Loan Agreement. Public Disclosure Authorized LOAN NUMBER 1978 JM. Public Disclosure Authorized

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Loan Agreement LOAN NUMBER 1978 JM (Second Export Development Fund Project) Public Disclosure Authorized between JAMAICA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Public Disclosure Authorized Dated, 1981

2 LOAN NUMBER 1978 JM LOAN AGREEMENT AGREEMENT, dated I, 1981, between JAMAICA (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS (A) the Borrower has requested the Bank to assist in the financing of the Project described in Schedule 2 to this Agreement by making the Loan as hereinafter provided; (B) Part A of the Project will be carried out by the Export Development Fund Jamaica Limited (hereinafter called the Fund) acting through the Jamaica Export Credit Insurance Corporation Limited (hereinafter called JECIC) and Part B by JECIC and Jamaica National Export Corporation (hereinafter called JNEC); (C) the Borrower will assist the Fund, JECIC and JNEC in carrying out the said Parts of the Project, and as part of such assistance, will out of the proceeds of the Loan: (i) relend the Fund an amount equivalent to thirty six milli,n dollars ($36,000,000) or such other amount or amounts as shall be allocated to Category (1) in Schedule 1 hereto; and (ii) grant to JECIC and JNEC amounts equivalent to three hundred thousand dollars ($300,000) and seven hundred thousand dollars ($700,000), respectively or such othar amount or amounts as shall be allocated to JECIC and JNEC in Category (2) in Schedule 1 hereto; and WHEREAS the Bank has agreed, on the basis inter alia of the foregoing, to make the Loan available to the Borrower upon the terms and conditions set forth hereinafter and in a project agreement of even date herewith between the Bank, Bank of Jamaica, the Fund, JECIC and JNEC; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated October 27, 1980, with the same force and effect as if they were fully set forth herein.

3 -2- Section Wherever used in this 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) "Project Agreement" means the agreement of even date herewith between the Bank, BOJ, the Fund, JECIC and JNEC, as such agreement may be amended from time to time; (b) "sub-loan" means: (i) a loan made by a commercial bank to an eligible enterprise, and discounted by the Fund for: (A) the importation into Jamaica of raw materials, intermediate goods, packaging materials and spare parts which will be used in the manufacture or processing in Jamaica of goods and products; (B) the importation into Jamaica of recurrent inputs required for the cultivation, harvesting, handling and packaging of bananas for export; and (C) permanent working capital and equipment required by exporters of non-traditional goods and their suppliers to attain their presently installed rated production capacity; and (ii) the sale of foreign exchange by the Fund through a commercial bank to an eligible enterprise for purposes of the Project; and "free-limit sub-loan" means a sub-loan, as so defined, which qualifies as a free-limit sub-loan pursuant to the provisions of paragraph 3 of Schedule 1 hereto. (c) "BOJ" means the Bank of Jamaica established under the Borrower's Bank of Jamaica Act; (d) "JECIC" means Jamaica Export Credit Insurance Corporation Limited, a company incorporated and operating under the Borrower's Companies Act; (e) "JNEC" means Jamaica National Export Corporation, a statutory corporation established and operating under the Borrower's Jamaica National Export Corporation Act; (f) "The Fund" means the Export Development Fund Jamaica Limited, a company established pursuant to the Loan Agreement (Second Program Loan) dated June 8, 1979 between the Borrower and the Bank and incorporated and operating under the Borrower's Companies Act; (g) "Statement of Policies and Procedures" means the Statement of Policies and Procedures of the Fund approved by the Fund's Board on June 15, 1979;

4 -3- (h) "eligible enterprise" means an enterprise duly established and operating under the laws of the Borrower and qualified to have access to the resources of the Fund; (i) "investment activity" means a specific manufacturing activity to be carried out by an eligible enterprise utilizing the proceeds of a sub-loan; (j) "subsidiary" means any company of which a majority of the outstanding voting stock or other proprietary interest is directly or indirectly owned or effectively controlled by the Fund, JECIC or JNEC; (k) "Memorandum and Articles of Association" means with respect to: (i) JECIC, the Memorandum and Articles of Association of JECIC dated June 25, 1971; and (ii) the Fund, the Memorandum and Articles of Association of the Fund dated May 9, 1979; (1) "Parts of the Project" means with respect to: (i) the Fund, Part A of the Project; (ii) JECIC, Part B (1) of the Project; and (iii) JNEC, Part B (2) of the Project; (m) "Subsidiary Loan Agreement" means the agreement to be entered into by the Borrower and the Fund pursuant to Section 3.01 (b) of this Agreement, as the same may be amended from time to time, and the term includes all schedules to the Subsidiary Loan Agreement; and (n) "'The Banana Company of Jamaica Limited" means the Banana Company of Jamaica Limited incorporated and operating under the Borrower's Companies Act. ARTICLE II The Loan Section The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to thirty seven million dollars ($37,000,000). Section (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank, for

5 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 and to be financed out of the proceeds of the Loan. (b) When presenting a sub-loan for permanent working capital or equipment (other than a free-limit sub-loan) to the Bank for approval, the Borrower shall furnish to the Bank an application, in form satisfactory to the Bank, together with (i) a description of the eligible enterprise and an analysis of the investment activity, including a description of the expenditures proposed to be financed out of the proceeds of the Loan; (ii) the proposed terms and conditions of the sub-loan; (iii) a description of the procedures followed in the procurement of goods to be financed under the sub-loan; and (iv) such other information as the Bank shall reasonably request. (c) Each request by the Borrower for authorization to make withdrawals from the Loan Account in respect of a free-limit sub-loan shall contain: (i) a summary description of the eligible enterprise and the investment activity, including a description of the expenditures proposed to be financed out of the proceeds of the Loan; (ii) the terms and conditions of the sub-loan; (iii) a description of the procedures followed in the procurement of goods in excess of $100,000 to be financed under the sub-loan; and (iv) such other information as the Bank shall reasonably request. (d) Except as the Bank and the Borrower shall otherwise agree, applications and requests made pursuant to the provisions of paragraphs (b) and (c) of this Section shall be presented to the Bank on or before June 30, Section Except as the Bank shall otherwise agree, procurement of the goods to be financed out of the proceeds of the Loan, shall be governed by the provisions of Section 2.03 of the Project Agreement. Section The Closing Date shall be December 31, 1983 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 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.

6 - 5 - Section The Borrower shall pay interest at the rate of nine and three-fifths per cent (9-3/5%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section Interest and other charges shall be payable semiannually on January 1 and July 1 in each year. Section The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. Section The Chairman of the Board of the Fund shall be included among the persons to be designated as representatives of the Borrower for the purposes of taking any action required or permitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions. ARTICLE III Execution of the Project Section (a) Without any limitation or restriction upon any of its other obligations under this Agreement, the Borrower shall ensure that BOJ, the Fund, JECIC and JNEC perform in accordance with the provisions of the Project Agreement all their respective obligations therein set forth, shall take or cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable BOJ, the Fund, JECIC and JNEC to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall out of the proceeds of the Loan: (i) relend to the Fund, for the purposes of Part A of the Project, amounts equivalent to thirty six million dollars ($36,000,000) or such other amount or amounts as shall be allocated to Category (1) in Schedule 1 hereto under a Subsidiary Loan Agreement to be entered into between the Borrower and the Fund on terms and conditions satisfactory to the Bank, including repayment of principal in 17 years, a grace period of 4 years, interest at the rate specified in Section 2.06 hereof and a fee of one per cent (1%) per annum; and (ii) grant to JECIC and JNEC, on terms and conditions satisfactory to the Bank, amounts equivalent respectively to three hundred thousand dollars ($300,000) and

7 -6- seven hundred thousand dollars ($700,000) or such other amount or amounts as shall be allocated to JECIC and JNEC in Category (2) in Schedule 1 hereto. Section The Borrower shall ensure that import licenses are issued promptly to all eligible enterprises whose applications for access to the Fund's resources have been approved by JECIC; and shall no later than July 31, 1981 cause the import licensing application requirements for such enterprises to be simplified. Section (a) The Borrower shall ensure that the Fund is maintained until June 30, 1987 or for such other period as the Borrower and the Bank may determine. (b) The Borrower and the Bank shall jointly determine the uses to which the resources of the Fund shall be put for the promotion of Jamaican exports upon the cessation of the Fund's operations or in such other circumstances as the Bank and the Borrower shall jointly determine. Section The Borrower shall take all action necessary to obtain all necessary exchange control approvals and exemptions to enable the Fund and JECIC, acting on behalf of the Fund, to perform all of the Fund's responsibilities under the Project. Section The Borrower undertakes not to deny to eligible enterprises granted access to the resources of the Fund benefits that may be provided for other exporters under the Borrower's exchange laws and regulations unless the Bank and the Borrower shall jointly determine that such denial would not affect the international competitiveness of the exports of such enterprises. Section The Borrower shall submit to the Bank the results of a study of required industrial reforms to be undertaken by consultants with qualifications, and under terms of reference, acceptable to the Bank and shall by July 31, 1981 consult with the Bank on a specific program of action for industrial reforms on the basis of the above-mentioned study or parts thereof. ARTICLE IV Other Covenants Section (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in

8 - 7 - normal circumstances, special security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of foreign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Borrower, in creating or permitting the creation of such lien, shall make express provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or administrative subdivisions, the Borrower shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security fcr payment of the purchase price of such property; and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means assets of the Borrower, of any political or administrative subdivision thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Borrower or any such subdivision, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Borrower. ARTICLE V Remedies of the Bank Section For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof:

9 -8- (a) BOJ, the Fund, JECIC or JNEC shall have failed to perform any of its obligations set forth in the Project Agreement; (b) a change shall have been made in the Bank of Jamaica Act, the Memorandum and Articles of Association or the Jamaica National Export Corporation Act so as to affect materially and adversely the operations or financial condition of BOJ, the Fund, JECIC or JNEC, as the case may be; (c) a change shall have been made in the Fund's Statement of Policies and Procedures so as to affect materially and adversely the operations or financial condition of the Fund; (d) any action shall have been taken by the Borrower or any other authority having jurisdiction for the dissolution or disestablishment, or for the suspension of the operations, of BOJ, the Fund, JECIC or JNEC, as the case may be; and (e) a subsidiary or any other entity shall have been created or acquired or taken over by the Fund, JECIC or JNEC, if such creation, acquisition or taking over would adversely affect the conduct of their respective business or financial conditions or the efficiency of their respective managements and personnel or the carrying out of the Project. Section For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) any events specified in paragraph (a) or (e) of Section 5.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Bank to the Borrower and to BOJ, the Fund, JECIC or JNEC (as the case may be); and (b) any event specified in paragraph (b), (c) or (d) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section The following event is specified as an additional condition to the effectiveness of the Loan Agreement within the meaning of Section (c) of the General Conditions,

10 - 9 - namely, that the Subsidiary Loan Agreement has been duly executed on behalf of the Borrower and the Fund. Section The following are specified as additional matters, within the meaning of Section (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank: (a) that the Project Agreement has been duly authorized or ratified by BOJ, the Fund, JECIC and JNEC, and is legally binding upon BOJ, the Fund, JECIC and JNEC in accordance with its terms; (b) that the Subsidiary Loan Agreement has been duly authorized or ratified by the Borrower and the Fund and is legally binding upon the Borrower and the Fund in accordance with its terms. Section The date, is hereby specified for the purposes of Section of the General Conditions. ARTICLE VII Representatives of the Borrower; Addresses Section The Minister responsible for Finance of the Borrower is designated as representative of the Borrower for the purposes of Section of the General Conditions. Section The following addresses are specified for the purposes of Section of the General Conditions: For the Borrower: Ministry of Finance and Planning 30 National Heroes Circle Kingston Jamaica Cable address: MINISTRY OF FINANCE Kingston

11 For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C United States of America Cable address: Telex: INTBAFRAD Washington, D.C (ITT) (RCA) or (WUI) IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, 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. JAMAICA By Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By A ' Regional Vice President Latin America and the Caribbean

12 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 and the allocation of amounts of the Loan to each Category: Category Amount of the Loan Allocated (Expressed in Dollar Equivalent) (1) Sub-loans: (a) Short-term opera- 22,000,000 tions (manufacturing enterprises) (b) Short-term opera- 4,000,000 tions (banana producers) (c) Permanent working 10,000,000 capital and equipment (2) Technical assistance: (a) JECIC 300,000 (b) JNEC 700,000 TOTAL 37,000, Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower except with respect to expenditures under Category (2);

13 (b) payments made for expenditures prior to the date of this Agreement; (c) payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; (d) sub-loans made under Category (1) (b) unless assurances satisfactory to the Fund and the Bank have been received by them from The Banana Company of Jamaica Limited with respect to that Company's participation in Part A (2) of the Project; and (e) sub-loans for permanent working capital or equipment made under Category (1) (c) unless: (i) the sub-loan shall have been approved by the Bank; or (ii) the sub-loan shall be a freelimit sub-loan for which the Bank shall have authorized withdrawals from the Loan Account; and (iii) the Fund's Board has approved a statement of policy, satisfactory to the Bank, for the regulation of medium term financing of permanent working capital and equipment. 3. A free-limit sub-loan shall be a sub-loan for permanent working capital and equipment in an amount to be financed out of the proceeds of the Loan which shall not exceed the sum of $250,000 equivalent when added to any other outstanding amounts for permanent working capital and equipment financed or proposed to be financed out of the proceeds of the Loan, the foregoing amount being subject to change from time to time. 4. Except as the Bank and the Borrower shall otherwise agree, no withdrawals shall be made on account of expenditures in respect of a sub-loan subject to the Bank's approval if such expenditures shall have been made more than ninety days prior to the date on which the Bank shall have received in respect of such sub-loan the application and information required by Section 2.02 (b) of this Agreement or, in respect of a free-limit sub-loan, more than ninety days prior to the date on which the Bank shall have received in respect of such free-limit sub-loan the request and information required by Section 2.02 (c) of this Agreement. 5. Notwithstanding the allocation of an amount of the Loan set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category or sub-category will be insufficient to finance the

14 expenditures to be made under that Category or sub-category, the Bank may, by notice to the Borrower, reallocate from a Category or sub-category to such Category or sub-category, to the extent required to meet the estimated shortfall, proceeds of the Loan then allocated to that Category or sub-category and which in the opinion of the Bank are not needed to meet other expenditures. 6. If the Bank shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as, in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan.

15 SCHEDULE 2 Description of the Project The Project consists of the following Parts: Part A: (1) Provision of foreign exchange by the Fund for short-ter& financing of imports of raw materials, intermediate goods, packaging materials and spare parts of producers of non-traditional manufactured exports and their domestic suppliers. (2) Provision of foreign exchange by the Fund for short-term financing of imports of recurrent inputs required for the cultivation, harvesting, handling and packaging of bananas for export. (3) Establishment and operation by the Fund of a new facility to provide foreign exchange for medium term financing of permanent working capital and equipment required by exporters of non-traditional goods and their domestic suppliers to attain their presently installed rated production capacity. Part B: (1) Further strengthening of JECIC's capacity to manage export financing programs including provision of technical assistance for further training of JECIC's staff, acquisition of an electronic data processing system for its accounting function and the Fund's operations and for the development and operation of a management control, information and performance evaluation system. (2) Further strengthening of JNEC's capacity to provide export marketing assistance to manufacturers and exporters including provision of technical assistance to JNEC to carry out the recommendations of its programs of market research. The Project is expected to be completed by December 31, 1984.

16 SCHEDULE 3 Amortization Schedule Date Payment Due Payment of Principal (expressed in dollars)* On each January 1 and July 1 beginning January 1, 1986 through January 1, ,425,000 On July 1, ,375,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.04), the figures in this column represent dollar equivalents determined as for purposes of withdrawal.

17 Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1.70% More than three years but not more than six years before maturity 3.40% More than six years but not more than eleven years before maturity 6.20% More than eleven years but not more than fifteen years before maturity 8.50% More than fifteen years before maturity 9.60%

18 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 Development. In witness whereof I have signed this Certificate and affixed the Seal of the Bank thereunto this -day of A --, FOR SECRETARY