Honduras - Livestock Development Project : Credit 0179 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 179 HO Project Agreement (Livestock Development Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND BANCO CENTRAL DE HONDURAS DATED MARCH 2, 1970 CONFORMED COPY CREDIT NUMBER 179 HO Project Agreement (Livestock Development Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND BANCO CENTRAL DE HONDURAS DATED MARCH 2, 1970 PROJECT AGREEMENT AGREEMENT , dated March 2 , 1970, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and BANCO CENTRAL DE HONDURAS (hereinafter called Banco Central). WHEREAS by a development credit agreement of even date herewith between the Republic of Honduras (hereinafter called the Borrower) and the Association, which agreement, the Schedules thereto and the General Conditions Applicable to Development Credit Agreements of the Association made applicable thereto are hereinafter called the Development Credit Agreement, the Association has agreed to make available to the Borrower a development credit in various currencies equivalent to two million six hundred thousand dollars ($2,600,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that Banco Central agree to undertake certain obligations toward the Association as hereinafter provided; WHEREAS by a subsidiary loan agreement of even date herewith between the Borrower and Banco Central (hereinafter called the Subsidiary Loan Agreement) the Borrower has undertaken to make the proceeds of the said development credit available to Banco Central on the terms and conditions set forth in the Subsidiary Loan Agreement on condition that Banco Central and the Participating Banks agree to carry out the Project described in the Development Credit Agreement; WHEREAS Banco Central is willing to carry out such Project together with the Participating Banks, and with the Government's assistance; and WHEREAS Banco Central, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in the Project Agreement, unless the context otherwise requires, the several terms defined in the Development Credit Agreement 4 have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Livestock Project Account" means the account referred to in Section 2.02 (a) of this Agreement. (b) "Livestock Project Services Account" means the account referred to in Section 2.03 (a) of this Agreement. (c) "Part A Loan" means any loan included in Part A of the Project. (d) "Part B Loan" means any loan included in Part B of the Project. (e) "Ranch Development Plan" means any ranch development plan referred to in Section 2.07 of this Agreement. (f) "Stage II Loan" means any loan made by a Participating Bank to a rancher for livestock development pursuant to Section 2.09 of this Agreement and eligible for withdrawals from the Livestock Project Account. ARTICLE II Particular Covenants of Banco Central Section 2.01. (a) Banco Central and the Participating Banks shall carry out Parts A and B of the Project and Banco Central shall carry out Part C of the Project, all with due diligence and efficiency and in conformity with sound administrative, agricultural, economic and financial practices, and in accordance with the relevant provisions of the Project Agreement and of the Subsidiary Loan Agreement. (b) Banco Central shall at all times provide to the Project Commission its full cooperation, as well as all information, documents and facilities which the Project Commission may require in order to carry out its functions as provided in Decree No. 865 dated December 18, 1969 and in Section 4.06 of the Development Credit Agreement. Section 2.02. (a) Banco Central shall open and maintain on its books a Livestock Project Account to which the proceeds of the loan provided for in Section 2.01 (a) of the Subsidiary Loan Agreement shall be credited and through which all payments under such loan and all payments under Project Administration Agreements shall be made. 5 (b) Banco Central shall cause the equivalent of the proceeds of the Credit relent to it pursuant to Section 2.01 (a) of the Subsidiary Loan Agreement and credited to the Livestock Project Account to be used exclusively for extending Part A Loans in accordance with the provisions of the Development Credit Agreement and of the Project Agreement. (c) Banco Central shall cause such amounts credited to the Livestock Project Account and representing repayments of principal on account of Part A Loans and of Stage II Loain; which shall from time to time be available in the Livestock Project Account after repayments of principal on the Loan provided for in Section 2.01 (a) of the Subsidiary Loan Agreement, to be used exclusively for extending, through Participating Banks, FIage 1I Loans to ranchers for livestock credit purposes in accordance with the relevant provisions of the Development Credit Agreement and of the Project Agreement. Section 2.03. Banco Central shall open and maintain on its books a Livestock Project Services Account to which the proceeds of the grant provided for in Section 2.01 (b) of the Subsidiary Loan Agreement shall be credited and from which all payments in respect of the carrying out of Part C of the Project described in Schedule 2 to the Development Credit Agreement shall be made in accordance with the provisions of the Development Credit Agreement and of the Project Agreement. Section 2.04. (a) For the purpose of carrying out Part C of the Project Banco Central shall appoint a competent and experienced Project Director acceptable to the Association. (b) Banco Central shall retain the services of such Project Director at least until the Closing Date, upon terms and conditions (including terms of reference and scope of authority) satisfactory to the Association. (c) Banco Central shall ensure that the Participating Banks employ and second to the Project Director an adequate number of livestock technicians acceptable to him to assist him on all technical aspects of the carrying out of the Project, with such qualifications, duties and responsibilities as the Participating Banks and the Project Director shall agree. (d) Banco Central shall pay out of the Livestock Project Services Account for the reasonable cost of technical assistance services (including salary, family and housing allowances and international travel of the Project Director, office equipment and vehicles) under Part C of the Project, provided, however, that no withdrawals from the Livestock Project Account shall be made on account of payments for 6 taxes imposed by the Borrower or any of its political subdvisions on, or in connection with the importation or supply of, goods or services required for the Project. Section 2.05. Banco Central shall enter into a Project Administration Agreement satisfactory to the Association with each Participating Bank, under which each Participating Bank shall undertake: (a) To extend the loans included in Parts A and B of the Project as well as Stage II Loans in accordance with the requirements set forth in the Project Agreement, in such Project Administration Agreement and, in the case of Part A Loans and Part B Loans, in accordance with the Ranch Development Plan for the rancher applying for any such loan. (b) To open on its books a separate account through which all amounts withdrawn from, and to be paid into, the Livestock Project Account by such bank shall flow, and such account shall (i) identify each Part A Loan, Part B Loan or Stage 1I Loan made by such bank; (ii) identify the goods and services financed out of such loans; and (iii) reflect, in accordance with consistently maintained sound accounting practices, the administration of such account and of each such loan. (c) To cause the account referred to in Section 2.05 (b) of this Agreement to be audited annually by independent auditors acceptable to the Association and to Banco Central and to transmit to Banco Central, and through it, to the Association, promptly after their preparation and not later than four months after the close of such bank's financial year to which they relate, certified copies of the financial statements relating to such account and a signed copy of the auditors' report. (d) To employ and to second to the Project Director such livestock technicians as shall be required pursuant to Section 2.04 (c) of this Agreement. (e) To process all Part A Loans, Part B Loans and Stage II Loans pursuant to its normal administrative and financial procedures. (f) To enter into a loan agreement with each rancher in respect of each Part A Loan and Part B Loan on terms and conditions acceptable to the Project Director, and to provide to Banco Central conformed copies of such loan agreement. (g) To enter into a loan agreement with each rancher in respect of each Stage II Loan on terms and conditions acceptable to Banco Central, and to provide to Banco Central conformed copies of such loan agreement. 7 (h) To take such steps as may be required to ensure compliance by each rancher with all obligations assumed by him under the applicable loan agreement entered into with respect to each Part A Loan and Part B Loan or Stage II Loan by such bank and such rancher, and with all the provisions of the applicable Ranch Development Plan, in the case of Part A Loans. (i) In the event of any default by any rancher in respect of any of the obligations or provisions referred to in Section 2.05 (h) of this Agreement, (A) to promptly inform the Project Director of such default, (B) unless the Project Director otherwise agrees, to take all measures required to suspend or terminate access by the defaulting rancher to the use of any of the proceeds of the Livestock Project Account, and (C) if the Project Director agrees, to take all remedial action the circumstances require, including, without limitation, requiring the immediate repayment of all amounts lent to such defaulting rancher out of the proceeds of the Livestock Project Account. (j) To furnish to Banco Central, promptly upon its request, the reports, the loan applications for ranch development programs eligible for financing out of the proceeds of the Livestock Project Account, the recommendations in respect of such loan applications, the specifications and procurement schedules in respect of goods and services to be procured by any rancher out of the proceeds of any Part A Loan, Part B Loan or Stage 11 Loan and any material modifications subsequently made therein, in such detail as Banco Central shall reasonably request. Section 2.06. (a) Banco Central shall furnish to the Association, promptly upon their execution, conformed copies of all Project Administration Agreements entered into with Participating Banks pursuant to Section 2.05 of this Agreement, and shall furnish to the Association, upon request, copies of any of the loan agreements referred to in Section 2.05 (f) or (g) of this Agreement. (b) In respect of any Project Administration Agreement, Banco Central shall submit to the Association, together with the conformed copies thereof referred to in Section 2.06 (a) of this Agreement, an opinion satisfactory to the Association of counsel acceptable to the Association showing that such agreement has been duly authorized or ratified by, and executed and delivered on behalf of, Banco Central and the Participating Bank party thereto, and constitutes a valid and binding obligation of the parties thereto in accordance with its terms. Section 2.07. In respect of each rancher eligible for or benefiting from a Part A Loan, Banco Central shall ensure at least until the Closing Date of the Credit Account that the Project Director, in conformity with sound agricultural credit and financial practices, prepare, review, and, if appropriate, modify from 8 time to time, a ranch development plan containing a detailed description of the estimated requirements for development of the ranch concerned and a financing plan specifying the estimated amounts to be contributed by the rancher himself and the amounts to be borrowed by him. Section 2.08. (a) Until the funds to be made available to the Borrower by the Association on account of Part A Loans for relending to Banco Central pursuant to Section 2.01 (a) of the Subsidiary Loan Agreement, together with the amounts representing prepayments of Part A Loans within five years of the date of the Project Agreement shall have been fully committed, Banco Central shall ensure that Participating Banks extend Part A Loans and. if required, Part B Loans to all applicant creditworthy ranchers eligible under Part A of the Project in accordance with the provisions of the Project Agreement and of the applicable Ranch Development Plan. (b) Except as the Association, Banco Central and the Participating Bank shall otherwise agree, Part A Loans shall be extended upon inter alia the following terms and conditions: (i) The amount of a Part A Loan shall be equivalent to such percentage of the aggregate cost of all goods or services to be financed out of the proceeds of such loan as shall be provided in the applicable Ranch Development Plan; (ii) Part A Loans shall be repayable within periods ranging from eight to twelve years including grace periods ranging from three to five years; (iii) Part A Loans shall bear interest at the rate of nine per cent (9%) per annum on their principal amount withdrawn and outstanding from time to time, and no other charges shall be payable thereon by the beneficiary rancher to the Participating Bank; and (iv) No Part A Loan in excess of the equivalent of one hundred thousand dollars ($100,000) shall be made before approval has been obtained from tha Association. (c) Part B Loans shall cover working capital requirements for production purposes, including the purchase of feeder steers, set forth in the Ranch Development Plan for the rancher applying for such loan, and shall be repayable within a period not exceeding two years. 9 (d) Except as the Association, Banco Central and the Participating Bank shall otherwise agree, Stage 11 Loans shall bear interest at the rate of nine per cent (9/) per annum on their principal amount withdrawn and outstanding from time to time and no other charges shall be payable by the beneficiary rancher to the Participating Bank. Section 2.09. Banco Central shall make available to Participating Banks, for the purpose of extending loans to ranchers for livestock credit purposes (Stage II Loans), such amounts in the Livestock Project Account representing repayments of principal on account of Part A Loans (other than the amounts representing prepayments of Part A Loans within five years of the date of the Project Agreement) and of Stage 11 Loans as shall from time to time be available in the Livestock Project Account after repayment of such principal amounts of the loan provided for in Section 2.01 (a) of the Subsidiary Loan Agreement as are required to be paid to the Borrower by Banco Central pursuant to Section 2.02 (d) of the Subsidiary Loan Agreement. Section 2. 10. Except as the Association, Banco Central and any Participating Bank shall otherwise agree, Participating Banks shall pay interest at the rate of five per cent (51 ) per annum on the amounts withdrawn from the Livestock ProJect Account by that bank on account of Part A Loans and Stage 11 Loans and outstanding from time to time; no other charges shall be payable thereon by Participating Banks. Interest shall accrue from the respective dates on which amounts shall be so withdrawn, and shall be computed on the basis of a 360-day year of twelve 30-day months. Interest shall be payable on the dates specified in each Project Administration Agreement. Section 2.11. Except as Banco Central and the Participating Bank shall otherwise agree, the Participating Bank shall repay the aggregate amounts withdrawn from the Livestock Project Account as follows: (a) the aggregate amounts withdrawn on account of each Part A Loan in installments payable on the dates specified in each Project Administration Agreement, and ending on the day of the last scheduled repayment by the borrowing rancher under such loan; and (b) the aggregate amounts withdrawn on account of each Stage 11 Loan in installments payable on the dates specified in each Project Administration Agreement and ending on the installment date next following the day of the last scheduled repayment by the borrowing rancher under such loan, or on December 15, 1986, whichever shall be the earlier. 10 Section 2.12. (a) Except as Banco Central and the Participating Bank shall otherwise agree, the Participating Bank may repay in advance of maturity at par all or part of the amounts repayable under Section 2.11 of this Agreement, and any such repayment shall be applied to the several maturities referred to in said Section 2.11 in chronological order. (b) Whenever a rancher prepays all or part of the principal amount of a Part A Loan or Stage II Loan granted to him, Banco Central shall require the Participating Bank party to the loan agreement providing for such Part A Loan or Stage II Loan to repay such amount to Banco Central, and such amounts shall be available for use in providing Part A Loans or Stage 1I Loans pursuant to the provisions of Section 2.08 or Section 2.09 of this Agreement. Section 2.13. (a) Prior to any withdrawal by a Participating Bank from the Livestock Project Account in respect of any Part A Loan or Stage II Loan, Banco Central shall require a conformed copy of the loan agreement pertaining to such Part A Loan or Stage II Loan, and, in respect of any Part A Loan, a signed statement of expenditures approved by the Project Director and relating to such disbursement and sufficient evidence that the rancher has made his counterpart contribution as provided in the applicable Ranch Development Plan. (b) Each Participating Bank shall be entitled to withdraw from the Livestock Project Account, in respect of Part A Loans to ranchers, the equivalent of seventy-five per cent (75%) of such amount as it shall have paid to, or in the name of, ranchers under Part A Loans. Section 2.14. Whenever and to the extent required to supplement the resources of any Participating Bank to bring them to such a level as to enable such bank at all times to meet its commitments under loans extended in carrying out Part B of the Project, Banco Central shall make rediscounting facilities available to such Participating Bank. Section 2.15. (a) Banco Central shall (i) maintain or cause to be maintained records adequate to identify the loans, goods and services financed out of funds withdrawn from the Livestock Project Account or from the Livestock Project Services Account, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof), and to reflect, in accordance with consistently maintained sound accounting practices the administration and operation of the Livestock Project Account, of the Livestock Project Services Account and of the accounts referred to in Section 2.05 (b) of this Agreement, and the operations and financial condition of Banco Central and of the Participating Banks in respect of the Project or any part thereof; (ii) enable the Association's 11 representatives to inspect the Project, the goods and any relevant records and documents; and (iii) furnish or cause to be furnished to the Association all such information as the Association shall reasonably request concerning the expenditure of the funds withdrawn from the Livestock Project Account, from the Livestock Project Services Account and from the accounts referred to in Section 2.05 (b) of this Agreement, the Project, the performance by Banco Central of its obligations under the Project Agreement, the goods and services financed out of the funds withdrawn from the Livestock Project Account or from the Livestock Project Services Account and those financed out of the funds withdrawn from the accounts referred to in Section 2.05 (b) of this Agreement, and the administration, operations and financial condition of the Participating Banks. (b) Banco Central shall furnish or cause to be furnished to the Association, promptly upon its request, the reports, loan applications, lending plans, specifications, and procurement schedules for the Project and any material modifications subsequently made therein, in such detail as the Association shall reasonably request. Section 2.16. (a) Banco Central shall cause the Livestock Project Account, the Livestock P oject Services Account and the accoLints referred to in Section 2.05 (b) of this Agreement to be audited annually by independent auditors acceptable to the Association and shall cause to be transmitted to the Association, promptly after their preparation and not later than four months after the close of the respective financial y;ars of Banco Central and of the Participating Banks to which they relate, certified copies of the financial statements relating to such accounts and a signed copy of the auditors' reports. (b) Banco Central and the Association shall from time to time, at the request of either party, exchange views through their representatives with regard to matters relating t., the purposes of the Credit, the Project Agreement, the Project Commiss, n. the Project Director, the Project Administration Agreements, the performanc by Banco Central of its obligations under the Project Agreement, and the performance by Banco Central and by the Participating Banks of their respective obligations under the Project Administration Agreements. (c) Banco Central shall promptly inform the Association of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, the performance by Banco Central of its obligations under the Project Agreement and the performance by Banco Central or by the Participating Banks of their respective obligations under the Project Administration Agreements. 12 ARTICLE III Effective Date; Termination; Cancellation and Suspension Section 3.01. The Project Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. If the Development Credit Agreement terminates pursuant to Section 6.03 thereof, the Project Agreement and all obligations of the parties thereunder shall forthwith terminate. Section 3.02. The Project Agreement and all the obligations of the parties thereunder shall terminate on the later of the following dates: (a) the date on which the Subsidiary Loan Agreement shall terminate in accordance with its terms; or (b) December 31, 1986. ARTICLE IV Miscellaneoius Provisions Section 4.01. Any notice or request required or permitted to be given or made under the Project 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, or at such other address 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 Associ-tion 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Indevas Washington, D.C. For Banco Central: Banco Central de Honduras Tegucigalpa, D.C. Honduras 13 Cable address: Bantral Tegucigalpa Section 4.02. No delay in exercising, or omission to exercise, any right, power or remedy accruing to either party under the Project Agreement upon any default shall impair any such right, power or remedy or be construed to be a waiver thereof or an acquiescence in such default; nor shall the action of such party in respect of any default, or any acquiescence in any default, affect or impair any right, power or remedy of such party in respect of any other or subsequent default. Section 4.03. Banco Central shall furnish to the Association sufficient evidence of the authority of the person or persons who will, on behalf of Banco Central, take any action or execute any documents required or permitted to be taken or executed by Banco Central pursuant to any of the provisions of the Project Agreement and the authenticated specimen signature of each such person. Section 4.04. Any action required or permitted to be taken, and any documents required or permitted to be executed, under the Project Agreement on behalf of Banco Central may be taken or executed by the President of Banco Central or such other person or persons as Banco Central shall designate in writing. Section 4.05. The Project Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. IN WITNESS WHEREOF the parties hereto, acting through their representatives thereunto duly authorized, have caused the Project Agreement to be signed in their respective names and delivered in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ J. Burke Knapp Vice-President BANCO CENTRAL DE HONDURAS By /s / Roberto Ramirez A uthorized Representative