0 CREDIT NUMBER 117 PAK Development Credit Agreement (Second Agricultural Development Bank Project) BETWEEN ISLAMIC REPUBLIC OF PAKISTAN AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JUNE 13, 1968 CREDIT NUMBER 117 PAK Development Credit Agreement (Second Agricultural Development Bank Project) BETWEEN ISLAMIC REPUBLIC OF PAKISTAN AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JUNE 13, 1968 Bradatpment G1rrbit Ageemetg AGREEMENT, dated June 13, 1968, between the ISLAMIC REPUBLIC OF PAKISTA,, acting by its President (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WIEBREAS the Borrower and the Agricultural Develop- ment Bank of Pakistan have requested the Association to assist in the financing of a lending program for agricultural development; ITEREAS by an agreement of even date herewith (herein- after called the Swedish Agreement) the Kingdom of Sweden has agreed to make available to the Borrower for such lending program a credit (hereinafter called the Swedish Credit) in a. principal amount of twenty-six mil- lion Swedish Kronor (SKr 26,000,000), equivalent at pres- ent parity rate as near as possible to five million dollars ($5, J0,000), on the terms and conditions set forth in the Swedish Agreement; WHEREAS the Agricultnral Development Bank of Paki- stan will, with the Borrower's assistance, carry out or cause to be carried out such lending program and, as part of such assistance, the Borrower will make available to the Agriculfural Development Bank of Pakistan the proceeds of the development credit provided herein and the proceeds of the Swedish Credit; and WITEREAS the Association is willing, on the basis of the foregoing, to make a development credit to the Borrower on the terms and conditions provided herein and in a proj- ect agreement of even date herewith between the Associa- tion and the Agricultural Development Bank of Pakistan; Now THEREFORE the parties hereto hereby agree as follows: 4 ARTICLE I Credit Regulations; Special Definitions SECTION 1.01. The parties to this Agreement accept all the provisions of Development Credit Regulations No. 1 of the Association dated June 1, 1961 as amended February 9, 1967, with the same force and effect as if they were fully set forth herein, subject, however, to the following modifica- tions thereof (said Development Credit Regulations No. 1 as so modified being hereinafter called the Regulations): (a) Section 6.02 is amended by inserting the words "or the Project Agreement" after the words "the Development Credit Agreement". (b) Paragraph 5 of Section 9.01 is amended to read as follows: '5. The term 'Borrower' means the Islamic Re- public of Pakistan, acting by its President." SECTION 1.02. Unless the context otherwise requires, the following terms wherever used in the Development Credit Agreement have the following meanings: (a) The term "Agricultural Bank" means the Agri- cultural Development Bank of Pakistan established under the Agricultural Development Bank Ordi- nance, 1961 of the Borrower. (b) The term "Project Agreement" means the agree- ment between the Association and the Agricultural Bank of even date herewith, providing for the carry- ing out of the Project, and shall include any amend- ments thereof made by agreement between the Agri- cultural Bank and the Association. (c) The term "agriculturists" means the agriculturists as defined in the Agricultural Development Bank Ordinance, 1961 of the Borrower. 5 ARTICLE II The Credit SECTION 2.01. The Association agrees to make available to the Borrower, on the terms and conditions in the De- velopment Credit Agreement set forth or referred to, a development credit in an amount in various currencies equivalent to ten million dollars ($10,000,000). SECTION 2.02. The Association shall open a Credit Ac- count in the name of the Borrower and shall credit to such Credit Account the amount of the Credit. The amount of the Credit may be withdrawn from the Credit Account as provided in, and subject to the rights of cancellation and suspension set forth in, the Development Credit Agree- ment. SEcTioN 2.03. Except as the Association shall otherwise agree: (a) the Borrower shall be entitled, subject to the pro- visions of the Development Credit Agreement, to withdraw from the Credit Account: (i) such amounts as shall have been expended for the reasonable foreign exchange cost of goods required for carrying out the Project; (ii) the equivalent of a percentage or percentages to be established from time to time by agree- ment between the Borrower and the Association of such amounts as shall have been lent by the Agricultural Bank to finance the reasonable cost of goods required for carrying out the Project and not included in the foregoing sub- section (i); and (iii) if the Association shall so agree, such amounts as shall be required by the Borrower to meet payments under the foregoing subsections (i) and (ii) hereof; 6 provided, however, that no withdrawals shall be made pur- suant to this subsection (a) for that part of the cost of goods in respect of which withdrawals shall have been made under the Swedish Agreement; and (b) no withdrawals shall be made on account of expendi- tures made prior to the date of this Agreement. SECTION 2.04. The currency of the United Kingdom of Great Britain and Northern Ireland is hereby specified for the purposes of Section 3.02 of the Regulations. SECTION 2.05. The Borrower shall pay to the Associa- tion a service charge at the rate of three-fourths of one per cent (% of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. The Borrower shall also pay to the Association a service charge at the rate of one-half of one per cent (1/ of 1%) on the principal amount outstanding of any special commitment entered into by the Association pursuant to Section 4.02 of the Regulations. SECTION 2.06. Service charges shall be payable semi- annually on May 1 and November 1 in each year. SECTION 2.07. The Borrower shall repay the principal of the Credit withdrawn from the Credit Account in semi- annual installments payable on each May 1 and Novem- ber 1 commencing May 1, 1978 and ending November 1, 2017, each installment to and including the installment payable on November 1, 1987, to be one-half of one per cent (1/ of I1 o) of such principal amount, and each install- ment thereafter to be one and one-half per cent (111/1) of such principal amount. ARTICLE III Use of Proceeds of the Credit SECTION 3.01. The Borrower shall eanse the proceeds of the Credit to be applied exclusively to financing the Cost 0 7 of the goods required to carry out the Project described in the Schedule to this Agreement. The specific allocation of the proceeds of the Credit and the methods and procedures for procurement of the goods to be financed out of such proceeds, shall be determined by agreement between the Association and the Borrower, subject to modification by firther agreement between them. Spe'nois 3.02. Except as the Association shall otherwise agree, the Borrower shall cause all goods financed out of the proceeds of the Credit to be used in the territories of the Borrower exclusively in the carrying out of the Project. ARTICLE IV Particular Covenants SETION 4.01. (a) The Borrower shall cause the Project to be carried out with due diligence and efficiency and in conformity with sound agricultural, engineering, economic and financial practices and shall at all times make avail- able, promptly as need ed, all funds, facilities, services and other resources required for the purpose. (b) The Borrower shall relend the proceeds of the Credit and of the Swedish Credit, or the equivalent thereof, to the Agricultural Bank on terms and conditions to be de- termined by agreement between the Borrower am the Asso- ciation, subject to modification by further agreement between them. SEcTION 4.02. The Borrower shall take all action which shall be necessary on its part to enable the Agricultural Bank to perform all its obligations under the Project Agreement and shall not take any action that would inter- fere with the performance of such obligations by the Agricultural Bank. SECTION 4.03. (a) The Borrower and the Association shall cooperate fully to assure that the purposes of the 8 Credit will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reasonably request with regard to the general status of the Credit. On the part of the Borrower, such information shall include information with respect to financial and eco- nomic conditions in the territories of the Borrower and the international balance of payments position of the Borrower. (b) The Borrower and the Association shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Credit and the maintenance of the service thereof. The Borrower shall promptly inform the Association of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit or the main- tenance of the service thereof. (c) The Borrower shall afford all reasonable opportunity for accredited representatives of the Association to visit any part of the territories of the Borrower for purposes related to the Credit. SECTIoN 4.04. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes, and free from all restrictions, imposed under the laws of the Borrower or laws in effect in its territories. SECTIo- 4.05. The Development Credit Agreement and the Project Agreement shall be free from any taxes that shall be imposed under the laws of the Borrower or laws in effect in its territories on or in connection with the execution, delivery or registration thereof. SECTIox 4.06. The Borrower shall ensure that adequate servicing and repair facilities are made available to agri- culturists for farm machinery financed out of the proceeds of the Credit. 0 9 ARTICLE V Remedies of the Association S'ECT[ON 5.01. (i) If any event specified in paragraph (a) or paragraph (c) of Section 5.02 of the Regulations shall occur and shall continue for a period of thirty days, or (ii) if any event specified in paragraph (b) of Section 5.02 of the Regulations or if any event specified in paragraphs (a), (b) or (d) of Section 5.02 of this Development Credit Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower, or (iii) if the event speci- fled in paragraph (c) of Section 5.02 of this Development Credit Agreement shall occur and shall continue for a period of 120 days after notice thereof shall have been given by the Association to the Borrower, then at any sub- sequent time during the continuance thereof, the Associa- tion, at its option, may declare the principal of the Credit then outstanding to be due and payable immediately, and upon such declaration such principal shall become due and payable immediately, anything in this Development Credit Agreement to the contrary notwithstanding. SECTION 5.02. For the purposes of Section 5.02 (k) of the Regulations, the following additional events are specified: (a) the Agricultural Bank shall have failed to perform any covenant or agreement under the Project Agree- ment; (b) the Agricultural Development Bank Ordinance, 1961 of the Borrower shall have been suspended, ter- minated, repealed, or amended in such a way as to materially affect the powers, duties, functions or responsibilities of the Agricultural Bank; (c) the right of the Borrower to withdraw the proceeds of the credit provided for in the Swedish Agreement shall have been suspended, or the Borrower shall 10 have been unable to withdraw such proceeds, in whole or in part, and the Borrower shall have failed to obtain funds from other sources in substitution therefor; (d) the outstanding principal of the credit provided for in the Swedish Agreenent shall have been declared, or become, du and payable in advance of the agreed miaturity thereof in accordance with the termis of said Agreemient ; and (e) an extraordinary situation shall have arisen which shall make it improbablo that the Agricultural Bank will be able to perfor its obligations under ihe Proj Agreement. ARTICLE VI Effective Date; Termination SECT1ON 6.01. The following events are specified as ad- (litional conditionls to the effeetiveness of this Agreement within the meaning of Section 8.01 (b) of the Regulations: (a) the execution and delivery of the Project Agreement on behalf of the Agricultural Bank have been dily authorized or ratified by all necessary action; and (b) the conditions precedent to the effectiven,ess of the Swedish Agreement shall have been fulfilled, subl- ject only to the effectiveness of this Agreeient. SECT1ox 6.02. The following are specified as additional natters within the imeaning of Section 8.02 (b) of the Regu- lations, to be inciluded in the opinion or opinions to be furnished to the Association: (a) that the Project Agreement has been (ily althllo(rized or ratifled by, and executed and delivere( ou behalf of, the Agricultural Bank and constitutes a valid and binding obligation of the Agricultural Bank in ac- cordance with its terns; and 11 (b) that the Swedish Agreement has been duly author- ized or ratified by, and executed and delivered on behalf of, the Borrower and constitutes a valid and binding obligation of the Borrower in accordance with its terms. SECTION 6.03. If this Development Credit Agreement shall not have come into force and effect by August T 5, 1968, this Development Credit Agreoment al all obliga- tions of the parties hereunder shall terniinate, unless the Association, after coilsideration of the reasons for the delay, establishes a later (late for purposes of this See- tion. The Association shall promptly notify the Borrower and the Agricultural Bank of such later (late. SECTION 6.04. On termination of the Project Agreement. in accordance with its terms, the obligations of the Bor- rower with respect to the Project and the Agricultural Bank shall forthwith terminate. ARTICLE VII Miscellaneous SECTION 7.01. The Closing Date shall be December 31, 1969, or such other date or dates as may from time to time be agreed between the Borrower and the Association. SECTION 7.02. The following addresses are specified for the purposes of Section 7.01 of the Regulations: For the Borrower: The Secretary to the Government of Pakistan Economic Affairs Division Islamabad, Pakistan Alternative address for cables: Economic Islamabad 12 For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Alternative address for cables: Indevas Washington, D.C. SECTION 7.03. The Secretary to the Government of Paki- stan, Economic Affairs Division, is designated for the pur- poses of Section 7.03 of the Regulations. IN AVITNESS WIHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Development Credit Agreement to be signed in their respective names and delivered in the District of Columbia, United States of America, as of the day and year first above written. ISLAMIC REPUBLIC OF PAKISTAN By //s/ A. R. BASHIR Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ J. BURKE KNAPP Vice President 13 SCHEDULE Description of Project The Project is part of the Agricultural Bank's lending program for farm niachinery amounting to approximately S3.7 millioin Rupees for the period from April 1, 1968 to December 31, 1968. The Project iiicludes the financing of medium and long- term loans to be made to agriculturists for the purchase of farm machinery, such as tractors, power tillers, power pumps, spare parts and miscellaneous equipment and the use of such farm machinery by the agriculturists.