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

CONFORMED COPY CREDIT NUMBER 179 HO Development Credit Agreement (Livestock Development Project) BETWEEN REPUBLIC OF HONDURAS AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED MARCH 2, 1970 CONFORMED COPY CREDIT NUMBER 179 HO Development Credit Agreement (Livestock Development Project) BETWEEN REPUBLIC OF HONDURAS , ND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED MARCH 2, 1970 DEVELOPMENT CREDIT AGREEMENT AGREEMENT , dated March 2, 1970 , between REPUBLIC OF HONDURAS (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS the Borrower has undertaken a program for the development of the Borrower's livestock sector, such program to be carried out by Banco Central de Honduras; and WHEREAS the Association is prepared to grant a development credit to the Borrower, for use by Banco Central and the Participating Banks in carrying out such program upon the terms and conditions set forth in the Development Credit Agreement and in a project agreement of even date herewith between the Association and Banco Central; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The Borrower and the Association accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated January 31, 1969, with the same force and effect as if they were fully set forth herein, subject however to the following modifications thereof (said General Conditions Applicable to Development Credit Agreements of the Association as so modified being hereinafter called the General Conditions): (a) Section 6.06 is amended by inserting the words ", the Project Agreement" after the words "the Development Credit Agreement". (b) Section 8.02 is amended by inserting the words "or under the Project Agreement" after the words "the Development Credit Agreement". (c) The following subparagraph is added to Section 2.01: "13. The term 'Project Agreement' shall have the meaning set forth in the Development Credit Agreement". 4 Section 1.02. Wherever used in the Development Credit Agreement, 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) "Banco Central" means the Banco Central de Honduras, the Central Bank of Honduras established by Decree No. 53 of the National Congress dated February 3, 1950, as such Decree may be amended from time to time, and includes any successor thereto. (b) "Participating Bank" means any banking institution established in Honduras which shall have entered into a Project Administration Agreement. (c) "Project Administration Agreement" means an agreement, referred to in Section 2.05 of the Project Agreement, entered into on terms and conditions satisfactory to the Association between Banco Central and a Participating Bank for the purpose of carrying out the Project or any part thereof, and shall include any amendment thereto made with the approval of the Association. (d) "Project Agreement" means the project agreement between the Association and Banco Central of even date herewith, providing for the carrying out of the Project, as the same shall be amended from time to time by agreement between the Borrower, the Association and Banco Central. (e) "Project Commission" means the commission established pursuant to Decree No. 865 dated December 18, 1969. (f) "Project Director" means the person referred to in Section 2.04 (a) and (b) of the Project Agreement. (g) "Subsidiary Loan Agreement" means the Agreement referred to in Section 3.01 of the Development Credit Agreement entered into between the Borrower and Banco Central, as the same may be amended from time to time with the approval of the Association. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to two million six hundred thousand dollars ($2,600,000). 5 Section 2.02. (a) The Association shall open a Credit Account on its books in the name- of the Borrower and shall credit to such account the amount of the Credit. (b) The amount of the Credit may be withdrawn from the Credit Account as provided in, and subject to the rights of cancellation and suspension set forth in, the Development Credit Agreement and in accordance with the allocation of the proceeds of the Credit set forth in Schedule I to this Agreement, as such allocation shall be modified from time to time pursuant to the provisions of such Schedule or by further agreement between the Borrower and the Association. Section 2.03. The Borrower shall be entitled to withdraw from the Credit Account, in respect of the reasonable cost of goods or services required for the Project and to be financed under the Development Credit Agreement: (i) the equivalent of seventy-five per cent (75%) of such amounts as shall have been paid by Participating Banks to ranchers under loans made in accordance with the applicable Project Administration Agreements and included in Category 1 of the allocation of the proceeds of the Credit referred to in Section 2.02 of this Agreement; and (ii) such amounts as shall have been paid (or, if the Association shall so agree, as shall be required to meet payments to be made) for goods or services included in Category II of such allocation of the proceeds of the Credit. Section 2.04. No withdrawals from the Credit Account shall be made on account of payments for taxes imposed by the Borrower or any of its political subdivisions on, or in connection with the importation or supply of, goods or services included in Category 1I of the allocation of the proceeds of the Credit referred to in Section 2.02 of this Agreement. Section 2.05. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. Section 2.06. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.07. Service charges shall be payable semi-annually on February 15 and August 15 in each year. 6 Section 2.08. The Borrower shall repay the principal amount of the Credit withdrawn from the Credit Account in semi-annual installments payabie on each February 15 and August 15 commencing February 15, 1980 and ending August 15, 2019, each installment to and including the installment payable on August 15, 1989 to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. ARTICLE III Use of Proceeds of the Credit Section 3.01. The Borrower shall make the proceeds of the Crudit accorded under the Development Credit Agreement available to Banco Central pursuant to a subsidiary loan agreement between the Borrower and Banco Central containing terms and conditions satisfactory to the Association, and such proceeds shall be applied in accordance with the provisions of the Development Credit Agreement, of the Project Agreement and of the Subsidiary Loan Agreement exclusively to expenditures on the Project, described in Schedule 2 lo this Agreement. Section 3.02. Except as the Borrower and the Association shall otherwise agree, all goods and services financed out of the proceeds of the Credit shall be used exclusively in carrying out the Project. ARTICLE IV Particular Covenants Section 4.01. (a) The Borrower shall ensure that Banco Central and the Participating Banks shall carry out Parts A and B of the Project and that 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 provisions of the Project Agreement and of the Subsidiary Loan Agreement, and the Borrower iall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) The Borrower and all its agencies shall take all action which shall be necessary on their part to enable Banco Central to perform all of its obligations under the Project Agreement, the Subsidiary Loan Agreement and the Project Administration Agreements and shall not take any action which might interfere with such performance. 7 Section 4.02. The Borrower shall exercise its rights under the Subsidiary Loan 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 Borrower shall not assign, nor amend, abrogate or waive any provision of the Subsidiary Loan Agreement. Section 4.03. (a) The Borrower and the Association shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reasonably request with regard to the general status of the Credit. On the part of the Borrower, such information shall include information with respect to financial and economic conditions in the territories of the Borrower and the international balance of payments position of the Borrowe; (b) The Borrower and the Association shall from time to time, at the request of either party, exchange views through their representatives with regard to matters relating to the purposes of the Credit, the maintenance of the service thereof, the Project Commission, the Project Agreement and the Subsidiary Loan Agreement, and the performance by the Borrower of its obligations Linder the Development Credit Agreement and under the Subsidiary Loan Agreement. (c) The Borrower 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 maintenance of the service thereof, the performance by the Borrower of its obligations under the Development Credit Agreement and the Subsidiary Loan Agreement, and the performance by Banco Central of its obligations under the Subsidiary Loan Agreement. (d) The Borrower shall afford all reasonable opportunity for accredited representatives of the Association to visit any part of the territories of the Borrower for purposes related to the Credit. Section 4.04. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes imposed under the laws of the Borrower or laws in effect in its territories, and shall be free from all restrictions imposed under any such laws. Section 4.05. The Development Credit Agreement, the Subsidiary Loan Agreement and the Project Agreement shall be free from any taxes on or in connection with the execution, delivery or registration thereof imposed under the laws of the Borrower or laws in effect in its territories. 8 Section 4.06. The Borrower shall maintain the Project Commission at least until completion of the Project, and shall at all times ensure that the Project Commission shall coordinate and supervise all aspects of the Project in accordance with sound administrative, agricultural, economic and financial practices. ARTICLE V Remedies of the Association Section 5.01. If any event specified in Section 7.01 of the General Conditions or in Section 5.02 of this Agreement shall occur and shall continue for the period, if any, therein set forth, then at any subsequent time during the continuance thereof, the Association, at its option, may by notice to the Borrower declare the principal of the Credit then outstanding to be due and payable immediately together with the service charges thereon and upon any such declaration such principal, together with such charges, shall become due and payable immediately, anything in the Development Credit Agreement to the contrary notwithstanding. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) the Subsidiary Loan Agreement or any Project Administration Agreement or any material provision thereof shall have been amended, suspended, abrogated or waived without the prior approval of the Association; (b) Banco Central shall have failed to perform any of its obligations under the Project Agreement or under the Subsidiary Loan Agreement and such event shall continue for a period of sixty days; and (c) Decree No. 865 dated December 18, 1969 relating to the establishment, functions and composition of the Project Commission or any provision thereof, shall have been materially amended, suspended, abrogated, repealed or waived so as to affect the Project adversely and such event shall continue for a period of thirty days. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 10.01 (b) of the General Conditions, namely that: 9 (a) the execution and delivery of the Project Agreement on behalf of Banco Central have been duly authorized or ratified by all necessary corporate action; (b) the execution and delivery of the Subsidiary Loan Agreement on behalf of the Borrower and of Banco Central, in form satisfactory to the Association, have been duly authorized or ratified by all necessary corporate and governmental action and have become fully effective and binding on the parties thereto in accordance with its terms, or shall become so effective and binding immediately upon the effectiveness of the Development Credit Agreement; and (c) the requirements of Section 2.04 (a) of the Project Agreement have been fulfilled. Section 6.02. The following are specified as additional matters within the meaning of Section 10.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) that the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, Banco Central and constitutes a valid and binding obligation of Banco Central in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the parties thereto and constitutes a valid and binding obligation of the parties thereto in accordance with its terms. Section 6.03. The date September 1, 1970 is hereby specified for the purposes of Section 10.04 of the General Conditions. ARTICLE VII Miscellaneous Section 7.01. The Closing Date shall be December 31, 1975 or such other date as shall be agreed between the Borrower and the Association. Section 7.02. The Minister of Economic Affairs and Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 9.03 of the General Conditions. 10 Section 7.03. The following addresses are specified for the purposes of Section 9.01 of the General Conditions: For the Borrower: Ministerio de Econornia y Hacienda Tegucigalpa, D.C. Honduras Cable address: Mineconomia Tegucigalpa For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Indevas Washington, D.C. Section 7.04. The Borrower irrevocably designates the President of Banco Central and, in his absence, the person then fulfilling the functions of the President of Banco Central for the purposes of taking any action required or permitted to be taken under the provisions of Sections 5.01, 5.03, 5.04, 5.05 and 5.06 of the General Conditions. IN WITNESS WHEREOF tbs. parties hereto, acting through their representatives thereunto duly authoiized, have caused the Development Credit 11 Agreement to be signed in their respective names and to be delivered in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF HONDURAS By /s/ Armando Alvarez Authorized Representatibe INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ J. Burke Knapp Vice-Presiden t 12 SCHEDULE 1 Allocation of the Proceeds of the Credit Amounts Expressed Category in Dollar Equivalent I. Long-term loans for investments in ranch development - Part A of the Project 2,450,000 II. Technical assistance services, including salary, family and housing allowances and international travel of the Project Director, office equipment and vehicles - Part C of the Project 150,000 Total 2,600,000 Reallocation upon Change in Cost Estimates 1. If the estimate of the cost of the items included in Category 1I shall decrease, the amount of the Credit then allocated to, and no longer required for, such Category will be reallocated by the Association to Category I. 2. If the estimate of the cost of the items included in Category II shall increase, an amount equal to the portion, if any, of such increase to be financed out of the proceeds of the Credit will be allocated by the Association, at the request of the Borrower, to such Category from Category . 13 SCHEDULE 2 Description of the Project The Project is part of the Borrower's program of livestock development, and consists of the following: Part A. The extension through Participating Banks of long-term loans (8 - 12 years) to ranchers for the development of beef breeding/fattening ranches, dairy-steer/fattening ranches and beef breeding ranches; Part B. The extension by Participating Banks of short-term loans to provide to ranchers benefiting from loans included in Part A of the Project working capital for production purposes including the purchase of feeder steers; and Part C. The provision of technical services for livestock development, including the employment of a Project Director assisted by livestock technicians. The Project is expected to be completed by December 31, 1974.