CONFORMED COPY CREDIT NUMBER 525 MAG Development Credit Agreement (Mangoro Forestry Project) BETWEEN MALAGASY REPUBLIC AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED DECEMBER 23, 1974 CONFORMED COPY CREDIT NUMBER 525 MAG Development Credit Agreement (Mangoro Forestry Project) BETWEEN MALAGASY REPUBLIC AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED DECEMBER 23, 1974 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated December 23, 1974, between MALAGASY REPUBLIC (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 the Project described in Schedule 1 to an agreement of even date herewith between the Borrower and the Bank (hereinafter called the Loan Agreement) by extending the Credit as hereinafter provided; (B) The Borrower has also requested the Bank to provide additional assistance towards the financing of the Project and by the Loan Agreement the Bank is agreeing to provide such assistance in an aggregate principal amount equivalent to six million seven hundred and fifty thousand dollars ($6,750,000) (hereinafter called the Loan); (C) The Borrower and the Association intend, to the extent practicable, * that the proceeds of the Credit provided for in this Agreement be disbursed on account of expenditures on the Project before disbursements of the proceeds of the Loan provided for in the Loan Agreement are made; 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 March 15, 1974, with the same force and effect as if they were fully set forth herein, subject, however, to the following modifications thereof (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified, being hereinafter called the General Conditions): 4 (a) Section 2.01(9) is deleted and the following is substituted therefor: "9. The term 'Project' means the project or program for which the Credit is granted, as described in the Loan Agreement and as the description thereof may be amended from time to time by agreement between the Bank, the Association and the Borrower." (b) Section 6.02(b) is deleted and the following is substituted for: "(b) The Borrower shall have failed to perform any other obligation and the Development Credit Agreement or the Loan Agreement (as such term is defined in the Development Credit Agreement)." (c) Section 7.01(c) is amended to read as follows: "(c) A default shall occur in the performance of any other obligation on the part of the Borrower under the Development Credit Agreement or the Loan Agreement (as such term is defined in the Development Credit Agreement), and such default shall continue for a period of sixty days after notice thereof shall have been given by the Association or the Bank to the Borrower." Section 1.02. 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) "Loan Agreement" means the agreement of even date herewith between the Borrower and the Bank for the purpose of the Project, as such agreement may be amended from time to time; and such term includes the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated March 15, 1974, as made applicable to such agreement, all agreements supplemental to the Loan Agreement and all schedules to the Loan Agreement; (b) "Loan" means the loan provided for in the Loan Agreement; (c) "Loan Account" means the account established pursuant to Section 2.02 of the Loan Agreement; and (d) the several terms defined in the Loan Agreement have the respective meanings therein set forth. 5 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 six million seven hundred and fifty thousand dollars ($6,750,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule I to this Agreement, as such Schedule may be amended from time to time, 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. Section 2.03. Except as the Association shall otherwise agree, contracts for the purchase of goods or for the carrying out of works or services (other than consultants' services) for the Project to be financed out of the proceeds of the Credit, shall be awarded in accordance with the provisions of Schedule 3 to the Loan Agreement. Section 2.04. The Closing Date shall be December 31, 1980 or such other date as shall be agreed between the Borrower and the Association. Section 2.05. 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 2.06. Service charges shall be payable semi-annually on May 15 and November 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in seni-annual installments payable on each May 15 and November 15 commencing November 15, 1984, and ending May 15, 2024, each installment to and including the installment payable on May 15, 1994 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 (1-1/2N) of such principal amount. Section 2.08. The currency of the United Statee of America is hereby specified for the purposes of Section 4.02 of the General Conditions. 6 ARTICLE III Execution of the Project Section 3.01. Article III and Sections 4.02 and 4.03 of the Loan Agreement and Schedule I and 3 thereto are hereby incorporated into this Agreement with the same force and effect as if they were fully set forth herein; provided, however, that (i) all reference to the Bank in such Article, Sections or Schedules or in any of them shall be deemed to be references to the Association, and (ii) all references to the Loan in such Article, Sections or Schedules or in any of them shall be deemed to be references to the Credit. Section 3.02. So long as any part of the Loan provided for under the Loan Agreement shall remain outstanding and unpaid, all action taken, including approvals given, by the Bank pursuant to the Articles of the Loan Agreement enumerated in Section 3.01 of this Agreement, or of Section 2.03 of the Loan Agreement, shall be deemed to be taken or given in the name and on behalf of both the Bank and the Association; and all information furnished by the Borrower to the Bank pursuant to the provisions of such Articles, shall be deemed to be furnished to both the Bank and the Association. ARTICLE IV Remedies of the Association Section 4.01. For the pUrpOSCS of Section 6.02 of the General Conditions, the additional events specified in Section 5.01 of the Loan Agreement are hereby incorporated into this Agreement with the same force and effect as if they were fully set forth herein; provided, however, that: (i) all references to the Bank in su2h Section shall be deemed to be references to the Association; and (ii) so long as any part of the Loan provided for under the Loan Agreement shall remain outstanding and unpaid, all actions taken, including approvals given by the Bank pursuant to such Section, shall be deemed to be taken or given in the name and on behalf of both the Bank and the Association. Section 4.02. For the purposes of Section 7.01 of the General Conditions, the additional events specified in Section 5.02 of the Loan Agreement are hereby incorporated into this Agreement with the same force and effect as if they were fully set forth herein; provided, however, that: (i) all references to the Bank in such Section shall be deemed to be references to the Association; and (ii) so long as any part of the Loan provided for under the Loan Agreement shall remain outstanding and unpaid, all actions taken, including approval given by the Bank 7 pursuant to such Sectioi, shall be deemed to be taken or given in the name and on behalf of both the Bank and the Association. ARTICLE V Effective Date; Termination Section 5.01. (a) 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, namely, that the conditions precedent to the effectiveness, except the condition under paragraph (a) of Section 6.01, of the Loan Agreement shall have been fulfilled, subject only to the effectiveness of this Agreement. (b) All references to the Bank in Section 6.01 of the Loan Agreement shall be deemed references to the Association. Section 5.02. The date March 24, 1975 is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.03. The obligations of the Borrower under Sections 4.02 through 4.04 of the Loan Agreement incorporated by reference in Article III of this Agreement and the provisions of Sections 4.01 and 4.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date 25 years after the date of this Agreement, whichever shall be the earlier. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Minister of Economy and Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministere de 1'Economie et des Finances Tananarive Malagasy Republic 8 Cable address: MINECOFIN Tananarive For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INDEVAS Washington, D.C. 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. MALAGASY REPUBLIC By /s/ Henri Raharijaona Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s / S. Shahid Husain Regional Vice President Eastern Africa 9 SCHEDULE 1 Withdrawal of the Proceeds of the Credit and of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit and of the Loan, the allocation of amounts of such proceeds to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit and of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Civil works by 2,100,000 75% contractors (2) Civil works by 6,500,000 75% force account and administra- tive cost (3) Vehicles and equip- 2,000,000 100% of foreign ment expenditures or 75% of local ex- penditures (4) Fertilizer 900,000 100% of foreign expenditures or 75% of local ex- penditures (5) Consultants' 700,000 100% of foreign services for expenditures and research and 75% of local ex- training and penditures preparation of a second- phase project 10 Amount of the Credit and of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (6) Consultants' 500,000 100% of foreign services for expenditures and the prepara- 75% of local ex- tion of agricul- penditures tural projects (7) Agro-pastural 100,000 100% of foreign development expenditures in the Project and 75% of local Area expenditures (8) Unallocated 700,000 TOTAL 13,500,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures for goods or services supplied from, the territory, and in the currency, of any country other than the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower, and for goods or services supplied from, the territory of the Borrower. 3. The disbursement percentages have been calculated in compliance with the policy of the Association and the Bank that no proceeds of the Credit and of the Loan shall 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; to that end, if any event occurs which shall affect the amount of any such taxes included in the cost of any item to be financed out of the proceeds of the Credit and of the Loan, the Association or the Bank may, by notice to the Borrower, correspondingly adjust the disbursement percentage then applicable to such item. S 11 4. Notwithstanding the provisions of paragraph I abuve, no withdrawals shall be made in respect of expenditures prior to the date of this Agreement, except that withdrawals may be made in respect of Category (2) on account of expenditures incurred after November 1, 1974 in an aggregate amount not exceeding the equivalent of S100,000. In addition, except as the Borrower, the Association and the Bank shall otherwise agree, and until all amounts of the Credit shall have been withdrawn or committed, no withdrawals shall be made from the Loan Account except under commitments entered into by the Bank pursuant to Section 5.02 of the General Conditions referred to in Section 1.01 of the Loan Agreement. 5. Notwithstanding the allocation of an amount of the Credit and of the Loan or the disbursement percentages set forth in the table in paragraph I above, if the Association and the Bank have, or after full withdrawal of the entire amount of the Credit, the Bank has rea,onably estimated that the amount of the Credit and of the Loan then allocated ro any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association and the Bank may, by notice to the Borrower: (i) reallocate to such Category to the extent required to meet the estimated shortfall proceeds of the Credit and of the Loan which are then allocated to another Category and which in the opinion of the Association and of the Bank 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. 6. If the Association and 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 Credit and of the Loan and the Association and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Association and of the Bank under the Development Credit Agreement and the Loan Agreement, by notice to the Borrower, cancel such amount of the Credit and of the Loan as in the Association's and 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 Credit and of the Loan.