CONFORMED COPY CREDIT NUMBER 860 TA Development Credit Agreement (Tourism Rehabilitation Project) between UNITED REPUBLIC OF TANZANIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated January 22, 1979 ÿþCREDIT NUMBER 860 TA DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated January 22, 1979, between UNITED REPUBLIC OF TANZANIA (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 2 to this Agreement by extending the Credit as hereinafter provided; and (B) part of the Project will be carried out by the Tanzania Tourist Corporation (hereinafter called TTC) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to TTC a portion of the proceeds of the Credit as hereinafter provided; 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 and in the Project Agreement of even date herewith between the Association and TTC; 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 (said General Conditions Applicable to Development Credit Agree- ments of the Association being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Project Agreement" means the agreement between the Association and TTC of even date herewith, as the same may be - 2 - amended from time to time, and such term includes all schedules to the Project Agreement and all agreements supplemental to the Project Agreement; (b) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and TTC pursuant to Section 3.01 (c) of this Agreement, as the same may be amended from time to time, and such term includes all srhedules to the Subsidiary Loan Agreement; and (c) "TShs" means the currency of the Borrower. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions i- the Development Credit Agreement set forth or referred to, an amcunt in various currencies equiva- lent to fourteen million dollars ($14,000,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Association, 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, procurement of the goods and civil works required for the Project and to be financed out of the proceeds of the Credit, shall be governed by the provisions set forth or referred to in Section 2.03 of the Project Agreement. Section 2.04. The Closing Date shall be June 30, 1983 or such later date as the Association shall establish. The Associa- tion shall promptly notify the Borrower of such later date. 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. - 3 - Section 2.06. Service charges shall be payable semiannually on May 1 and November 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each May 1 and November 1 commencing May 1, 1989, and ending November 1, 2028, each installment to and including the installment payable on November 1, 1998, 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 (1-1/2%) of such principal amount. Section 2.08. The currency of the United Kingdom of Great Britain and Northern Ireland is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out Parts C and D of the Project through its Ministry of Natural Resources and Tourism and Ministry of Works, respectively, with due diligence and efficiency and in conformity with appropriate administrative, commercial, engineering and financial practices, and shall pro- vide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause TTC to carry out Parts A and B of the Project and to perform in accordance with the provisions of the Project Agreement and the Subsidiary Loan Agreement all the obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable TTC to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (c) The Borrower shall relend a portion of the proceeds of the Credit to TTC under a subsidiary loan agreement to be entered into between the Borrower and TTC under terms and conditions satisfactory to the Association which shall include the following: repayment over sixteen years inclusive of four years grace at an interest rate of 10 per cent (10%) per annum. (d) The Borrower shall exercise its rights under the Sub- sidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. (e) The Borrower shall cause Tanzania National Parks and the Ngorongoro Conservation Authority to carry out Part E of the Project with due diligence and efficiency and shall pass on the proceeds of the Credit withdrawn for Part E of the Project to them as a grant. Section 3.02. With respect to the Hotel and Tourism Training Institute referred to in Part C of the Project: (a) The Borrower shall locate the Institute in Dar es Saiaam on a site determined in consultation with the Association. (b) The Borrower shall study the methods of financing the Institute's operations and shall, by December 31, 1980, have completed the study and informed the Association of the results thereof. (c) At least six months prior to the expected opening of the Institute, the Borrower shall have prepared an accounting system for the Institute which is satisfactory to the Associa- tion. (d) The Borrower shall furnish, or cause to be furnished to the Association, the financial statements of the Institute for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors accept- able to the Association; and furnish, or cause to be furnished, to the Association as soon as available, but in any case not later than six months after the end of each such year: (i) certified copies of such statements as so audited and (ii) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested. (e) Except as the Borrower and the Association shall other- wise agree, the Borrower shall employ qualified and experienced consultants on terms and conditions of employment satisfactory to the Borrower and the Association as follows: (i) a senior technical advisor in the Borrower's Ministry of Natural Resources and Tourism for three years to assist in planning the operations of the Institute and to advise on training policy; and (ii) a head teacher, to be nominated by December 31, 1979, and five other persons to assist in the preparation of syllabi and teach at the Institute for its first three years of operation. Section 3.03. (a) To the extent that funds for capital expen- ditures of TTC are not raised through long-term non-governmental borrowings, the Borrower shall provide, or cause to be provided, to TTC the funds necessary for any capital expenditures in excess of TShs. 2,000,000 per fiscal year if and to the extent that TTC's ratio of current assets to current liabilities, on a consolidated basis, after making the proposed capital expenditures in question, would be less than 1.1 to 1. (b) For the purposes of this Section: (i) the term "current assets" means cash, securities readily convertible into cash, accounts receivable and realizable within one year and inventories; and (ii) the term "current liabilities" means acconts payable within twelve months, customer advances, income taxes, bonuses and all other liabilities (including debt) which will be due and payable, or could be called for payment, within twelve months. Section 3.04. With respect to Parts C, D and E of the Proj- ect: (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) Except as the Association shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the Project. - 6 - Section 3.05. With respect to Parts C, D and E of the Project: (a) The Borrower shall furnish to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for those Parts of the Project, and any material modifi- cations thereof or additions thereto, in such detail as the Association shall, reasonably request. (b) The Borrower: (i) shall maintain records and procedures adequate to record and monitor the progress of those Parts of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Credit, and to disclose their use in those Parts of the Project; (ii) shall enable the Association's accredited representatives to visit the facilities and construction sites included in those Parts of the Project and to examine the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) shall furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning those Parts of the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. Section 3.06. With respect to Parts C, D and E of the Project, the Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations, resources and expenditures, in respect of those Parts of the Project, of the departments or agencies of the Borrower respon- sible for carrying out those Parts of the Project. Section 3.07. The Borrower shall upgrade the Makuyuni- Serengeti road to an all-weather standard by the Closing Date and shall maintain this road to an all-weather standard in accordance with sound engineering standards. Section 3.08. The Government shall continue to pursue policies consistent with tie preservation of wildlife resources. Any major proposed changes in policies affecting wildlife pre- servation, relating to organization and staffing of antipoaching units, licensing of hunting, dealing in and exporting of trophies, shall be submitted to the Association in sufficient time to enable it to comment on them. A report dealing with the wildlife situa- tion in Tanzania and the results of antipoaching activities shall be furnished annually to the Association. - 7- ARTICLE IV Remedies of the Association Section 4.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (h) thereof: (a) TTC shall have failed to perform any obligation of TTC under the Project Agreement. (b) The organization, powers or responsibilities of TTC shall have been terminated or altered so as to affect materially and adversely the carrying out by TTC of its obligations under the Project Agreement. Section 4.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) any event specified in paragraph (a) of Section 4.01 of this Agreement shall occur and shall continue for a period of 30 days after notice thereof shall have been given by the Association to the Borrower and TTC; and (b) any event specified in paragraph (b) of Section 4.01 of this Agreement shall occur. ARTICLE V Effective Date; Termination Section 5.01. The following event is specified as an addi- tional condition to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions, namely, that the Subsidiary Loan Agreement has been executed on behalf of the Borrower and TTC. Section 5.02. The following are specified as additional matters, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) that the Project Agreement has been duly authorized or ratified by TTC, and is legally binding upon TTC in accordance with its terms; and -8- (b) that the Subsidiary Loan Agreement has been duly autho- rized or ratified by the Borrower and TTC and is legally binding upon the Borrower and TTC in accordance with its terms. Section 5.03. The date April 24, 1979, is hereby speci- fied for the purposes of Section 12.04 of the General Conditions. Section 5.04. The obligations of the Borrower under Sections 3.02 (d), 3.04 and 3.06 of this Agreement and the provisions of Section 4.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date fifteen years after the date of this Agreement, which- ever shall be the earlier. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Minister of the Borrower at the time responsible for Finance is designated as representative of the Borrower for the purposes of Section 11.03 of the General Condi- tions. Section 6.02. The following addresses are specified for the purpose of Section 11.01 of the General Conditions: For the Borrower: Ministry of Finance and Planning P. 0. Box 9111 Dar es Salaam Tanzania Cable address: TREASURY Dar es Salaam For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America - 9 - Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment 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. UNITED REPUBLIC OF TANZANIA By Is/ Paul Bomani Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Is! W.A. Wapenhans Regional Vice President Eastern Africa - 10 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Civil works 3,500,000 65% (2) Furniture, fixtures, 5,000,000 100% of foreign equipment and expenditures, vehicles 75% of local ex- penditures for imported items procured locally and 100% of local expenditures ex-factory (3) Consulting services 400,000 100% of foreign for Categories (1) expenditures and and (2) 50% of local expenditures (4) Other technical 1,500,000 100% of foreign assistance expenditures and 50% of local expenditures (5) Marketing 500,000 100% of foreign expenses expenditures and 50% of local expenditures (6) Unallocated 3,100,000 TOTAL 14,000,000 - 11 - 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory 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 com- pliance with the policy of the Association that no proceeds of the Credit 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 the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as :equired to be consistent with the aforementioned policy of the Association. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expen- ditures prior to the date of this Agreement, except that withdra- wals, in an aggregate amount not exceeding the equivalent of $400,000, may be made in respect of Category (2) on account of payments made for such expenditures before that date but after October 1, 1978. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in para- graph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finL. 'e the agreed percentage of all expenditures in that Category, the. Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association 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 expen- ditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. - 12 - 6. If the Association 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 the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eiigible for financ- ing out of the proceeds of the Credit. - 13 - SCHEDULE 2 Description of the Project The Project consists of the following parts: Part A: Rehabilitation of the twelve hotels and lodges set forth below which are owned and operated by TTC, includ- ing structural repair; repair and replacement of equip- ment and technical plant; provision of vehicles and staff housing; and improvement and strengthening of maintenance and repair facilities and staff housing. The hotels and lodges and their locations are: Kiliman- jaro Hotel - Dar es Salaam; New Africa Hotel - Dar es Salaam; Kunduchi Beach Hotel - north of Dar es Salaam; Mafia Island Lodge - Mafia Island; Mikumi Wildlife Lodge - Mikumi National Park; Lake Manyara Hotel - overlooking Lake Manyara National Park; Ngorongoro Wildlife Lodge - Ngorongoro Conservation Area; Seronera Wildlife Lodge - Serengeti National Park; Lobo Wildlife Lodge - Serengeti National Park; New Mwanza Hotel - Mwanza; New Safari Hotel - Arusha; and Moshi Hotel - Moshi. Part B: Strengthening TTC's management in the fields of hotel rehabilitation, hotel maintenance and engineering, sup- plies, reservations and communications; and marketing, including promotional materials and marketing campaigns. Part C: Construction, including furnishing and equipping, and operation of a Hotel and Tourism Training Institute in Dar es Salaam. Part D: Improvements to terminal building of the Dar es Salaam Airport. Part E: Improving and supporting the Borrower's anti-poaching program. The Project is expected to be completed by December 31, 1982.