OFFICIAL
DOCUMENTSj'
LOAN NUMBER 8382-RO
Loan Agreement
(First Fiscal Effectiveness and Growth Development Policy Loan)
between
ROMANIA
and
INTERNATIONAL BANK FOR RECONSTRUCTION
AND DEVELOPMENT
Dated _A______ _ _ 20
LOAN AGREEMENT
Agreement dated 4 1 , 201 entered into between ROMANIA
("Borrower") and INTERNATIONAL BANK FOR RECONSTRUCTION AND
DEVELOPMENT ("Bank") for the purpose of providing financing in support of the
Program (as defined in the Appendix to this Agreement). The Bank has decided to
provide this financing on the basis, inter alia, of: (a) the actions which the Borrower has
already taken under the Program and which are described in Section I of Schedule 1 to
this Agreement; and (b) the Borrower's maintenance of an adequate macroeconomic
policy framework. The Borrower and the Bank therefore hereby agree as follows:
ARTICLE I - GENERAL CONDITIONS; DEFINITIONS
1.01. The General Conditions (as defined in the Appendix to this Agreement)
constitute an integral 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 - LOAN
2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or
referred to in this Agreement, the amount of seven hundred and fifty million Euro
(EUR750,000,000), as such amount may be converted from time to time through
a Currency Conversion in accordance with the provisions of Section 2.07 of this
Agreement ("Loan").
2.02. The Borrower may withdraw the proceeds of the Loan in support of the Program
in accordance with Section II of Schedule 1 to this Agreement.
2.03. The Front-end Fee payable by the Borrower shall be equal to one quarter of one
percent (0.25%) of the Loan amount. The Borrower shall pay the Front-end Fee
not later than sixty days after the Effective Date.
2.04. The interest payable by the Borrower for each Interest Period shall be at a rate
equal to the Reference Rate for the Loan Currency plus the Variable Spread;
provided, that upon a Conversion of all or any portion of the principal amount of
the Loan, the interest payable by the Borrower during the Conversion Period on
such amount shall be determined in accordance with the relevant provisions of
Article IV of the General Conditions. Notwithstanding the foregoing, if any
amount of the Withdrawn Loan Balance remains unpaid when due and such non-
payment continues for a period of thirty (30) days, then the interest payable by
the Borrower shall instead be calculated as provided in Section 3.02 (e) of the
General Conditions.
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2.05. The Payment Dates are May 15 and November 15 in each year.
2.06. The principal amount of the Loan shall be repaid in accordance with the
provisions of Schedule 2 to this Agreement.
2.07. (a) The Borrower may at any time request any of the following Conversions
of the terms of the Loan in order to facilitate prudent debt management:
(i) a change of the Loan Currency of all or any portion of the principal
amount of the Loan, withdrawn or unwithdrawn, to an Approved
Currency; (ii) a change of the interest rate basis applicable to all or any
portion of the principal amount of the Loan withdrawn and outstanding
from a Variable Rate to a Fixed Rate, or vice versa, or from a Variable
Rate based on a Variable Spread to a Variable Rate based on a Fixed
Spread; and (iii) the setting of limits on the Variable Rate applicable to
all or any portion of the principal amount of the Loan withdrawn and
outstanding by the establishment of an Interest Rate Cap or Interest Rate
Collar on the Variable Rate.
(b) Any conversion requested pursuant to paragraph (a) of this Section that
is accepted by the Bank shall be considered a "Conversion", as defined
in the General Conditions, and shall be effected in accordance with the
provisions of Article IV of the General Conditions and of the Conversion
Guidelines.
2.08. Without limitation upon the provisions of Section 5.08 of the General Conditions
(renumbered as such pursuant to paragraph 3 of Section II of the Appendix to this
Agreement and relating to Cooperation and Consultation), the Borrower shall
promptly furnish to the Bank such information relating to the provisions of this
Article II as the Bank may, from time to time, reasonably request.
ARTICLE III - PROGRAM
3.01. The Borrower declares its commitment to the Program and its implementation.
To this end, and further to Section 5.08 of the General Conditions:
(a) the Borrower and the Bank shall from time to time, at the request of
either party, exchange views on the Borrower's macroeconomic policy
framework and the progress achieved in carrying out the Program;
(b) prior to each such exchange of views, the Borrower shall furnish to the
Bank for its review and comment a report on the progress achieved in
carrying out the Program, in such detail as the Bank shall reasonably
request; and
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(c) without limitation upon the provisions of paragraphs (a) and (b) of this
Section, the Borrower shall promptly inform the Bank 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 BANK
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.
ARTICLE V - EFFECTIVENESS; TERMINATION
5.01. The Additional Condition of Effectiveness consists of the following, namely that
the Bank is satisfied with the progress achieved by the Borrower in carrying out
the Program and with the adequacy of the Borrower's macroeconomic policy
framework.
5.02. The Effectiveness Deadline is the date of one hundred and fifty (150) days after
the date of this Agreement.
ARTICLE VI - REPRESENTATIVE; ADDRESSES
6.01. The Borrower's Representative is the Borrower's Minister of Public Finance or
whomever the Minister delegates to.
6.02. The Borrower's Address is:
Ministry of Public Finance
17 Apolodor Street
Bucharest
Romania
Telex: Facsimile:
11239 40213126792
6.03. The Bank's Address is:
International Bank for Reconstruction and Development
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
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Cable address: Telex: Facsimile:
INTBAFRAD 248423(MCI) or 1-202-477-6391
Washington, D.C. 64145(MCI)
AGREED and signed at ,Y1AA-&0LU4t Romania, as of the day
and year first above written.
ROMANIA
By:
Authorized Representative
Name: ,P-L*..A_
Title: QJOj6 A k ?PQJ4
INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT
By:
Authori ed Representative
Name:
Title: yC L 4&
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SCHEDULE 1
Program Actions; Availability of Loan Proceeds
Section I. Actions under the Pro2ram
The actions taken by the Borrower under the Program include the following:
1. The Borrower, through its Ministry of Public Finance (MoPF), has approved and
published the rolling medium-term debt management strategy (DSM) for 2014-
16 and the corresponding 2014 Annual Borrowing Plan (ABP) to build up the
Borrower's Government securities market.
2. The National Bank of Romania (NBR) has introduced an electronic auction
facility for government securities in the primary market and started to hold
auctions on March 2014.
3. The Borrower's Parliament has enacted amendments to the Public Finance Law
No. 500/2002 through Law No. 270/2013 and, based on these amendments, the
MoPF has issued a detailed action plan for preparing and executing results-
informed budgets.
4. The Borrower's Government has approved Emergency Ordinance No. 88/2013
setting up a system for prioritizing significant (over one hundred million RON)
public investments; and has approved the Government Decision No. 225/2014
dated March 26, 2014 on methodological norms for the implementation of such
system.
5. The Borrower's Government has approved a Memorandum on March 26, 2014
assigning to the inter-ministerial committee on minimum social insertion
program (MSIP) the preparation of specific legal and institutional steps to
introduce the MSIP in the first calendar quarter of 2016, including provisions to
increase incentives to work.
6. The Borrower's Government has approved a Memorandum on April 2, 2014 on
state ownership and oversight that clarifies the responsibilities of the line
ministries and MoPF for monitoring, advocacy for good government practices,
transparency, and financial reporting.
7. The Borrower's Government has approved Emergency Ordinance No. 8/2014,
establishing the operational and financial independence of the National Agency
of Cadastre and Land Registration for investments covering both the rural and
urban real estate registration.
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8. The National Energy Regulatory Authority (ANRE) has issued the Orders fully
liberalizing the nonresidential electricity market.
9. The Borrower's Government has approved Emergency Ordinance No. 94/2013
reducing the board size of the Financial Supervisory Authority (ASF) from 11 to
9 members and establishing minimum qualification requirements and conflict of
interest principles for both board members and senior staff, and the Borrower's
Parliament, through its Decision No. 60/2013 endorsed the revised composition
of the Board of the ASF, as amended.
Section II. Availability of Loan Proceeds
A. General. The Borrower may withdraw the proceeds of the Loan in accordance
with the provisions of this Section and such additional instructions as the Bank
may specify by notice to the Borrower.
B. Allocation of Loan Amounts. The Loan is allocated in a single withdrawal
tranche, from which the Borrower may make withdrawals of the Loan proceeds.
The allocation of the amounts of the Loan to this end is set out in the table below:
Amount of the Loan Tranche
Allocated
Allocations (expressed in Euro)
Single Withdrawal Tranche 750,000,000
TOTAL AMOUNT 750,000,000
C. Payment of Front-end Fee. No withdrawal shall be made from the Loan
Account until the Bank has received payment in full of the Front-end Fee.
D. Withdrawal Tranche Release Conditions
No withdrawal shall be made of the Single Withdrawal Tranche unless the Bank
is satisfied: (a) with the Program being carried out by the Borrower; and (b) with
the adequacy of the Borrower's macroeconomic policy framework.
E. Deposits of Loan Amounts. Except as the Bank may otherwise agree:
1. all withdrawals from the Loan Account shall be deposited by the Bank
into an account designated by the Borrower and acceptable to the Bank;
and
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2. the Borrower shall ensure that upon each deposit of an amount of the
Loan into this account, an equivalent amount is accounted for in the
Borrower's budget management system, in a manner acceptable to the
Bank.
F. Excluded Expenditures. The Borrower undertakes that the proceeds of the
Loan shall not be used to finance Excluded Expenditures. If the Bank determines
at any time that an amount of the Loan was used to make a payment for an
Excluded Expenditure, the Borrower shall, promptly upon notice from the Bank,
refund an amount equal to the amount of such payment to the Bank. Amounts
refunded to the Bank upon such request shall be cancelled.
G. Closing Date. The Closing Date is December 31, 2015.
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SCHEDULE 2
Amortization Schedule
The Borrower shall repay the principal amount of the Loan in full on May 15,
2032.
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APPENDIX
Section I. Definitions
1. "Annual Borrowing Plan" means the Borrower's forward-looking plan elaborated
by the Treasury and Public Debt Department within the Ministry of Public
Finance (as defined hereinafter) with the objective to adequately meet borrowing
requirements, ensuring consistency with medium-term debt strategy targets and
market development objectives.
2. "Excluded Expenditure" means any expenditure:
(a) for goods or services supplied under a contract which any national or
international financing institution or agency other than the Bank or the
Association has financed or agreed to finance, or which the Bank or the
Association has financed or agreed to finance under another loan, credit,
or grant;
(b) for goods included in the following groups or sub-groups of the Standard
International Trade Classification, Revision 3 (SITC, Rev.3), published
by the United Nations in Statistical Papers, Series M, No. 34/Rev.3
(1986) (the SITC), or any successor groups or subgroups under future
revisions to the SITC, as designated by the Bank by notice to the
Borrower:
Group Sub-group Description of Item
112 Alcoholic beverages
121 Tobacco, un-
manufactured, tobacco
refuse
122 Tobacco, manufactured
(whether or not containing
tobacco substitutes)
525 Radioactive and associated
materials
667 Pearls, precious and
semiprecious stones,
unworked or worked
718 718.7 Nuclear reactors, and parts
thereof; fuel elements
(cartridges), non-
irradiated, for nuclear
reactors
728 728.43 Tobacco processing
I machinery
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897 897.3 Jewelry of gold, silver or
platinum group metals
(except watches and watch
cases) and goldsmiths' or
silversmiths' wares
(including set gems)
971 Gold, non-monetary
(excluding gold ores and
concentrates)
(c) for goods intended for a military or paramilitary purpose or for luxury
consumption;
(d) for environmentally hazardous goods, the manufacture, use or import of
which is prohibited under the laws of the Borrower or international
agreements to which the Borrower is a party;
(e) on account of any payment prohibited by a decision of the United
Nations Security Council taken under Chapter VII of the Charter of the
United Nations; and
(f) with respect to which the Bank determines that corrupt, fraudulent,
collusive or coercive practices were engaged in by representatives of the
Borrower or other recipient of the Loan proceeds, without the Borrower
(or other such recipient) having taken timely and appropriate action
satisfactory to the Bank to address such practices when they occur.
3. "Emergency Ordinance No. 8/2014" means the Borrower's Government
Emergency Ordinance No. 8 dated February 26, 2014 amending certain legal acts
and other fiscal-budgetary measures (published in the Borrower's Official
Gazette No. 151 dated February 28, 2014).
4. "Emergency Ordinance No. 88/2013" means the Borrower's Government
Emergency Ordinance No. 88 dated September 18, 2013 approving selected
fiscal-budgetary measures to meet certain commitments made to international
organizations, and the amendment of some legal acts, approved with amendments
through Law No. 25/2014 (published in the Borrower's Official Gazette No. 593
dated September 20, 2013).
5. "Emergency Ordinance No. 94/2013" means the Borrower's Government
Emergency Ordinance No. 94 dated October 16, 2013 amending the Government
Emergency Ordinance No. 93/2012 on the establishment and functioning of
Financial Supervisory Authority, and amending the Law No. 136/1995 on
insurance and reinsurance in Romania, (published in the Romanian Official
Gazette No. 643 dated October 18, 2013).
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6. "Financial Supervisory Authority" or "FSA" means the Borrower's financial
supervisory authority established as a specialized autonomous administrative
authority with legal personality pursuant to Emergency Ordinance No. 93/2012
on the establishment and functioning of the Financial Supervisory Authority, as
amended.
7. "General Conditions" means the "International Bank for Reconstruction and
Development General Conditions for Loans", dated July 31, 2010 with the
modifications set forth in Section II of this Appendix.
8. "Government Decision No. 225/2014" means the Borrower's Government
Decision No. 225 dated March 26, 2014 approving the methodological norms
regarding the prioritization of the public investment projects, (published in the
Romanian Official Gazette No. 249 dated April 7, 2014).
9. "Law No. 270/2013" means the Borrower's law No. 270 dated October 15, 2013
amending the Public Finance Law No. 500/2002 (published in the Borrower's
Official Gazette No. 642 dated October 18, 2013).
10. "Ministry of Labor, Family, Social Protection and Elderly" means the Borrower's
ministry in charge of labor, family, social protection and elderly or any successor
thereto.
11. "Ministry of Public Finance" means the Borrower's ministry of public finance or
any successor thereto.
12. "National Energy Regulatory Authority" or "ANRE" means the Borrower's
national energy regulatory authority, established as an autonomous
administrative authority with legal personality under Parliamentary control,
pursuant to Law No. 160/2012 approving the Emergency Ordinance No. 33/2007
amending the Energy Law No. 13/2007 and the Gas Law No. 351/2004.
13. "National Bank of Romania" means the Borrower's National Bank.
14. "Orders" means collectively the following Orders taken by ANRE in the exercise
of its functions: (a) Order No. 41/2013 dated June 21, 2013 (published in the
Romanian Official Gazette No. 378 dated June 26, 2013); (b) Order No. 82/2013
dated November 20, 2013 as subsequently amended (published in the Romanian
Official Gazette No. 734 dated November 28, 2013); and (c) Order No.113/2013
dated December 18, 2013 (published in the Romanian Official Gazette No. 16
dated January 10, 2014).
15. "Parliament Decision No. 60/2013" means the Borrower's Parliament Decision
No. 60 dated November 5, 2013 on the appointment of the Board of the Financial
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Supervision Authority, (published in the Romanian Official Gazette No. 680
dated November 5, 2013), as amended through Decision No. 14/2014.
16. "Program" means the program of actions, objectives and policies designed to the
strengthening of fiscal debt management and State Owned Enterprises' (SOE)
performance and improving the functioning of property, energy and capital
markets as set forth or referred to in the letter dated May 5, 2014 from the
Borrower to the Bank declaring the Borrower's commitment to the execution of
the Program, and requesting assistance from the Bank in support of the Program
during its execution.
17. "Public Finance Law No. 500/2002" means the Borrower's public finance law
No. 500 dated July 11, 2002, as amended (published in the Borrower's Official
Gazette No. 597 dated August 13, 2002).
18. "RON" means the Borrower's local currency.
19. "Single Withdrawal Tranche" means the amount of the Loan 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.
Section II. Modifications to the General Conditions
The modifications to the General Conditions are as follows:
1. The last sentence of paragraph (a) of Section 2.03 (relating to Applications for
Withdrawal) is deleted in its entirety.
2. Sections 2.04 (Designated Accounts) and 2.05 (Eligible Expenditures) are deleted
in their entirety, and the remaining Sections in Article II are renumbered
accordingly.
3. Sections 5.01 (Project Execution Generally), and 5.09 (Financial Management;
Financial Statements; Audits) are deleted in their entirety, and the remaining
Sections in Article V are renumbered accordingly.
4. Paragraph (a) of Section 5.05 (renumbered as such pursuant to paragraph 3 above
and relating to Use of Goods, Works and Services) is deleted in its entirety.
5. Paragraph (c) of Section 5.06 (renumbered as such pursuant to paragraph 3
above) is modified to read as follows:
"Section 5.06. Plans; Documents; Records
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... (c) The Borrower shall retain all records (contracts, orders,
invoices, bills, receipts and other documents) evidencing expenditures
under the Loan until two years after the Closing Date. The Borrower
shall enable the Bank's representatives to examine such records."
6. Paragraph (c) of Section 5.07 (renumbered as such pursuant to paragraph 3
above) is modified to read as follows:
Section 5.07. Program Monitoring and Evaluation
... (c) The Borrower shall prepare, or cause to be prepared, and
furnish to the Bank not later than six months after the Closing Date, a
report of such scope and in such detail as the Bank shall reasonably
request, on the execution of the Program, the performance by the Loan
Parties and the Bank of their respective obligations under the Legal
Agreements and the accomplishment of the purposes of the Loan.
7. The following terms and definitions set forth in the Appendix are modified or
deleted as follows, and the following new terms and definitions are added in
alphabetical order to the Appendix as follows, with the terms being renumbered
accordingly:
(a) The definition of the term "Eligible Expenditure" is modified to read as
follows:
"'Eligible Expenditure' means any use to which the Loan is put in
support of the Program, other than to finance expenditures excluded
pursuant to the Loan Agreement."
(b) The term "Financial Statements" and its definition are deleted in their
entirety.
(c) The term "Project" is modified to read "Program" and its definition is
modified to read as follows (and all references to "Project" throughout
these General Conditions are deemed to be references to "Program"):
"'Program' means the program referred to in the Loan Agreement in
support of which the Loan is made."