CREDIT NUMBER 7288-ZR Financing Agreement (Sevond DRC Foundational Economic Governance Reforms Development Policy Financing) between DEMOCRATIC REPUBLIC OF CONGO and INTERNATIONAL DEVELOPMENT ASSOCIATION CREDIT NUMBER 7288-ZR FINANCING AGREEMENT AGREEMENT dated as of the Signature Date between the DEMOCRATIC REPUBLIC OF CONGO ("Recipient") and the 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 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 L01- 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 an amount equivalent to five hundred million Dollars (USD 500,000.000) (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 Payment Dates are April 15 and October 15 in each year. 2.04. The principal amount of the Credit shall be repaid in accordance with the repayment schedule set forth in Schedule 2 to this Agreement. 2.05. The Payment Currency is Dollar. 206. Without limitation upon the provisions of Section 505 of the General Conditions, the Recipient shall promptly furnish to the Association such information relating to the provisions of this Article 11 as the Association may, from time to time, reasonably request. -2- ARTICLE Ill -PROGRAM 301. 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, ARTICLE IV - REMEDIES OF THE ASSOCIATION 4.01. The Additional Event of Suspension consists of the following, namely, that a situation has arisen which shall make it improbable that the Program, or a significant part of it, will be carried out. 4,02. The Additional Event of Acceleration consists of the following, namely, that the event specified in 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. 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 fi-anework. 5,02, The EfTectiveness Deadline is the date ninty (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 Ihe Recipient under this Agreement (ether than those proi iding for payment obligations) shall terminate is ten (10) years after the Signature Date- -3- ARTICLE VI- REPRESENTAIVE; ADDRESSES 6.01. The Recipient's Representative is the minister in charge of finances. 6.02. For purposes of Section 11,01 of the General Conditions: (a) the Recipient's address is: Ministry of Finance Boulevard du 30 Juin - Commune de la Gombe Kinshasa I Democratic Republic of Congo; and (b) the Recipient's Electronic Address is: E-mail: cabinet@financesuv.cd 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 (b) the Association's Electronic Address is: Telex: Facsimile: 248423 (MCI) (+1) 202-477-6391 -4- AGREED as of the Signature Date. DEMOCRATIC REPUBLIC OF CONGO By Authorized Representative Name: J Titi: _ A L Date: INTERNATIONAL DEVELOPMENT ASSOCIATION By Authorized Representative Name: _ Title: Date:Kkc- ~ ?i ____ -5- SCHEDULE I Program Actions; Availability of Financing Proceeds Section 1. Actions under the Program A. Actions Taken Under the Program. The actions taken by the Recipient under the Program include the following: Pillar 1. Strengthening the management of public expenditure and mining royalties L . To strengthen expenditure management, the Recipient: (i) has operationalized the DGTCP through: (a) the appoinment of DGTCP leadership General Director, two Deputy General Directors and seven Directors; (b) the establishment of the governance and institutional framework of the DGTCP pursuant to Decree No, 22!54 , dated December 30, 2022, published in the Official Gazette, Special Edition, dated March 2, 2023; and (c) the establishment of the National Network of Public Accountants pursuant to Ministerial Order No. 07/CAB/9NiFINNACES/2023, dated March 2, 2023; (ii) has adopted Decree No. 23/12, dated March 3, 2023, revising Art, 146 of the Manual of Procedures (dated June 2, 2010) of the Public Procurement Law (renumbered as Art. 137), requiring a standard procurement model for all direct contracting, published in the Official Gazette, Special Edition, dated March 7, 2023. 2. To improve collection of non-tax revenues, the Recipient has issued Circular No. 003, dated 29 December 2022, published in the Official Gazette, Special Edition, dated January 12. 2023, operationalizing LOGIRAD as of January 1-, 2023, in Kinshasa, Kongo Central, Lualaba, Haut-Katanga, Bas Uele, Hlaut Uele, Haut Lomami, Tanganyika and Tshopo provinces and across the following revenue collecting institutions: DGRAD; General Director of Migrations; Ministry of Mines; Ministry of Environment and Sustainable Development; Ministry of Land Affairs; Ministry of Hydrocarbons; and Ministry of Post, Telecommunications and New Information and Communication Technologies, 3 To ensure that the mining sector enables inclusive and sustainable socio-economic development in the DRC, the Recipient has adopted Decree No. 23/05, dated February 20, 2023, published in the Official Gazette, Special Edition, dated March 7, 2023, modifying and complementing Decree No. 19 17 dated November 25, 2019. regarding the statute, organization and operationalization of the Mining Fund for Future Generations (FOMIN) with extended oversight and transparency mechanisms. Pilar 2. Accelerating digital transformation and strengthening SOE transparency and governance 4. To accelerate the digital transformation of DRC, the Recipient: (i) has promulgated the following implementing regulations of the Telecommunications Law No. 20/017: (a) Decree No. 23113 dated March 3, 2023, creating the regulatory authority under the Ministry of Post, Telecommunications and New Information and Communication Technologies, published in the Official Gazette, Special Edition, dated March 7, 2023; (b) Decree No. 22/51, dated December 30, 2022, creating the Universal Service Fund, published in the Official Gazette, Special Edition, dated March 2, 2023; and (c) Ministerial order No. CAB/MEN!PT&NTIC/ AKIM/KL/Kbs/037f2022, dated July 11. 2022, on issuance of concession licenses; and (ii) has implemented the effective direct connection of the fiber optic cable owned by SOCOF to the WACS landing station, pursuant to Letter No. 007/FASTCONGO/DG07/02/2023 dated February 27, 2023, as instructed by letter from the Minister of Ministry of Post, Telecommunications and New Information and Communication Technologies dated December 30, 2022. 5. To increase the transparency and accountability of SOEs and strengthen corporate govemance, the Recipient has: (i) published a report on the financial performance of SOEs for 2021 on the CSP website; (ii) adopted Decree No, 23/8, dated February 22, 2023, published in Official Gazette, Special Edition, dated March 2, 2023, detailing the procedures regarding the transactions of mining assets of state- owned enterprises, in accordance with Law No. 08/008, dated 7 July 2008, on State Disengagement; and (iii) completed the competitive, meritocratic and transparent recruitment of the Chairmen, General Managers and Deputy General Managers of SNEL, REGIDESO and FONER, and the selected candidates nominated pursuant to Presidential Ordinances No. 22177; No, 22/176; No. 22/178, dated 10 October 2022, published in the Official Gazette No. 21, dated November 1', 2022. Pillar 3. Strengthening governance for sustainable forestry 6- To strengthen the implementation of forest protection and management laws and transparency of the forestry sector (i) the Recipient has adopted Decree No. 23/11 dated March 3, 2023, published in Official Gazette, Special Edition, dated March 7, 2023, modifying and completing Decree No. 08/03 of January 26, 2008, on the composition, organization and functioning of the National Forestry Advisory Council to, iner alia, include civil sueiety and indigenous peoples representation in its executive committee ("Bureau"): and (ii) the MEDD-led inter-ninisterial Coiunission has submitted to the Council of Ministers, for information purposes, its preliminary conclusions related to the administrative review aspects of the forest concessions, on March 3, 2023. -7- 7. To address deforestation and forest degradation from agriculture, the Council of Ministers has adopted on February 17, 2023, a national sustainable agricultural policy that integrates the principles of land-use planning and protection of high conservation value forests and promotes the development of sustainable commercial agriculture in savannah areas. 8. To mainstream climate change into DRC's policy frameworks and mobilize climate finance to support implementation, the Recipient's Council of Ministers has adopted on February 3, 2023, the draft ordinance-law amending Law I /009 of July 9, 2011, establishing fundamental principles for protection of the environment. Section [. 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 500,000,000 Tranche TOTAL AMOUNT 500,000,000 C. Withdrawal Tranche Release Conditions I 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 I The Recipient, within thirty (30) days after the withdrawal of the Financing from the Financing Account, shall report to the Association: (a) the exact sun received into the account referred to in Section 2.03 (a) of the General Conditions; (b) the details of the account to which the CDF equivaleni ofthe 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. 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 deposit of the Financing amount in the account referred to in Section 2,03 (a) of the General Conditions, 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. furish 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 June 30, 2024. -9- SCHEDULE 2 Repayment Schedule Date Payment Due Principal Amount of the Credit repayable (expressed as a percentage)* On each April 15 and October 15: Commencing 15 April 2033, to and including 15 L25% October 2072. The percentage represents the percentage of the principal amount of the Credit to be repaid, except as the Association may otherwise specify pursuant to renumbered Section 3.03 (b) (originally numbered Section 3.05 (b)) of the General Conditions. APPENDIX Section . Definitions 1. "CDF" means the Congolese franc, the lawful currency of the Recipient. 2. "DGRAD" means Direction Ggn6rate des Receites AdminisiratIves; Judiciaires. Domaniales et de Participarions, the Recipient's non-tax revenues authority. 3. "DGTCP" means Direction G6n&ale de ta Trisorerie et de la Comptabili Publique, the Borrower's Treasury and Public Accounting General Directorate. 4. "DRC" means Democratic Republic of Congo. 5. "FONER" means Fonds National d'Eniretien Routier, the Recipient's Road maintenance Fund. a public institution (Eiablissement Publique) established pursuant to the Prime Minister's Decree No. 08/27 dated December 24, 2008, 6. "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). 7, "LOGIRAD" means Logiciel de Gestion lntegrde des Recedes Administratives et Domaniales, the DGRAD's computerized management information system. 8. "MEDD" means the Borrower's ministry in charge of environment and sustainable development, or any successor thereto. 9. 'Program" means: the program of objectives, policies, and actions set forth or referred to in the letter dated March 7, 2023. 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 I to this Agreement., and actions to be taken consistent with the program's objectives. 10. "REGIDESO" means Regie de Distribution d'Ea, the Recipient's national water utility, established and operating pursuamt to Law No,66/460, dated August 25, 1966. IL "SNE " means Soci'd NatVoledtEectricil, the Rcioien'; national electricity utility, established and operating pursuant to Ordinance-Law No.70/033. dated May 16, 1970, as amended. -ll- 12. "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. 13, "Single Withdrawal Tranche" means the amount of the Financing allocated to the category entitled "Single Withdrawal Tranche" in the table set forth in Part 8 of Section I1 of Schedule I to this Agreement. 14. "SOE" means state owned enterprise. Section [1. Modifications to the General Conditions The General Conditions are hereby modified as follows; 1. Section 3.03 (Service Charge) and Section 3.04 (Interest Charge) are deleted in their entirety and the remaining Sections in Article III are renumbered accordingly, and all references to the Sections of Article III in any provision of the General Conditions are understood to be to such renumbered Sections. 2. Paragraph 66 (Interest Charge) in the Appendix is modified to read as follows: "66. "Interest Charge" means the interest charge for the purpose of Section 3.07. 3. Paragraph 100 (Service Charge) in the Appendix is deleted in its entirety and the subsequent paragraphs are renumbered accordingly, and any reference to "Service Charge" or "Service Charges" in any provision of the General Conditions is deleted.