OFFICIAL DOCUMENTS CREDIT NUMBER 6097-SN Financing Agreement (First Multi-Sector Structural Reforms Development Policy Financing) between REPUBLIC OF SENEGAL and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 2017 CREDIT NUMBER 6097-SN FINANCING AGREEMENT AGREEMENT dated IAL.0, 2017, entered into between REPUBLIC OF SENEGAL ("Recipient") and FWEIATIONAL 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 L.A of Schedule I 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) 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- FINANCING 2.01. The Association agrees to extend to the Recipient, on the terms and conditions set forth or referred to in this Agreement, a credit in the amount of fifty-four million nine hundred thousand Euro (Euro 54,900,000) (variously, "Credit" and "Financing"). 2.02. The Recipient may withdraw the proceeds of the Financing in support of the Program in accordance with Section II of Schedule 1 to this Agreement. 2.03. The Maximum Commitment Charge Rate payable by the Recipient on the Unwithdrawn Financing Balance shall be one-half of one percent (1/2 of 1%) per annum. 2.04. The Service Charge payable by the Recipient on the Withdrawn Credit Balance shall be equal to the greater of: (a) the sum of three-fourths of one percent (3/4 of 1%) per annum plus the Basis Adjustment to the Service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. 2.05. The Payment Dates are June 15 and December 15 in each year. 2.06. The principal amount of the Credit shall be repaid in accordance with the repayment schedule set forth in Schedule 2 to this Agreement. -2- 2.07. The Payment Currency is Euro. 2.08. Without limitation upon the provisions of Section 4.08 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 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 4.08 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 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 framework. -3- 5.02. The Effectiveness Deadline is the date ninety (90) days after the date of this Agreement. 5.03. For purposes of Section 8.05 (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 date of this Agreement. ARTICLE VI- REPRESENTATIVE; ADDRESSES 6.01. The Recipient's Representative is its Minister responsible for finance. 6.02. The Recipient's Address is: Rue Rend Ndiaye x Avenue Carde BP 4017 Telex: Telephone: 3382241 95 +221 33 8892118 6.03. The Association's Address is: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Telex: Facsimile: 248423(MCI) 1-202-477-6391 -4- AGREED at M,, p ,-, xL, , as of the day and year first above written. Le 1 lstre de PEco dFin, cos et Aadou BA Authorized Representative Name: Title: INTERNATIONAL DEVELOPMENT ASSOCIATION By Auth zed Repre SEN'EG Name: Lu, (p, Title: -5- SCHEDULE 1 Program Actions; Availability of Financing Proceeds Section I. Actions under the Program A. Actions Taken Under the Program. The actions taken by the Recipient under the Program include the following: Part I. Improving Governance in the Energy Sector 1 . In order to improve management of SENELEC, the Recipient has entered with SENELEC into a focused performance contract which includes a monitoring and corrective mechanism, and incorporates a functional performance incentive system. 2. In order to enable the board of directors of SENELEC to better perform its corporate governance role: (i) SENELEC's General Assembly has adopted the modifications to SENELEC's statutes to ensure compliance with Article 416 of the OHADA Revised Uniform Act of 2014, allowing the appointment of directors to its board of directors that are not shareholders; and (ii) SENELEC's Board of Directors has established technical and financial committees at board level for auditing, investment and commercial aspects. 3. In order to sustainably resolve the sector issues on cross debt and financial arrears: (i) the Recipient has entered with SENELEC into a cross-debt and arrears clearance agreement covering the period August 2012 - February 2016; (ii) the Recipient has agreed to pay SENELEC's 2017 value added tax (VAT) credits within the statutory three months, while SENELEC has agreed to honor 100% of its tax commitments by 2019; and (iii) the Recipient's minister in charge of finance has issued a circular instructing all central governmental autonomous institutions and entities to include in their yearly budget, separate allocations for covering electricity and water bills. 4. In order to diversify the country energy mix towards less expensive sources including renewables, the Recipient's Council of Ministers has approved a strategic master plan for electricity generation setting forth the Recipient's priorities in energy diversification and private sector participation in power generation, including related project development modalities. 5. In order to improve access to affordable electricity services in rural areas, the Recipient's minister in charge of energy has instructed the electricity national regulator to lower rural concessions' electricity user tariffs to SENELEC's national tariffs. -6- Part II. Improving the Information and Communications Technology (ICT) Sector 6. The Recipient's Council of Ministers has adopted the national strategy for the digital economy "S6negal Num6rique 2025" providing policy basis for increased open market access to new service providers in the telecommunications sector in line with international best practices. 7. In order to facilitate the entry of a wider range of internet service providers into the retail internet broadband segment, the Recipient has: (i) enacted amendments to Articles 29 to 32 of the Recipient's Telecom Law no. 2011-01 of February 24, 2011, providing that internet service providers are subject to the lighter and less expensive general authorization regime instead of the licensing regime, and are allowed to deploy and operate their own infrastructure; (ii) issued an implementation decree of the amended Art. 29 to 32 of the Telecom Law No 2011- 01 of February 24, 2011 which includes a provision converting attributed internet service providers licenses into authorizations. 8. In order to increase competition in the wholesale internet broadband segment, the Recipient has adopted and implemented a decree specifying the rules for granting authorizations to wholesale telecommunications infrastructure operators in accordance with the Recipient's Telecom Law no. 2011-01 of February 24, 2011. 9. With a view to reduce infrastructure roll-out costs for telecom operators, the Recipient has adopted and implemented a decree clarifying the technical and financial rules for infrastructure sharing among telecommunications operators in accordance with Articles 10 and 25 of the Recipient's Telecom Law no 2011-01 of February 24, 2011. 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. The allocation of the amounts of the Financing to this end is set out in the table below: .i Amount of the Financing Allocated (expressed in EUR) Single Withdrawal Tranche 54,900,000 TOTAL AMOUNT 54,900,000 -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. Deposits of Financing Amounts. Except as the Association may otherwise agree: 1. all withdrawals from the Financing Account shall be deposited by the Association into an account designated by the Recipient and acceptable to the Association (the "Deposit Account"); 2. the Recipient shall ensure that upon each deposit of an amount of the Financing into the Deposit Account, an equivalent amount is accounted for in the Recipient's budget management system, in a manner acceptable to the Association; and 3. within thirty (30) days of such deposit, the Recipient will provide a written report to the Association of the amount deposited in the Deposit Account and credited to the Recipient's budget-management system. E. Audit. If the Association so requests, the Recipient shall: 1. have the Deposit Account 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 four (4) months after the end of the Recipient's fiscal year, a certified copy of the report of such audit, of such scope and in such detail as the Association shall reasonably request; 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 Deposit Account and its audit as the Association shall reasonably request. F. Excluded Expenditures. The Recipient undertakes that the proceeds of the Financing shall not be used to finance Excluded Expenditures. If the Association determines at any time that an amount of the Financing was used to make a payment for an Excluded Expenditure, the Recipient shall, promptly upon notice from the Association, refund an amount equal to the amount of such payment to the Association. Amounts refunded to the Association upon such request shall be cancelled. G. Closing Date. The Closing Date is December 15, 2018. -8- SCHEDULE 2 Repayment Schedule Date Payment Due Principal Amount of the Credit repayable (expressed as a percentage)* On each June 15 and December 15: commencing 15 December 2023 to and 1.5625% including 15 June 2055 * 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 3.03 (b) of the General Conditions. -9- APPENDIX Section I. 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. "Council of Ministers" means the Recipient's Council of Ministers established pursuant to the Recipient's constitutional law dated January 22,2011, or its successor thereof. 3. "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 Association or the Bank has financed or agreed to finance, or which the Association or the Bank has financed or agreed to finance under another credit, grant or loan; (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 Association by notice to the Recipient: 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 machinery 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) -10- (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 Recipient or international agreements to which the Recipient 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 Association determines that corrupt, fraudulent, collusive or coercive practices were engaged in by representatives of the Recipient or other recipient of the Financing proceeds, without the Recipient (or other such recipient) having taken timely and appropriate action satisfactory to the Association to address such practices when they occur. 4. "General Conditions" means the "International Development Association General Conditions for Credits and Grants", dated July 31, 2010, with the modifications set forth in Section 11 of this Appendix. 5. "OHADA Revised Uniform Act" means the revised Uniform Act on commercial companies and economic interests groups adopted on January 30, 2014 by the OHADA Council of Ministers and published in the official gazette on February 4, 2014. 6. "Program" means the program of actions, objectives and policies designed to promote growth and achieve sustainable reductions in poverty and set forth or referred to in the letter of May 17 2017 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. 7. "SENELEC" means "Socidtd Nationale de l'El&tricitd du Sinigal", the Recipient's national power utility, established as a corporation (socitd anonyme & participation publique majoritaire), pursuant to the Law No. 98-06 of January 28, 1998, authorizing SENELEC's transformation into a corporation, and SENELEC's Statutes dated 31 mars 1999, as said law and statutes may be amended from time to time, and operating under the laws of the Recipient. 8. "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 I to this Agreement. -11- Section II. Modifications to the General Conditions The General Conditions are hereby modified 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 subsequent Sections in Article II are renumbered accordingly. 3. Sections 4.01 (Project Execution Generally) and 4.09 (Financial Management; Financial Statements; Audits) are deleted in their entirety, and the remaining Sections in Article IV are renumbered accordingly. 4. Paragraph (a) of Section 4.05 (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 4.06 (renumbered as such pursuant to paragraph 3 above) is modified to read as follows: "Section 4.06. Plans; Documents; Records ... (c) The Recipient shall retain all records (contracts, orders, invoices, bills, receipts and other documents) evidencing expenditures under the Financing until two years after the Closing Date. The Recipient shall enable the Association's representatives to examine such records." 6. Paragraph (c) of Section 4.07 (renumbered as such pursuant to paragraph 3 above) is modified to read as follows: "Section 4.07. Program Monitoring and Evaluation ... (c) The Recipient shall prepare, or cause to be prepared, and furnish to the Association not later than six months after the Closing Date, a report of such scope and in such detail as the Association shall reasonably request, on the execution of the Program, the performance by the Recipient and the Association of their respective obligations under the Legal Agreements and the accomplishment of the purposes of the Financing." -12- 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 Financing is put in support of the Program, other than to finance expenditures excluded pursuant to the Financing Agreement." (b) The term "Financial Statements" and its definition as set forth in the Appendix are deleted in their entirety. (c) The term "Project" is modified to read "Program" and its definition is modified to read as follows: ""Program" means the program referred to in the Financing Agreement in support of which the Financing is made." All references to "Project" throughout these General Conditions are deemed to be references to "Program".