CREDIT NUMBER 7123-GD Financing Agreement (Grenada First Recovery and Resilience Programmatic Development Policy Financing) between GRENADA and INTERNATIONAL DEVELOPMENT ASSOCIATION CREDIT NUMBER 7123-GD FINANCING AGREEMENT AGREEMENT dated as of the Signature Date between GRENADA (“Recipient”) and INTERNATIONAL DEVELOPMENT ASSOCIATION (“Association”) for the purpose of providing financing in support of the Program (as defined in the Appendix to this Agreement). The Association has decided to provide this financing on the basis, inter alia, of: (i) the actions which the Recipient has already taken under the Program and which are described in Section I of Schedule 1 to this Agreement; and (ii) the Recipient’s maintenance of an adequate macroeconomic policy framework. The Recipient and the Association therefore hereby agree as follows: ARTICLE I — GENERAL CONDITIONS; DEFINITIONS 1.01. The General Conditions (as defined in the Appendix to this Agreement) apply to and form part of this Agreement. 1.02. Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the General Conditions or in the Appendix to this Agreement. ARTICLE II — FINANCING 2.01. The Association agrees to extend to the Recipient a credit, which is deemed as Concessional Financing for purposes of the General Conditions, in the amount of twenty-five million Dollars ($25,000,000) (variously, “Credit” and “Financing”). 2.02. The Maximum Commitment Charge Rate is one-half of one percent (1/2 of 1%) per annum on the Unwithdrawn Financing Balance. 2.03. The Service Charge is the greater of: (a) the sum of three-fourths of one percent (3/4 of 1%) per annum plus the Basis Adjustment to the Service Charge; and (b) three-fourths of one percent (3/4 of 1%) per annum; on the Withdrawn Credit Balance. 2.04. The Payment Dates are July 15 and January 15 in each year. 2.05. The principal amount of the Credit shall be repaid in accordance with the repayment schedule set forth in Schedule 2 to this Agreement. -2- 2.06. The Payment Currency is Dollar. 2.07. Without limitation upon the provisions of Section 5.05 of the General Conditions, the Recipient shall promptly furnish to the Association such information relating to the provisions of this Article II as the Association may, from time to time, reasonably request. ARTICLE III — PROGRAM 3.01. The Recipient declares its commitment to the Program and its implementation. To this end, and further to Section 5.05 of the General Conditions: (a) the Recipient and the Association shall from time to time, at the request of either party, exchange views on the Recipient’s macroeconomic policy framework and the progress achieved in carrying out the Program; (b) prior to each such exchange of views, the Recipient shall furnish to the Association for its review and comment a report on the progress achieved in carrying out the Program, in such detail as the Association shall reasonably request; and (c) without limitation upon the provisions of paragraphs (a) and (b) of this Section, the Recipient shall promptly inform the Association of any situation that would have the effect of materially reversing the objectives of the Program or any action taken under the Program including any action specified in Section I of Schedule 1 to this Agreement. ARTICLE IV — REMEDIES OF THE ASSOCIATION 4.01. The Additional Events of Suspension consist of the following: (a) A situation has arisen which shall make it improbable that the Program, or a significant part of it, will be carried out. (b) An action has been taken or a policy has been adopted by the Recipient to reverse any prior action or policy under the Program, including any action listed in Section I of Schedule I to this Agreement. 4.02. The Additional Event of Acceleration consists of the following, namely that any event specified in paragraphs (a) or (b) of Section 4.01 of this Agreement occurs and is continuing for a period of sixty (60) days after notice of the event has been given by the Association to the Recipient. -3- ARTICLE V — EFFECTIVENESS; TERMINATION 5.01. The Additional Condition of Effectiveness consists of the following, namely, that the Association is satisfied with the progress achieved by the Recipient in carrying out the Program and with the adequacy of the Recipient’s macroeconomic policy framework. 5.02. The Effectiveness Deadline is the date ninety (90) days after the Signature Date. 5.03. For purposes of Section 10.05 (b) of the General Conditions, the date on which the obligations of the Recipient under this Agreement (other than those providing for payment obligations) shall terminate is twenty years after the Signature Date. ARTICLE VI — REPRESENTATIVE; ADDRESSES 6.01. The Recipient’s Representative is its Minister responsible for finance. 6.02. For purposes of Section 11.01 of the General Conditions: (a) the Recipient’s address is: Ministry of Finance, Economic Development, Physical Development and Energy Financial Complex The Carenage St. George’s, Grenada; and (b) the Recipient’s Electronic Address is: Facsimile: E-mail: 473-440-4115/6 ps@mof.gov.gd 6.03. For purposes of Section 11.01 of the General Conditions: (a) The Association’s address is: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America; and -4- (b) the Association’s Electronic Address is: Telex: Facsimile: 248423 (MCI) 1-202-477-6391 AGREED as of the Signature Date. GRENADA By __________________________________________/s1/ Authorized Representative Gregory Bowen Name: ____________________________________/n1/ Minister for Finance Title: ____________________________________ /t1/ 01-Jun-2022 Date: ____________________________________/d1/ INTERNATIONAL DEVELOPMENT ASSOCIATION By __________________________________________/s2/ Authorized Representative Lilia Burunciuc Name: ____________________________________/n2/ Country Director Title: ____________________________________/t2/ 01-Jun-2022 Date: ____________________________________/d2/ -5- SCHEDULE 1 Program Actions; Availability of Financing Proceeds Section I. Actions under the Program Actions Taken Under the Program. The actions taken by the Recipient under the Program include the following: 1. The Recipient has approved the “Disaster Management Bill, 2022” for tabling in Parliament to steer national policy and to enhance disaster and climate resilience, as evidenced by a letter from the Cabinet Secretary dated April 14, 2022, citing Cabinet Conclusion No. 255 dated March 28, 2022. 2. The Recipient has approved regulations establishing an electricity tariff setting methodology to promote (i) efficient operations and energy usage, (ii) long term viability and sustainability of electricity service, and (iii) investment in renewable generation and network, as evidenced by the “Electricity (Tariff Setting Methodology) Regulations, 2022”, Statutory Rules and Orders No. 20 of 2022, published in the Recipient’s Government Gazette No. 22 of 2022 on April 8, 2022. 3. The Recipient has approved regulations on electricity generation expansion planning and competitive procurement to support a greener and low-carbon development by (i) scaling up renewable energy investment by the private sector, (ii) reducing greenhouse gas emissions, and (iii) increasing the sustainability and affordability of electricity supply, as evidenced by the “Electricity (Generation Expansion Planning and Competitive Procurement) Regulations, 2022”, Statutory Rules and Orders No. 21 of 2022, published in the Recipient’s Government Gazette No. 22 of 2022 on April 8, 2022. 4. The Recipient has approved the “Data Protection Bill, 2022” for tabling in Parliament to increase trust in digital transactions with private and public sector stakeholders by safeguarding personal data of individuals, as evidenced by a letter from the Cabinet Secretary dated April 14, 2022, citing Cabinet Conclusion No. 269, dated March 28, 2022. 5. The Recipient has approved the online issuance of property tax notices by March 2023, as part of a medium-term strategy to improve tax administration, as evidenced by a letter from the Cabinet Secretary dated April 14, 2022, citing Cabinet Conclusion No. 248 dated March 28, 2022. 6. The Recipient has approved the development of a climate change budget tagging methodology by the Ministry of Finance to identify and manage climate spending, as evidenced by a letter from the Cabinet Secretary dated April 14, 2022, citing Cabinet Conclusion No. 247 dated March 28, 2022. -6- 7. As part of its policy to promote gender inclusivity, the Recipient has decided to mainstream gender considerations in the national budget on a pilot-basis for the 2022 budget, as evidenced by (i) a letter from the Cabinet Secretary dated April 14, 2022 citing Cabinet Conclusion No. 463 dated June 14, 2021, regarding the Medium-term Action Plan 2022-2024; and (ii) a letter from the Permanent Secretary of the Ministry of Finance dated April 14, 2022 attaching: (a) the Finance Circular No. 19/2021 (“Budget Call Circular – 2022 Budget and 2023-24 Forward Estimates”), dated September 13, 2021; (b) the 2022 Budget Statement presented by Honourable Gregory Bowen, Minister for Finance, Economic Development, Physical Development, and Energy to the House of Representatives, dated November 26, 2021; and (c) the Recipient’s Medium-Term Action Plan 2022-2024. 8. The Recipient has approved a proposal to support the implementation of a permanent funded unemployment insurance programme and appointed the National Insurance Scheme (NIS) as the implementing agency to drive the process of developing the final framework and drafting legislation for the introduction of said permanent programme, as evidenced by a letter from the Cabinet Secretary dated March 31, 2022, citing Cabinet Conclusion No. 868 dated October 18, 2021. 9. The Recipient has approved a proposal for the establishment of the semi-autonomous National Statistical Institute of Grenada to strengthen the country’s statistical system, as evidenced by a letter from the Cabinet Secretary dated March 31, 2022, citing Cabinet Conclusion No. 443 dated June 7, 2021. Section II. Availability of Financing Proceeds A. General. The Recipient may withdraw the proceeds of the Financing in accordance with the provisions of this Section and such additional instructions as the Association may specify by notice to the Recipient. B. Allocation of Financing Amounts. The Financing is allocated in a single withdrawal tranche, from which the Recipient may make withdrawals of the Financing proceeds. The allocation of the amounts of the Financing to this end is set out in the table below: Amount of the Financing Allocated Allocations (expressed in USD) (1) Single Withdrawal Tranche 25,000,000 TOTAL AMOUNT 25,000,000 -7- C. Withdrawal Tranche Release Conditions. No withdrawal shall be made of the Single Withdrawal Tranche unless the Association is satisfied: (a) with the Program being carried out by the Recipient; and (b) with the adequacy of the Recipient’s macroeconomic policy framework. D. Deposit of Financing Amounts. The Recipient, within thirty (30) days after the withdrawal of the Financing from the Financing Account, shall report to the Association: (a) the exact sum received into the account referred to in Section 2.03 (a) of the General Conditions; (b) the details of the account to which the Eastern Caribbean Dollars (XCD) equivalent of the Financing proceeds will be credited; (c) the record that an equivalent amount has been accounted for in the Recipient’s budget management systems; and (d) the statement of receipts and disbursement of the account referred to in Section 2.03 (a) of the General Conditions. E. Audit. Upon the Association’s request, the Recipient shall: 1. have the account referred to in Section 2.03 (a) of the General Conditions audited by independent auditors acceptable to the Association, in accordance with consistently applied auditing standards acceptable to the Association; 2. furnish to the Association as soon as available, but in any case not later than six (6) months after the date of the Association’s request for such audit, a certified copy of the report of such audit, of such scope and in such detail as the Association shall reasonably request, and make such report publicly available in a timely fashion and in a manner acceptable to the Association; and 3. furnish to the Association such other information concerning the account referred to in Section 2.03 (a) of the General Conditions and their audit as the Association shall reasonably request. F. Closing Date. The Closing Date is December 31, 2023. -8- SCHEDULE 2 Repayment Schedule Principal Amount of the Credit Date Payment Due repayable (expressed as a percentage)* On each July 15 and January 15: commencing July 15, 2032, to and including 1% January 15, 2042 commencing July 15, 2042, to and including 2% January 15, 2062 * The percentages represent the percentage of the principal amount of the Credit to be repaid, except as the Association may otherwise specify pursuant to Section 3.05 (b) of the General Conditions. -9- APPENDIX Definitions 1. “Basis Adjustment to the Service Charge” means the Association’s standard basis adjustment to the Service Charge for credits in the currency of denomination of the Credit, in effect at 12:01 a.m. Washington, D.C. time, on the date on which the Credit is approved by the Executive Directors of the Association, and expressed either as a positive or negative percentage per annum. 2. “General Conditions” means the “International Development Association General Conditions for IDA Financing, Development Policy Financing”, dated December 14, 2018 (revised on August 1, 2020, April 1, 2021, and January 1, 2022. 3. “Ministry of Finance” or “Ministry of Finance, Economic Development, Physical Development and Energy” means the Recipient’s ministry of finance, economic development, physical development and energy, or any successor thereto acceptable to the Association. 4. “National Insurance Scheme” or “NIS” means the national insurance of Grenada, Carriacou and Petite Martinique established by Act No. 14 of 1983, as amended from time to time. 5. “Program” means the program of objectives, policies, and actions set forth or referred to in the letter dated April 21, 2022, from the Recipient to the Association declaring the Recipient’s commitment to the execution of the Program, and requesting assistance from the Association in support of the Program during its execution and comprising actions taken, including those set forth in Section I of Schedule 1 to this Agreement, and actions to be taken consistent with the program’s objectives. 6. “Signature Date” means the later of the two dates on which the Recipient and the Association signed this Agreement and such definition applies to all references to “the date of the Financing Agreement” in the General Conditions. 7. “Single Withdrawal Tranche” means the amount of the Financing allocated to the category entitled “Single Withdrawal Tranche” in the table set forth in Part B of Section II of Schedule 1 to this Agreement. 8. “XCD” means Eastern Caribbean Dollars.