ministerio de Economia y Obras y Servicios P6blicos) of the Borrower; -4- (p) "MSAS" means the Ministry of Health and Social Action (Ministerio de Salud y Acci6n Social) of the Borrower; (q) "MSP" means the Ministry of Health (Ministerio de Salud o Secretaria de Salud) of an Eligible Province or of a Province; (r) "PCU" means the unit referred to in Section 3.06 of this Agreement; (s) "Pesos" means the currency of the Borrower; (t) "PIU" means any of the units referred to in Section 3.07 of this Agreement; (u) "Project Preparation Advance" means the project preparation advance granted by the Bank to the Borrower pursuant to the Letter of Agreement dated February 15, 1993, countersigned by the Borrower on July 22, 1994, as amended; (v) "Province" means any province within the Borrower's territory and the Municipality of the city of Buenos Aires; (w) "Public Hospital" means a hospital owned or controlled by a Province; (x) "SLA" means any of the subsidiary loan agreements referred to in para- graph (b) of Section 3.01 of this Agreement; (y) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (z) "UNDP" means the United Nations Development Programme; and (aa) "UNDP Agreement" means the agreement entered into between the Borrower and UNDP dated June 16, 1994, as such agreement may be amended from time to time with the agreement of the Bank. ARTICLE II The Loan Section 2.01. The Bank agre-s to lend to the Borrower, on the terms and conditions set forth or referred to in the Loan Agreement, various currencies that shall have an aggregate value equivalent to the amount of one hundred one million four -5- hundred thousand ($101,400,000), being the sum of withdrawals of the proceeds of the Loan, with each withdrawal valued by the Bank as of the date of such withdrawal. 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 for expenditures made (or, if the Bank 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 Loan. (b) The Borrower may, for the purposes of the Project, open and maintain in Dollars a special deposit account in BNA or in a commercial bank, acceptable to the Bank, on terms and conditions satisfactory to the Bank, 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 5 to this Agreement. (c) Promptly after the Effective Date, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and pay to itself the amount required to repay the principal amount of the Project Preparation Advance w_thdrawn 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 June 30, 2001 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.04. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.05. (a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time, at a rate for each Interest Period equal to the Cost of Qualified Borrowings determined in respect of the preceding Semester, plus one-half of one percent (1/2 of 1%). On each of the dates specified in Sectioa 2.06 of this Agreement, the Borrower shall pay interest accrued on the principal amount outstanding during the preceding Interest Period, calculated at the rate applicable during such Interest Period. (b) As soon as practicable after the end of each Semester, the Bank shall notify the Borrower of the Cost of Qualified Borrowings determined in respect of such Semester. (c) For the purposes of this Section: -6- (i) "Interest Period" means a six-month period ending on the date immediately preceding each date specified in Section 2.06 of this Agreement, beginning with the Interest Period in which this Agreement is signed. (ii) "Cost of Qualified Borrowings" means the cost, as reasonably determined by the Bank and expressed as a percentage per annum, of the outstanding borrowings of the Bank drawn down after June 30, 1982, excluding such borrowings or portions thereof as the Bank has allocated to fund: (A) the Bank's investments; and (B) loans which may be made by the Bank after July 1, 1989 bearing interest rates determined otherwise than as provided in paragraph (a) of this Section. (iii) "Semester" means the first six months or the second six months of a calendar year. (d) On such date as the Bank may specify by no less than six months' notice to the Borrower, paragraphs (a), (b) and (c) (iii) of this Section shall be amended to read as follows: "(a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time, at a rate for each Quarter equal to the Cost of Qualified Borrowings determined in respect of the preceding Quarter, plus one-half of one percent (1/2 of 1%). On each of the dates specified in Section 2.06 of this Agreement, the Borrower shall pay interest accrued on the principal amount outstanding during the preceding Interest Period, calculated at the rates applicable during such Interest Period.". "(b) As soon as practicable after the end of each Quarter, the Bank shall notify the Borrower of the Cost of Qualified Borrowings determined in respect of such Quarter.". "(c) (iii) 'Quarter' means a three-month period commencing on January 1, April 1, July 1 or October 1 in a calendar year.". Section 2.06. Interest and other charges shall be payable semiannually on March 15 and September 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. -7- 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: (i) shall carry out Parts A, B.1 and C of the Project, through MSAS, with due diligence and efficiency in accordance with the Implementation Manual, and in conformity with appropriate health, technical, environmental, administrative and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for such Parts of the Project; and (ii) shall cause the Eligible Provinces, through the corresponding SLA (as mentioned in paragraph (b) herein), to carry out Eligible Subprojects "I" and Eligible Subprojects "II" under Parts B.2 and B.3 of the Project, respectively, with due diligence and efficiency in accordance with the Implementation Manual, and in conformity with appropriate health, technical, environmental, administrative and financial practices, shall take or cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable all the Eligible Provinces to carry out Eligible Subprojects "I" and Eligible Subprojects "II", and shall not take or permit to be taken any action which would prevent or interfere with the carrying out of such subprojects. (b) For the purpose of carrying out Eligible Subprojects "I" and Eligible Subprojects "II", the Borrower, through MOE and MSAS, shall relend a portion of the proceeds of the Loan to the respective Eligible Province under a subsidiary loan agreement (the SLA) to be entered into between the Borrower, through MOE and MSAS, and such province under terms and conditions satisfactory to the Bank which shall include, inter alia, mutatis mutandis: (i) the commitment charge and the repayment obligations referred to in Sections 2.04 through 2.07 of this Agreement; (ii) the obligations referred to in Sections 3.01 (aXii) and (b), 3.02 through 3.05, 3.07, 3.09, 3.10 4.01 and 4.02 of this Agreement, including the obligation of such province to provide the necessary counterpart funds to carry out such subprojects; and (iii) the events referred to in Sections 5.01 (b), (c) and (d) of this Agreement and the relevant events under Section 5.02 of this Agreementk (c) The Borrower, through MOE and MSAS, shall exercise its rights under each SLA in such a manner as to protect the interests of the Borrower and the Bank and -8- to accomplish the purposes of the Loan, and except as the Bank shall otherwise agree, the Borrower shall not assign, amend, suspend, terminate, abrogate, waive or fail to enforce any SLA or any provision thereof. (d) Without limitation to paragraph (a) above, the Borrower shall: (i) make available (in accordance with Law No. 24.156) each calendar year to MSAS until the completion of the Project, starting in 1996, promptly as needed in Pesos, as counterpart funds for Parts A, B.1 and C of the Project, the following minimum amounts: Counterpart funds for Parts A, B.1 and C of the Project (in Dollars equivalent Year of as of the first working day of each calendar Implementation year of Project implementation) 1st $1,900,000 2nd $5,200,000 3rd $4,700,000 4th $2,500,000 5th $1,400,000; (ii) not later than June 30 of each year during Project implementation, starting in 1996, furnish to the Bank, for its review, a copy of the Borrower's budget proposal related to the health sector in order to demonstrate that the funds necessary to carry out Parts A, B. 1 and C of the Project for the calendar year following the date of presentation of such budget proposal, including the amount of counterpart funds for such year referred to in (i) herein, have been included in such budget proposal; and (iii) within thirty days after the date in which the Borrower's budget for the health sector is approved each calendar year, furnish to the Bank a copy of such approved budget. Section 3.02. Except as the Bank shall otherwise agre% procurement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 4 to this Agreement. -9- Section 3.03. Without limitation upon the provisions of Article IX of the General Conditions, the Borrower shall: (a) prepare and furnish to the Bank not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower, through MSAS, and the Bank, a plan, of such scope and in such detail as the Bank shall reasonably request, for the future operation of the Project; (b) afford the Bank a reasonable opportunity to exchange views with the Borrower on said plan; and (c) thereafter, through MSAS, carry out or cause to be carried out, said plan with due diligence and efficiency and in accordance with appropriate practices, taking into account the Bank's comments thereon. Section 3.04. The Borrower, through MSAS, shall cause the Eligible Provinces in respect of their respective Eligible Subprojects to carry out the obligations set forth in Sections 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 and maintenance, respectively) in respect of Parts B.2 and B.3 of the Project. Section 3.05. (a) The Borrower, through MSAS, shall: (i) not later than December 31, 1997: (A) complete the studies under Part A of the Project; and (B) prepare and furnish to the Bank, a proposal, satisfactory to the Bank, to transform one Eligible Public Hospital, within each Eligible Province, into an Autonomous Public Hospital; and (ii) not later than April 30, 1998 participate, and shall cause the Eligible Provinces to participate, in a joint review with the Bank of the recommendations of the studies and the proposal, mentioned in (i) herein. (b) The Borrower shall on the date on which the review referred to in paragraph (b) of Section 3.09 of this Agreement is held, prepare and furnish to the Bank an action plan on the basis, inter alia, of the recommendations of the studies and the proposal mentioned in (a)(i) above, the experience resulting from the carrying out of Part B. 1 of the Project and the Bank's comments thereon, if any, for implementation by MSAS, if applicable, and the Eligible Provinces (as mentioned in paragraph 2 (dXi)(B) of Schedule 1 to this Agreement). (c) In the event that the recommendations of the studies carried out under Part A of the Project require actions to be undertaken by MSAS, the Borrower, through MSAS, shall carry out such actions as described in the action plna referred to in (b) above. - 10 - Section 3.06. (a) The Borrower, through MSAS, shall establish, and thereafter operate and maintain during Project implementation, a Project coordination unit (the PCU) with functions and responsibilities satisfactory to the Bank, which shall include, inter alia, the responsibility to: (i) assist MSAS in: (A) carrying out Parts A, B.1 and C of the Project; (B) coordinating and monitoring the implementation of the Project; (C) preparing the quarterly reports referred to in Section 3.08 of this Agreement; and (D) preparing the Project's budget proposal for each calendar year; and (ii) assist the PIUs in carrying out Parts B.2 and B.3 of the Project. (b) The Borrower, through MSAS, shall ensure that the PCU is at all times headed by a coordinator assisted by staff in adequate numbers, all with qualifications satisfactory to the Bank. Section 3.07. (a) The Borrower, through MSAS, shall cause each Eligible Province to establish, and thereafter operate and maintain during Project implementation a provincial implementation unit (PIU) with functions and responsibilities satisfactory to the Bank. (b) The Borrower, through MSAS, shall cause each Eligible Province to ensure that its PIU is at all times headed by a coordinator assisted by staff in adequate numbers, all with qualifications satisfactory to the Bank. Section 3.08. Without limitation to the provisions of Section 9.07 of the General Conditions, the Borrower, through MSAS, shall prepare and furnish to the Bank not later than January 31, April 30, July 31 and October 31 of each year, starting in January 1996, calendar quarterly reports of such scope and in such detail as the Bank may reasonably request concerning the progress in the implementation of the Project during the calendar quarter preceding the date of presentation of such report, with the exception of the last quarterly report for each calendar year which shall also include the information with respect to the progress in Project implementation for the entire calendar year in question. Section 3.09. (a) Without limitation to the provisions of Section 9.01 of the General Conditions, the Borrower, through MSAS, shall, and shall cause the Eligible Provinces to, review jointly with the Bank by not later than July 31 of each year during Project implementation, starting in 1996, the progress made by the Borrower, through MSAS, and the Eligible Provinces in: (i) carrying out their corresponding Parts of the Project; and (ii) achieving the objectives of the Project. Such review shall also focus on analyzing the budget proposal for the year in question and the quarterly reports, referred to in Section 3.01 (d) (ii) and 3.08 of this Agreement, respectively. As part of each such review the Bank may require that the Borrower, through MSAS, prepare an action plan, satisfactory to the Bank, to make adjustments in Project implementation. If so, the Borrower, through MSAS, shall prepare and furnish such action plan to the Bank not later - 11 - than thirty days after the conclusion of the review in question and shall thereafter carry out, or cause to be carried out, such action plan in accordance with its terms. (b) The Borrower, through MSAS, shall, and shall cause the Eligible Provinces to, participate in a Project implementation mid-term review to be held with the Bank as part of the annual review to be held not later than July 31, 1998. During such mid-term review, attention shall also be focussed on reviewing the plans referred to in Sections 3.05 (b) and 3.10 of this Agreement. Section 3.10. The Borrower, through MSAS, shall: (a) on the date on which the review referred to in paragraph (b) of Section 3.09 of this Agreement will be held, prepare and furnish to the Bank an action plan, satisfactory to the Bank, whereby the MSAS and MSP of each Eligible Province will gradually assume the functions and responsibilities of the PCU and each PIU; and (b) immediately thereafter, carry out or cause to be carried out the action plan mentioned in (a) herein in accordance with its terms. Section 3.11. Without limitation to the provisions of Section 3.01 (a)(i) of this Agreement, the Borrower, through MSAS, shall amend the UNDP Agreement under terms and conditions satisfactory to the Bank, including, inter alia, the obligation of UNDP to assist the Borrower, through MSAS, in hiring the consultants to be employed under Parts A, B.1 and C of the Project. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower, through MSAS, shall maintain or cause to be maintained records and separate accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of Parts A, B. 1 and C of the Project of the departments or agencies of the Borrower responsible for canying out such Parts of the Project. (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) of this Section including those for the Special Account and the records and accounts referred to in Section 4.02 of this Agreement for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; - 12 - (ii) furnish to the Bank 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 Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning said records and accounts and the audit thereof as the Bank shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of statements of expenditure, the Borrower 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 Bank has received the audit report for the fiscal year in which the last withdrawal from the Loan Account or payment out of the Special Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Bank'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 procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. Section 4.02. The Borrower, through MSAS, shall cause each Eligible Province: (a) to maintain records and separate accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of each Eligible Subproject "I" and each Eligible Subproject "II" to be carried out under Parts B.2 and B.3 of the Project by each such Eligible Province; and (b) to take the necessary actions to enable the Borrower to comply with its obligation under Section 4.01 (b) of this Agreement. - 13 - ARTICLE V Remedies of the Bank Section 5.01. Pursuant to Section 6.02 (1) of the General Conditions, the following additional events are specified: (a) that Decree No. 667/91 or any provision thereof shall have been amended, suspended, abrogated, repealed, waived or not enforced in such a manner so as to affect, in the opinion of the Bank, the ability of the Borrower to carry out Parts A, B. 1 and C of the Project through MSAS; (b) that Decree No. 578/93 or any provision thereof shall have been amended, suspended, abrogated, repealed, waived or not enforced in such a manner so as to affect, in the opinion of the Bank, the ability of the Borrower, through MSAS, or the Eligible Provinces or both, to carry out their respective Parts of the Project; (c) that any of the Eligible Provinces shall have failed to perform any of its obligations under the corresponding SLA; and (d) that 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 an Eligible Province will be able to perform its obligations under the corresponding SLA. Section 5.02. Pursuant to Section 7.01 (h) of the General Conditions, the following additional events are specified: (a) any event specified in paragraphs (a) or (b) of Section 5.01 of this Agreement shall occur; and (b) any of the events specified in paragraph (c) 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 Bank to the Borrower. - 14 - ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) that the PCU has: (i) been duly established; and (ii) employed staff, including the appointment of such unit's coordinator, as provided in Section 3.06 of this Agreement; (b) that the Implementation Manual has been duly approved by the Borrower, through MSAS; (c) that the UNDP Agreement has been amended as provided in Section 3.11 of this Agreement; and (d) that all action, satisfactory to the Bank, has been taken by the Borrower in order to permit the procurement of goods and services to be financed out of the proceeds of the Loan (for Parts A, B. 1 and C of the Project) in accordance with the provisions set forth or referred to in this Agreement. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank, namely, that: (a) the PCU has been duly established; and (b) all action referred to in paragraph (d) of Section 6.01 of this Agreement has been taken. Section 6.03. The date A Vvi 4 I is hereby specified for the purposes of Section 12.04 of the General Conditions. - 15 - ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Minister of Economy and Public Works and Services 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: Ministerio de Economia y Obras y Servicios Pu'blicos Hip6lito Yrigoyen 250 Buenos Aires Argentina Cable address: Telex: MINISTERIO ECONOMIA 121952-AR Baires For the Baik: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 248423 (RCA) Washington,D.C. 82987 (FTCC) 64145 (WUI) or 197688 (TRT) - 16 - 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. ARGENTINE REPUBLIC By Isl AlVeJob rAQLCk2- Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By ((~~ Regional Vice President Latin America and the Caribbean - 17 - SCHEDULE 1 Withdrawal of the Proceeds of the Loan 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 Dollar to be Category Equivalent) Financed (1) Works 37,500,000 70% (2) Medical, hardware and 24,500,000 70% office equipment, software application, vehicles and furniture under the Project (3) Consultants' services 23,000,000 70% and training (4) Refunding of 1,150,000 Amounts due Project Preparation pursuant to Advance Section 2.02(c) of this Agreement (5) Unallocated 15,250,000 TOTAL 101,400,000 - 18 - 2. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not to exceed $2,000,000 equivalent, may be made in respect of Category (3) set forth in the table in such paragraph on account of payments made for expenditures before that date but after April 15, 1995; (b) payments made for expenditures with respect to an Eligible Subproject "I" unless: (i) the corresponding Eligible Province has: (A) entered into the respective SLA; (B) entered into an arrangement (the Infrastructure Arrangement "I") with the respective Eligible Public Hospital to be benefitted by the carrying out of such subproject, substantially in accordance with a format approved by the Bank; (C) established a PIU and staffed such unit (including the appointment of a coordinator) as provided in Section 3.07 of this Agreement; (D) duly approved the corresponding sections within the Implementation Manual relating to the carrying out of the activities under Parts B.2 and B.3 of the Project; (E) furnished to the Bank the corresponding Investment Plan; and (F) taken all action, satisfactory to the Bank, in order to permit such Eligible Province to carry out th., procurement of goods and works to be financed under the Loan (for Parts B.2 and B.3 of the Project) in accordance with the provisions set forth or referred to in this Agreement; (ii) counsel for the Borrower and the corresponding Eligible Province, acceptable to the Bank, has each furnished to the Bank an opinion stating that the respective SLA has been executed by the Borrower and such Eligible Province and that such agreement is in full force and effect and that all action referred to in (i)(F) herein has been taken; and (iii) the Eligible Public Hospital mentioned in (i) (B) herein has appointed a director with qualifications acceptable to the PCU to administer such hospital; (c) payments made for expenditures with respect to each of the first two Eligible Subprojects "II" in each Eligible Province unless: (i) the corresponding Eligible Province has: (A) carried out the Eligible Subproject "I" in accordance with the plan mentioned in (b) (i) (E) above; and (B) entered into an arrangement (the Infrastructure Arrangement "II") with the Eligible Public Hospital mentioned in (b) (i) (B) above, substantially in accordance with a format approved by the Bank; and (ii) the Eligible Public Hospital mentioned in (b) (i) (B) above has: (A) established and implemented a system, satisfactory to the Bank, to provide information on costs per cost center within such hospital, satisfactory to the Bank; (B) established and implemented an organization structure satisfactory to the Bank; and (C) established a payroll information system satisfactory to the Bank; (d) payments made for expenditures with respect to each of the last three Eligible Subprojects "II" in each Eligible Province unless: (i) the corresponding Eligible Province has: (A) met the conditions referred to in (c)(i) above; and (B) furnished to - 19 - the Bank evidence satisfactory to the Bank indicating that such province has made progress satisfactory to the Bank in carrying out the corresponding activities for such province under the action plan referred to in paragraph (b) of Section 3.05 of this Agreement; and (ii) the Eligible Public Hospital mentioned in (b)(i)(B) above has met the conditions referred to in (c)(ii) above; and (e) payments made for expenditures under Part B. 1(b) of the Project, unless the Borrower has furnished to the Bank guidelines, acceptable to the Bank, for the design and implementation of the system referred to in such Part of the Project. 3. The Bank may require withdrawals from the Loan Account to be made on the basis of statements of expenditure for expenditures under: (a) all contracts for goods to be awarded pursuant to the provisions of: (i) Part C.2 (a) of Section I of Schedule 4 to this Agreement, with the exception of the first contract to be awarded pursuant to the provisions of such Part by each Eligible Province and each contract costing more than $200,000 equivalent; and (ii) Part C.3 of Section I of Schedule 4 to this Agreement; (b) all contracts for works to be awarded pursuant to the provisions of: (i) Part C.2 (b) of Section I of Schedule 4 to this Agreement, with the exception of the first contract to be awarded pursuant to the provisions of such Part by each Eligible Province and each contract costing more than $600,000 equivalent; and (ii) Part C.4 of Section I of Schedule 4 to this Agreement; (c) contracts for the employment of consulting firms costing less than $100,000 equivalent; and (d) contracts for the employment of individual consultants costing less than $35,000 equivalent, all under such terms and conditions as the Bank shall specify by notice to the Borrower. -20- SCHEDULE 2 Description of the Project The objective of the Project is to rationalize the Borrower's spending in the health sector, through: (a) the strengthening of the policy-making capacity of MSAS and the MSPs of the Eligible Provinces to: (i) foster reform in such sector; and (ii) support the implementation of specific short and medium-term actions that will establish the incentives for an efficient management of Eligible Public Hospitals; (b) the establishment of a framework to transform the current structure of the Eligible Public Hospitals into Autonomous Public Hospitals; and (c) the improvement of the capacity of the Eligible Provinces to deliver health services resulting from the implementation of the framework referred to in (b) herein. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Bank may agree upon from time to time to achieve such objectives: Part A: Policy Reform Studies Carrying out of the following studies: (a) a study to upgrade the national information system with respect to: (i) the information available at the national registry of health; (ii) epidemiological information; and (iii) provision of health services; (b) a study to define priority health services to be financed through the Borrower's subsidies; (c) a study to separate the responsibility of the Provinces to provide health services from their responsibility to finance such services; (d) a study to: (i) design a payment system for the provision of health services to be delivered by Eligible Public Hospitals; and (ii) design the required legal arrangements to reflect the implementation of the payment system mentioned in (d)(i) herein; (e) a study to define an identification system for the various modalities of health insurance beneficiaries within the health sector; (f) a study to design a strategy to establish a regulatory framework for the private health insurance system; (g) a study on the modifications to the current health sector regulatory framework in order to assure minimum quality standards of the health services delivered by public and private providers; (h) a study to design a strategy to reform the Obras Sociales Provinciales (the provincial occupational health insurance funds) in order to improve, inter alia, their efficiency in carrying out their functions; (i) a study on the impact of AIDS (Acquired Immunodeficiency Syndrome) in the operation of Public Hospitals, including, inter alia, the design of actions required to mitigate such impact; (j) a study to analyze and review the legal and institutional framework with respect to waste disposal by Public Hospitals; (k) a study to analyze the impact of the Project; and (1) a study to prepare new health sector projects to follow-up the Project. - 21 - Part B: Pilot Reform of Public Hospitals 1. Provision of technical assistance to Eligible Public Hospitals to: (a) improve, inter alia, their: (i) general organization and management; (ii) accounting and finance system; (iii) administration of patients; (iv) management and procurement of pharmaceutical materials and supplies; (v) hotel services, including, inter alia, laundry, food services and cleaning; (vi) diagnostic procedures; (vii) maintenance of the infrastructure and equipment; (viii) control of hospital infections; (ix) medical audits; and (x) treatment of medical waste; and (b) design and implement a management information system. 2. Carrying out of Eligible Subprojects "I". 3. Carrying out of Eligible Subprojects "II". Part C: Information of Reform Initiatives and Training of Sector Professionals 1. Carrying out of a campaign nationwide in order to inform the MSPs and the Public Hospitals of the Provinces (including the Eligible Public Hospitals) with respect to the activities being carried out by the Borrower to reform the health sector under Parts A and B above. 2. Provision of scholarships to Eligible Professionals in the areas of hospital management, public health and health economics. The Project is expected to be completed by December 31, 2000. - 22 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in Dollars)* On each March 15 and September 15 beginning March 15, 2001 5,070,000 through September 15, 2010 *The figures in this column represent dollar equivalents determined as of the respective dates of withdrawal. See General Conditions, Sections 3.04 and 4.03. - 23 - Premiums on Prepayment Pursuant to Section 3.04 (b) of the General Conditions, the premium payable on the principal amount of any maturity of the Loan to be prepaid shall be the percentage specified for the applicable time of prepayment below: Time of Prepayment Premium The interest rate (expressed as a percentage per annum) applicable to the Loan on the day of prepayment multiplied by: Not more than three years 0.20 before maturity More than three years but 0.40 not more than six years before maturity More than six years but 0.73 not more than 11 years before maturity More than 11 years but not 0.87 more than 13 years before maturity More than 13 years before 1.00 maturity - 24 - SCHEDULE 4 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: General Goods and works shall be procured in accordance with the provisions of Section I of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in January 1995 (the Guidelines) and the following provisions of this Section, as applicable. Part B: International Competitive Bidding 1. Except as otherwise provided in Part C of this Section, goods (consisting of: medical, hardware and office equipment, software application, vehicles and furniture) and works shall be procured under contracts awarded in accordance with the provisions of Section II of the Guidelines and paragraph 5 of Appendix I thereto. 2. The following provisions shall apply to goods and works to be procured under contracts awarded in accordance with the provisions of paragraph 1 of this Part B.1: (a) Grouping of contracts To the extent practicable, contracts for goods and works shall be grouped in bid packages estimated to cost $300,000 equivalent or more each and $ 3,000,000 equivalent or more each, respectively. (b) Two-stage bidding procedure The bidding procedure for computer equipment and software application estimated to cost $300,000 equivalent or more shall be carried out in two stages in accordance with the provisions of paragraph 2.6 of the Guidelines. (c) Preference for domestically manufactured goods The provisions of paragraphs 2.54 and 2.55 of the Guidelines and Appendix 2 thereto shall apply to goods manufactured in the territory of the Borro wer. - 25 - Part C: Other Procurement Procedures 1. Limited International Bidding Medical equipment estimated to cost more than $100,000 equivalent, up to an aggregate amount equivalent to $10,000,000, which the Bank agrees can only be purchased from a limited number of suppliers, may be procured under contracts awarded in accordance with the provisions of paragraph 3.2 of the Guidelines. 2. National Competitive Bidding (a) Medical, hardware and office equipment, software application, vehicles and furniture estimated to cost more than $100,000 equivalent but less than $300,000 equivalent per contract, up to an aggregate amount equivalent to $10,200,000, may be procured under contracts awarded in accordance with the provisions of paragraphs 3.3 and 3.4 of the Guidelines. (b) Works estimated to cost more than the equivalent of $300,000 but less than $3,000,000 equivalent per contract, up to an aggregate amount equivalent to $59,800,000, may be procured under contracts awarded in accordance with the provisions of paragraphs 3.3 and 3.4 of the Guidelines. (c) In the procurement of goods and works in accordance with paragraphs (a) and (b) herein, the Borrower shall use or cause to be used standard bidding documents acceptable to the Bank. 3. International and National Shopping Medical, hardware and office equipment, software application, vehicles and furniture estimated to cost $100,000 equivalent or less per contract, up to an aggregate amount equivalent to $2,000,000 may be procured under contracts awarded on the basis of international or national shopping piocedures in accordance with the provisions of paragraphs 3.5 and 3.6 of the Guidelines. 4. Procurement of Small Works Works estimated to cost $300,000 equivalent or less per contract, and not to exceed $3,200,000 in the aggregate, shall be procured under lumpsum, fixed price contracts awarded on the basis of quotations obtained from three qualified domestic contractors in response to a written invitation. The invitation shall include a detailed description of the works, including basic specifications, the required completion date, a - 26 - basic form of agreement acceptable to the Bank, and relevant drawings, where applicable. The award shall be made to the contractor who offers the lowest price quotation for the required work, and who has the experience and resources to successfully complete the contract. Part D: Review by the Bank of Procurement Decisions 1. Procurement Planning Prior to the issuance of any invitations to bid for contracts under the Project, the proposed procurement plan for the Project shall be furnished by the Borrower, through MSAS, to the Bank for its review and approval, in accordance with the provisions of paragraph I of Appendix 1 to the Guidelines. Procurement of all goods and works shall be undertaken in accordance with such procurement plan as shall have been approved by the Bank, and with the provisions of said paragraph 1. 2. Prior Review With respect to: (a) each contract for goods and works to be awarded pursuant to the provisions of Parts B and C.1 of this Section; (b) the first contract for goods to be awarded pursuant to the provisions of Part C.2(a) of this Section by each Eligible Province and each contract for goods estimated to cost more than $200,000 equivalent to be awarded pursuant to the provisions of such Part of this Section; and (c) the first contract for works to be awarded pursuant to the provisions of Part C.2 (b) by each Eligible Province and each contract for works estimated to cost more than $600,000. equivalent to be awarded pursuant to the provisions of such Part of this Section, the procedures set forth in paragraphs 2 and 3 of Appendix 1 to the Guidelines shall apply. 3. Post Review With respect to each contract not governed by paragraph 2 of this Part, the procedures set forth in paragraph 4 of Appendix 1 to the Guidelines shall apply. Section II. Employment of Consultants 1. Consultants' services shall be procured under contracts awarded in accordance with the provisions of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981 (the Consultant Guidelines). For complex, time-based assignments, such contracts shall be based on the standard form of contract for consultants' services issued by the Bank, with such modifications as shall have been agreed by the Bank. Where no relevant standard - 27 - contract documents have been issued by the Bank, other standard forms acceptable to the Bank shall be used. 2. Notwithstanding the provisions of paragraph I of this Section, the provisions of the Consultant Guidelines requiring prior Bank review or approval of budgets, short lists, selection procedures, letters of invitation, proposals, evaluation reports and contracts shall not apply to: (a) contracts for the employment of consulting firms estimated to cost less than $100,000 equivalent each, up to an aggregate amount equivalent to $10,000,000; or (b) contracts for the employment of individual consultants estimated to cost less than $35,000 equivalent each up to an aggregate amount equivalent to $5,000,000, with the exception of the contracts for the employment of individual consultants to be hired by the PCU and PIUs. However, this exception to prior Bank review shall not apply to: (a) the terms of reference for such contracts; (b) single-source selection of consulting firms; (c) assignments of a critical nature, as reasonably determined by the Bank; (d) amendments to contracts for the employment of consulting firms raising the contract value to $100,000 equivalent or above; or (e) amendments to contracts for the employment of individual consultants raising the contract value to $35,000 equivalent or above. - 28 - SCHEDULE 5 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1) through (3) set forth in the table in paragraph I 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 Loan allocated from time to time to the eligible Categories in accordance with the provisions of Schedule I to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $4,000,000 to be withdrawn from the Loan Account and deposited in the Special Account pursuant to paragraph 3 (a) of this Schedule, provided, however, that unless the Bank shall otherwise agree, the Authorized Allocation shall be limited to an amount equivalent to $1,000,000 until the aggregate amount of withdrawals [from the Loan Account plus the total amount of all outstanding special commitments entered into by the Bank pursuant to Section 5.02 of the General Conditions] shall be equal to or exceed the equivalent of $10,000,000. 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 - 29 - 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 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 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) if the Borrower shall have failed to furnish to the Bank, within the period of time specified in Section 4.01 (b) (ii) of this Agreement, any of the audit reports required to be furnished to the Bank pursuant to said Section in respect of the audit of the records and accounts for the Special Account; (c) if, at any time, the Bank shall have notified the Borrower of its intention to suspend in whole or in part the right of the Borrower to make withdrawals from the Loan Account pursuant to the provisions of Section 6.02 of the General Conditions; or (d) once the total unwithdrawn amount of the Loan allocated to the eligible Categories, 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 Project, shall equal the equivalent of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Loan Account of the remaining unwithdrawn amount of the Loan allocated to the eligible Categories shall follow such procedures as the Bank shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Bank shall have been satisfied that all such amounts - 30 - 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. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Bank for Reconstruction and Dcvelopment. FOR SECRETARY