Public Disclosure Authorized FFHICA DOCUMPENTS CREDIT NUMBER 1558 GRD Public Disclosure Authorized Public Disclosure Authorized Development Credit Agreement (Agricultural Rehabilitation and Crop Diversification Project) between GRENADA and INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized Dated, 1985
CREDIT NUMBER 1558 GRD DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated, 1985, between GRENADA (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) the Borrower has requested the Association to assist in the financing of Parts B, C, D and E of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; and (B) the Borrower intends to contract from the Caribbean Development Bank (hereinafter called CDB) a loan (hereinafter called the CDB Loan) in an amount equivalent to one million nine hundred thousand dollars ($1,900,000) to assist in the financing of Part A of the Project on terms and conditions set forth in an agreement (hereinafter called the CDB Loan Agreement) to be entered into between the Borrower and CDB; and WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated June 30, 1980, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agreements of the Association being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, 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) "MOA" means the Ministry of Agriculture, Lands, Forestry, Fisheries and Tourism of the Borrower;
-2- (b) "GBCS" means the Grenada Banana Cooperative Society, an entity organized and operating under Ordinance No. 57, dated March 16, 1955, as amended to the date of this Agreement; (c) "MNIB" means the Marketing and National Importing Board, an entity organized and operating under Act No. 40, dated May 23, 1974 as amended by People's Law No. 69, dated August 30, 1979; (d) "MOF" means the Ministry of Finance, Trade and Planning of the Borrower; (e) "MOCW" means the Ministry of Communications, Works, Civil Aviation, Energy and Public Utilities of the Borrower; (f) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (g) "East Caribbean Dollar" means the currency of the Borrower; (h) "Project Board of Management" means the entity referred to in Section 3.11 (a) of this Agreement; and (i) "Project Management Unit" means the entity referred to in Section 3.11 (b) of this Agreement. 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 five million Special Drawing Rights (SDR 5,000,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit 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 Association, for expenditures made (or, if the Association 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 Credit.
-3- (b) The Borrower shall, for the purposes of Parts B, C, D and E of the Project, open and maintain in dollars a special account in a commercial bank acceptable to the Association on terms and conditions satisfactory to the Association. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 4 to this Agreement. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and works required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agreement. Section 2.04. The Closing Date shall be December 31, 1990 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.05. (a) The Borrower shall pay to the Association a commitment charge at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of the Credit not withdrawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agreement to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without restrictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. 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. Commitment charges and service charges shall be payable semiannually on April 15 and October 15 in each year. Section 2.08. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each April 15 and October 15 commencing April 15, 1995, and ending October 15, 2034, each installment to and including the installment payable
-4- on October 15, 2004, 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. Section 2.09. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. Section 2.10. The Minister of the Borrower at the time responsible for agriculture is designated as representative 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 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, shall carry or shall cause the Grenada Development Bank to carry out Part A of the Project and shall carry out Parts B (1) through (6), C, D and E of the Project through MOA and Part B (7) of the Project through MOCW, all with due diligence and efficiency and in conformity with appropriate agricultural, administrative, financial and engineering practices, and shall provide or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) For the purposes of assisting the Borrower in carrying out Part B (5) and B (6) of the Project, the Borrower shall enter into contracts, satisfactory to the Association, with MNIB and GBCS, respectively, such contracts to include, inter alia, terms and conditions set forth in Schedule 5 to this Agreement. (c) The Borrower shall exercise its rights and comply with its obligations under the contracts referred to in paragraph (b) of this Section, in such a 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, amend, abrogate or waive such contracts or any provisions thereof. Section 3.02. In order to assist the Borrower in carrying out Parts C, D and E of the Project, the Borrower shall employ
-5- consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association, such consultants to be selected in accordance with principles and procedures satisfactory to the Association on the basis 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. Section 3.03. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) The Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the purposes of the Project. Section 3.04. (a) The Borrower shall furnish to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower shall: (i) maintain records and procedures adequate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Credit, and to disclose their use in the Project; (ii) enable the Association's representatives to visit the facilities and constrlction sites included in such Parts of the Project and to examine the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. (c) Upon the award by the Borrower of any contract for goods, works or services to be financed out of the proceeds of the Credit, the Association may publish a description thereof,
the name and nationality of the party to whom the contract was awarded and the contract price. (d) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Association, the Borrower shall prepare and furnish to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Association of their respective obligations under the Development Credit Agreement and the accomplishment of the purposes of the Credit. Section 3.05 (a) The Borrower shall, not later than June 30, 1986, prepare, under terms of reference satisfactory to the Association, and furnish to the Association for its review and comments the feasibility studies referred to in Part D (1) of the Project. (b) The Borrower shall: (i) prepare, under terms of reference and in accordance with timetables satisfactory to the Association, and furnish to the Association for its review and comments the studies referred to in Part D (2) of the Project; and (ii) carry or cause to be carried out the recommendations of such studies in a manner and in accordance with timetables satisfactory to the Association. Section 3.06. The Borrower shall exchange views with the Association in March of each year, starting in March 1986, on the Borrower's policies in the agricultural sector. Section 3.07. The Borrower shall adequately maintain all facilities constructed or rehabilitated under, and any equipment and vehicles included, in the Project, and shall make all necessary renewals and repairs thereof to be made in accordance with appropriate technical and engineering practices. Section 3.08. The Borrower shall transfer or cause to be transferred cars referred to in Part B (1) (d) and (5) (c) of the Project to relevant agricultural extension staff of MOA and marketing staff of MNIB under terms and conditions satisfactory to the Association.
-7- Section 3.09. The Borrower shall, not later than November 30, of each year, furnish to the Association for its approval, training programs under Part E of the Project. Section 3.10. The Borrower shall award fellowships for overseas training activities under Part E (2) of the Project to suitably qualified candidates in accordance with criteria for selection of such candidates, for the award of such fellowships -and for the designation of institutions for such training, satisfactory to the Association. Section 3.11. The Borrower shall maintain: (a) the Project Board of Management under the coordination of the Minister of the Borrower at the time responsible for agriculture and consisting, inter alia, of one representative each of MOCW, MNIB, the Grenada Development Bank, GBCS, MOF and the Project Management Unit, to provide coordination and policy guidance for the Project; and (b) the Project Management Unit, whose composition shall be satisfactory to the Association, to provide supervision for the Project and other responsibilities satisfactory to the Association. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained records and accounts adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations, resources and expenditures, in respect of Parts B, C, D and E of the Project, of the departments or agencies of the Borrower responsible for carrying out such Parts of the Project or any part thereof. (b) Without limitation to the foregoing, the Borrower shall: (i) maintain or cause to be maintained separate accounts reflecting all expenditures on account of which withdrawals are requested from the Credit Account on the basis of statements of expenditure; (ii) retain, until one year after the Closing Date, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing the expenditures on account of which withdrawals are requested from the Credit Account on the basis of statements of expenditure; and (iii) enable the Association's representatives to examine such records.
-8- (c) The Borrower shall: (i) have the Special Account and the accounts referred to in paragraphs (a) and (b) of this Section for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association, as soon as available, but in any case not later than four months after the end of each such year, a certified copy of the report of such audit by such auditors, of such scope and in such detail as the Association shall have reasonably requested; including without limitation to the foregoing, a separate opinion by said auditors in respect of the expenditures and records referred to in paragraph (b) of this Section as to whether the proceeds of the Credit withdrawn from the Credit Account on the basis of statements of expenditure have been used for the purpose for which they were provided; and (iii) furnish to the Association such other information concerning the Special Account and the accounts referred to in paragraphs (a) and (b) above, records and expenditures and the audit thereof as the Association shall from time to time reasonably request. ARTICLE V Remedies of the Association Section 5.01. For the purposes of Section 6.02 of the General Conditions, the following additional event is specified pursuant to paragraph (h) thereof, namely, that: (i) Subject to subparagraph (ii) of this paragraph: (A) the right of the Borrower to withdraw the proceeds of the CDB Loan or any other loan or grant made to the Borrower for the financing of the Project ehall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the agreement providing therefor; or (B) the CDB Loan or any other such loan shall have become due and payable prior to the agreed maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply if the Borrower establishes to the satisfaction
-9- of the Association that: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obligations under such agreement; and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional event is specified pursuant to paragraph (d) thereof, namely, that the event specified in paragraph (i) (B) of Section 5.01 of this Agreement shall occur, subject to the proviso of subparag-, 4ph (ii) of that paragraph. 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 12.01 (b) of the General Conditions: (a) the Association has been notified by CDB that all conditions precedent to the first disbursement of the CDB Loan, except for the effectiveness of this Agreement, have been fulfilled; (b) the Borrower has entered into the contracts referred to in Section 3.01 (b) of this Agreement in accordance with the provisions of such Section; and (c) the Borrower has established the entities referred to in Section 3.11 of this Agreement in accordance with the provisions of such Section. Section 6.02. The following is specified as an additional matter, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association, namely, that the contracts referred to in Section 3.01 (b) of this Agreement have been duly authorized or ratified by the Borrower, MNIB and GBCS, and are legally binding upon the Borrower, MNIB and GBCS in accordance with their respective terms.
- 10 - is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 6.03. The date (YePfXA'Lr/ ", Section 6.04. The obligations of the Borrower under Article IV of this Agreement and the provisions of Section 5.01 and 5.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. Except as provided in Section 2.10 of this Agreement, the Minister of Finance, Trade and Planning of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. 5ection 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministry of Finance, Trade and Planning St. Weorge's Grenada Cable address: Telex: MINFIN 320423 St. George's Grenada For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America
- 11 - IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respeztive names in the District of Columbia, United States of America, as of the day and year first above written. GRENADA 'By //3 7 c~yc ~ lt Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION B y I0 ij-w7l/6i Regional Vice President Latin America and the Caribbean
- 12 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) Works under 600,000 80% Part B (1), (2), (3), (4), and (5) the Project (2) Maintenance under 500,000 80% Part B (7)(b) of the Project (3) Vehicles and equip- 1,000,000 100% of foreign ment under Part B expenditures and of the Project 90% of local expenditures (4) Consultants' ser- 1,085,000 100% vices and training under Parts C, D and E of the Project
- 13 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (5) Incremental operating 560,000 (i) 90% until c.osts the aggregate amount of disbursements under this Category reaches the equivalent of SDR 240,000; (ii) 70% thereafter until such aggregate amount reaches the equivalent of SDR 240,000; and (iii) 50% thereafter until such aggregate amount reaches the equivalent of SDR 80,000 (6) Special Account 500,000 Amounts to be deposited pursuant to paragraph 3 (a) of Schedule 4 to this Agreement (7) Unallocated 755,000 TOTAL 5,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency other than that of the Borrower for goods or ser-. vices supplied from the territory of any country other than that of the Borrower;
- 14 - (b) the term "local expenditures" means expenditures in the curren('y of the Borrower or for goods or services supplied from the territory of the Borrower; provided, however, that if the currency of the Borrower is also that of another country from the territory of which goods or services are supplied, expenditures in such currency for such goods or services shall be deemed to be "foreign expenditures"; and (c) the term "incremental operating costs" means the aggregate supplemental operating and maintenance expenditures (excluding expenditures for the staff salaries) incurred by MOA, MOCW, GBCS and MNIB to the extent such expenditures were generated by the activities implemented by each of such entities under the Project. 3. The disbursement percentages have been calculated in compliance with the policy of the Association that the proceeds of the Credit shall not be disbursed on account of 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; on this basis, if the amount of any such taxes levied on or in respect of items in any Category decreases or increases, the Association may, by notice to the Bor-ower, increase or decrease the disbursement percentage then applicable to such Category as required to be consistent with the aforementioned policy of the Association. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made.
- 15-6. If the Association 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 expenditure for such item shall be financed out of the proceeds of the Credit, and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit.
- 16 - SCHEDULE 2 Description of the Project The objectives of the Project are to: (a) rehabilitate and expand the production of agricultural crops of the Borrower; and (b) promote marketing of such crops. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Association may agree upon from time to time to achieve such objectives: Part A: Agricultural Credit (1) Provision of medium-term and long-term credits to individual farmers for the rehabilitation and expansion of agricultural crops, including bananas, sugarcane, coconuts, coffee, tropical fruits, vegetables, and ornamental plants and cut flowers. (2) Provision of medium-term and long-term credits to agro-industries for the acquisition and rehabilitation of the agricultural equipment. Part B: Infrastructure Facilities (1) MOA: (a) construction of three municipal markets; and (b) upgrading of the Grenville harbour jetty, including construction of a loading shed. (2) Agricultural Extension Service of MOA: (a) construction of an information center and a field extension office; (b) rehabilitation and upgrading of three field extension offices; (c) acquisition and utilization of a minibus; (d) acquisition and utilization of about 29 four-wheel drive cars; and
- 17 - (e) acquisition and utilization of instructional and audiovisual equipment. (3) Plant Propagation Unit of MOA: (a) construction of a storage shed; and (b) acquisition and utilization of a 5-ton truck, 2 four-wheel drive cars and miscellaneous equipment and tools. (4) Plant Protection Unit of MOA: (5) MNIB: (a) construction of a quarantine building; and (b) acquisition and utilization of a four-wheel drive car and miscellaneous plant protection equipment. (a) construction of 2 agricultural crops collection centers and a central storage with a cold storage room; (b) acquisition and utilization of two 5-ton trucks, a generator and equipment for packing and storage handling; and (c) acquisition and utilization of 2 cars. (6) GBCS: four-wheel drive Acquisition and utilization of 2 trailer units, 3 four-wheel drive cars, about 4 forklifts, about 10 mist blowers, about 5 conveyors, a microcomputer including related equipment and software, and a radio-telephone syste.am equipment. (7) MOCW: (a) acquisition and utilization of about five 5-ton trucks, about 4 four-wheel drive cars, one motorgrader, one loader, one roller, 2 compactors, one rubber wheeled roller, about 4 dumpers and equipment for soil and materials laboratory; and
- 18 - (b) maintenance of about 160 kilometers of feeder and farm roads. Part C: Institutional Building Strengthening of the managerial and operational capabilities of MOA, MOCW, GBCS and MNIB through the provision of technical assistance thereto. Part D: Studies (1) Carrying out feasibility studies on: (a) (b) rehabilitation and upgrading of the Grenada Sugar Factory, Ltd; and renewal and upgrading of the machinery and equipment at the TEMPE Manufacturing Company Ltd. (2) Carrying out studies on: (a) management organization requirements of MNIB; (b) management organization requirements of GBCS; particu- (c) marketing of export crops including, in lar, non-traditional crops; and (d) optimal resource utilization on family-owned operated farms. or Part E: Training (1) Carrying out a program of in-service training for extension agents, agricultural technicians and other agricultural specialists. (2) Carrying out a program of overseas training for extension agents, agricultural technicians and other agricultural specialists. (3) Carrying out a training program for farmers. The Project is expected to be completed by June 30, 1990.
- 19 - SCHEDULE 3 Procurement A. International Competitive Bidding Except as provided in Part B hereof, goods and works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in August 1984 (the Guidelines). B. Other Procurement Procedures 1. Contracts for works, excluding works under Part B (7)(b) of the Project, may be awarded on the basis of competitive bidding advertised locally in accordance with local procedures satisfactory to the Association. 2. Contracts for works under Part B (7)(b) of the Project may be carried out by the Borrower through the use of force account. 3. Contracts for goods estimated to cost the equivalent of less than fifty thousand dollars ($50,000) each, but in the aggregate not to exceed the equivalent of six hundred thousand dollars ($600,000) may be awarded through negotiated purchases from established and reliable suppliers, provided, however, that quotations from at least three of such suppliers from the countries eligible under the Guidelines are obtained and evaluated. C. Review by the Association of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to all contracts estimated to cost the equivalent of $50,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. (b) With respect to each contract not governed by the preceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. (c) The provisions of the preceding subparagraphs (a) and (b) shall not apply to contracts on account of which the Association has authorized withdrawals from the Credit Account on the basis of statements of expenditure.
- 20-2. The figure of 10% is hereby specified for purposes of paragraph 4 of Appendix 1 to the Guidelines.
- 21 - SCHEDULE 4 Special Account 1. For the purposes of this Schedule: (a) the term "Category" means a category of items to be financed out of the proceeds of the Credit as set forth in the table in paragraph 1 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 Parts B, C, D and E of the Project and to be financed out of the proceeds of the Credit allocated from time to time to Categories (1) through (5) in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount in dollars equivalent to the amount allocated to Category (6) which is to be withdrawn from the Credit Account and deposited in the Special Account pursuant to paragraph 3 (a) of this Schedule. 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 Association has received evidence satisfactory to the Association that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Special Account may be made as follows: (a) On the basis of a request or requests by the Borrower for a deposit or deposits which add up to the aggregate amount of the Authorized Allocation, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) The Borrower shall furnish to the Association requests for replenishment of the Special Account at such intervals as the Association shall specify. On the basis of such requests, the Association shall withdraw from the Credit Account and deposit into the Special Account such amounts as shall be required to replenish the Special Account with amounts not exceeding the amount of payments made out of the Special Account for eligible
- 22 - expenditures. Except as the Association may otherwise agree, each such deposit shall be withdrawn by the Association from the Credit Account under the respective Categories (1) through (5), and in the respective equivalent amounts, as shall have been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. 4. For each payment made by the Borrower out of the Special Account for which the Borrower requests replenishment pursuant to paragraph 3 (b) of this Schedule, the Borrower shall furnish to the Association, prior to or at the time of such request, such documents and other evidence as the Association shall reasonably request, showing that such payment was made for eligible expenditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into the Special Account shall be made by the Association when either of the following situations first arises: (i) the Association shall have determined that all further withdrawals can be made directly by the Borrower from the Credit Account in accordance with the provisions of paragraph (a) of Section 2.02 of this Agreement; or (ii) unless otherwise agreed by the Association, when the total unwithdrawn amount of the Credit allocated to Categories (1) through (5) for Parts B, C, D and E of the Project, minus the amount of any outstanding qualified agreement to reimburse made by the Association and of any outstanding special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions with respect to Parts B, C, D and E of the Project, shall be equal to the equivalent of twice the amount of the Authorized Allocation. (b) Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to Categories (1) through (5) for Parts B, C, D and E of the Project shall follow such procedures as the Association shall specify by notice to the Borrower. Except as the Association shall otherwise agree, such further withdrawals shall be made only after and to the extent that the Association shall have been satisfied that all
- 23 - such amounts remaining on deposit in the Special Account as of the date of such notice have been or will be utilized in making payments for eligible expenditures. 6. (a) If the Association shall have determined at any time that any payment out of the Special Account: (i) was made for any expenditure or in any amount not eligible pursuant to paragraph 2 of this Schedule, or (ii) was not justified by the evidence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Association, deposit into the Special Account (or, if the Association shall so request, refund to the Association) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless otherwise agreed by the Association, no further deposit by the Association into the Special Account shall be made until the Borrower has made such deposit or refund. (b) If the Association 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 Association, refund to the Association such outstanding amount.
- 24 - SCHEDULE 5 Terms and Conditions of the contracts referred to in Section 3.01 (b) of this Agreement The following terms and conditions shall be applicable in respect of the proceeds of the Credit made available to MNIB and GBCS in accordance with the provisions of Section 3.01 (b) of this Agreement: 1. The Borrower shall relend an amount in East Caribbean Dollars to MNIB and GBCS equivalent to the amount of the proceeds of the Credit required for carrying out Parts B.5 and B.6 of the Project, respectively. 2. MNIB and GBCS shall repay to the Borrower the proceeds of the Credit so relent over a period of ten years, including therein three years grace period. 3. MNIB and GBCS shall pay interest on the proceeds of the Credit so relent al: the rate of ten and fifty hundredth per cent (10-50/100%) per annum on the principal amount withdrawn and outstanding from time to time. Such interest shall be subject to annual review between MNIB, GBCS and the Borrower, and, if needed, adjusted promptly thereafter to ensure that such rate remains positive in real terms, taking into account the prevailing inflation rate, market conditions and operating costs, all in a manner satisfactory to the Association. 4. The proceeds of the Credit so relent shall be used by MNIB and GBCS exclusively for the purposes of carrying out Parts B.5 and B.6 of the Project, respectively. 5. MNIB and GBCS shall undertake to carry out the recommendations of the studies referred to under Part D (2) (a) and (b) of the Project, respectively, in terms satisfactory to the Borrower and the Association.
INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Development Association. In witness whereof I have signed this Certificate and affixed the Seal of the Association thereunto the day of 198 FOR SECRETARY