CREDIT NUMBER 1741 TA Swiss Grant Agreement (Multisector Rehabilitation Credit) between UNITED REPUBLIC OF TANZANIA and INTERNATIONAL DEVELOPMENT ASSOCIATION as ADMINISTRATOR of the Swiss Funds within the framework of the SPECIAL FACILITY FOR SUB-SAHARAN AFRICA Dated / , 1986 CREDIT NUMBER 1741 TA SWISS GRANT AGREEMENT AGREEMENT, dated J-1 c , 1986. between the UNITED REPUBLIC OF TANZANIA (the Ben.eficiary) and the INTERNATIONAL DEVELOPMENT ASSOCIATION as ADMINISTRATOR of the Swiss Funds within the framework of the SPECIAL FACILITY FOR SUB-SAHARAN AFRICA (the Administrator). WHEREAS: (A) the Executive Directors of the International Development Association (IDA) have established by their Resolu- tion No. IDA 85-1 of May 21, 1985 (the Resolution), a Special Facility for Sub-Saharan Africa (the African Facility), consti- tuted by the funds contributed by the International Bank for Reconstruction and Development (the Bank) and other donors, and administered by IDA, acting as Administrator of the African Facility, for the purpose of, and in accordance with, the pro- visions of the Resolution; (B) pursuant to Section F of the Resolution, the Government of Switzerland (Switzerland) has agreed to provide Swiss funds in the form of grants in support of programs of structural change, policy reform and institutional improvement in countries which are eligible for financing from the African Facility's resources; (C) by an Arrangement, dated September 11, 1985, Switzerland has requested IDA, and IDA has accepted, to act as Administrator of the Swiss funds in accordance with the provisions of that Arrangement; (D) the Administrator has received a letter, dated October 29, 1986, from the Beneficiary describing a program of actions, objectives and policies designed to bring about appro- priate changes to the Beneficiary's economy (hereinafter called the Program), declaring the Beneficiary's commitment to the execution of the Program and requesting assistance from the Administrator in financing urgently needed imports required during such execution; (E) the Beneficiary has requested a grant of Swiss funds (the Swiss Grant) from the Administrator, for financing part of the Program, and the Administrator has determined that the Swiss Grant would be in accordance with the provisions of the Resolution and the Arrangement; -2- (F) the Beneficiary has also requested IDA, as Administra- tor of the African Facility, to provide additional assistance toward financing the Program, and, by an agreement of even date herewith between the Beneficiary and said Administrator (the African Facility Credit Agreement), the Administrator agrees to provide such assistance in an aggregate principal amount of thirty-eight million three hundred thousand Special Drawing Rights (SDR 38,100,000) (the African Facility Credit); (G) the Beneficiary has also requested IDA to provide addi- tional assistance towards financing the Program and, by an agreement of even date herewith between the Beneficiary and IDA (the Development Credit Agreement), IDA agrees to provide such assistance in two tranches in an aggregate principal amount equivalent to forty-one million three hundred thousand Special Drawing Rights (SDR 41,300,000) (the IDA Credit); (H) the Borrower also intends to obtain from the United Kingdom and the Federal Republic of Germany, grants in amounts of five million pounds sterling (E5,000,000) and thirty-five million deutsche marks (DM 35,000,000), respectively, to assist in financing the Program. WHEREAS the Administrator has agreed on the basis, inter alia, of the foregoing, to extend the Swiss Grant to the Borrower upon the t:erms and conditions set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Develop- ment Credit Agreements" of the International Development Associa- tion, dated January 1, 1985, with the modifications set forth below (the General Conditions), constitute an integral part of this Agreement: (a) the term "Association", when used in the General Condi- tions, means the International Development Association acting as Administrator of the Swiss funds, except in the phrase "member of the Association" in Sections 2.01 (5), 4.02 (b) and 6.02 (e) thereof; -3- (b) the terms "Development Credit Agreement", "Credit" and "Credit Account", when used in the General Conditions, are amended to read "Swiss Grant Agreement", "Swiss Grant" and "Swiss Grant Account", respectively; (c) Section 2.01, paragraph 9, shall be modified to read: "TProject' means the imports and other activities that may be financed out of the proceeds of the Swiss Grant pursuant to the provisions of Schedule 1 to the Swiss Grant Agreement."; (d) Sections 3.02, 3.03, 3.04, 3.05, 4.02, 4.03, 4.04, 4.05, 4.06, 6.05, 7.01, 8.01 (a), the second sentence of Sec- tion 5.01 and Article XII are deleted; (e) in Section 6.02 the term "Association" shall also include the International Development Association acting in its own capacity; and (f) Section 9.06 (c) shall be modified to read: "(c) Not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Administrator, the Borrower shall pre- pare and furnish to the Administrator a report, of such scope and in such detail as the Administrator shall reason- ably request, on the execution of the program referred to in the Preamble to the Swiss Grant Agreement, the perfor- mance by the Borrower and the Administrator of their respec- tive obligations under the Swiss Grant Agrtement and the accomplishment of the purposes of the Swiss Grant;". Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions and in the Pre- amble to this Agreement have the respective meanings therein set forth and the following additional terms have the following mean- ings: (a) "Part II member of IDA" means a member of IDA with res- pect to which the terms and conditions of membership are those prescribed in the Articles of Agreement of IDA for countries whose names are listed in Part II of Schedule A to those Articles and any other member of IDA determined to be a Part II member pursuant to Article II, paragraph 1 (b) of such Article; and (b) "SITC" means the United Nations Standard International Trade Classification, 1974 Revision (SITC, Rev. 2), published in Commodity Indexes for the Standard International Trade Classifi- cation, Revised, Statistical Papers, Series M, No. 38/Rev.2 (1981). ARTICLE II The Swiss Grant Credit Section 2.01. The Administrator agrees to make available to the Beneficiary on the terms and conditions set forth or referred to in this Agreement, an amount in various currencies equivalent to fifteen million Swiss francs (Sw F 15,000,000). Section 2.02. (a) The amount of the Swiss Grant may be with- drawn from the Swiss Grant: Account in accordance with the provi- sions of this Section and Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Beneficiary and the Administrator. (b) Withdrawals shall be made only on account of expendi- tures for goods produced in, or services supplied from, the ter- ritories of: (i) any Part II member of IDA; (ii) any country designated by the Administrator as meeting the provisions set forth in paragraphs 4 (f) (ii) and (iii) of the Resolution. (c) In so far as practicable, the Beneficiary shall with- draw the proceeds of the Swiss Grant, the United Kingdom Grant, the German Grant and the African Facility Credit pro rata, prior to withdrawing the proceeds of the IDA Credit. Section 2.03. The Closing Date shall be June 31, 1988, or such later date as the Administrator shall establish. The Admin- istrator shall promptly notify the Beneficiary of such later date. Section 2.04. The Bank of Tanzania is designated as repre- sentative of the Beneficiary for the purposes of taking any action required or permitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions, and the Beneficiary hereby entrusts the Bank of Tanzania with responsibility for the preparation of withdrawal applications under the Swiss Grant and the collection of docu- ments and other evidence to be furnished to the Administrator in -5- support of such applications. Such withdrawal applications shall, to the extent practicable be consolidated so as to apply for withdrawal of aggregate amounts of not less than fifty million dollars ($50,000). ARTICLE III Particular Covenants Section 3.01. (a) The Beneficiary and the Administrator shall from time to time, at the request of either party, exchange views on the progress achieved in carrying out the Program and the Beneficiary's arrangements to monitor such progress. (b) Prior to each such exchange of views, the Beneficiary shall furnish to the Administrator, for its review and comment, a report on the progress achieved in carrying out the Program in such detail as the Administrator shall reasonably request. Section 3.02. Except as the Administrator shall otherwise agree, procurement of the goods to be financed out of the pro- ceeds of the Swiss Grant shall be governed by the provisions of Schedule 2 to this Agreement. Section 3.03. (a) The Beneficiary shall maintain or cause to be maintained records and accounts adequate to reflect, in accordance with consistently maintained sound accounting prac- tices, the expenditures financed out of the proceeds of the Swiss Grant. (b) The Beneficiary shall: (i) have the records and accounts referred to in para- graph (a) of this Section audited, for each fiscal year, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Administrator; (ii) furnish to the Administrator as soon as available, but in any case not later than six months after the end of each such year, a certified copy of the report of such audit by said auditors, of such scope and in such detail as the Administrator shall have reasonably requested; and -6- (iii) furnish to the Administrator such other informa- tion concerning said accounts and the audit there- of as the Administrator shall from time to time reasonably request. ARTICLE IV Additional Events of Suspension Section 4.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional event is specified, namely, that an event has occurred which shall make it improbable that the Program, or a significant part thereof, will be carried out. ARTICLE V Effectivpness; Designation of Administrator Section 5.01. This Agreement shall become effective upon signature. Section 5.02. In the event that Switzerland or IDA decides to terminate the functions of IDA as Administrator pursuant to paragraph 5 of the Arrangement, the Administrator shall notify the Beneficiary promptly of the date on which Switzerland shall assume the rights and obligations of the Administrator under this Agreement. ARTICLE VI Representative of the Beneficiary; Addresses Section 6.01. Except as provided in Section 2.04 of this Agreement, the Minister of Finance of the Beneficiary at the time is designated as representative of the Beneficiary for the purposes of Section 11.03 of the General Conditions. - 7 - Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Beneficiary: Ministry of Finance, Economic Affairs and Planning P.O. Box 9111 Lar es Salaam United Republic of Tanzania Cable address: Telex: TREASURY 41329 Dar es Salaam For the Administrator: Administrator of the Swiss Funds (International Development Association) 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) -8- IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, 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. UNITED REPUBLIC OF TANZANIA By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION as ADMINISTRATOR of the Swiss Funds within the framework of the SPECIAL FACILITY FOR SUB-SAHARAN AFRICA By Regional Vice President Eastern arid Southern Africa -9- SCHEDULE 1 Withdrawal of the Proceeds of the Swiss Grant 1. Subject to the provisions set forth or referred to in this Schedule, the proceeds of the Swiss Grant may be withdrawn from the Swiss Grant Account for expenditures made (or, if the Administrator shall so agree, to be made) in respect of the rea- sonable cost of goods and services required during the execution of the Program and to be financed out of such proceeds. 2. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) expenditures for goods included in the following SITC groups or sub-groups: Group Sub-group Description of Items 112 - Alcoholic beverages 121 - Tobacco, unmanufactured tobacco refuse 122 - Tobacco, manufactured 667 - Pearls, precious and semi- precious stones, unworked or worked 688 - Uranium depleted in U235 and thorium, and their alloys, unwrought or wrought, and articles therefor, n.e.s.; waste and scrap of uranium depleted in U235 and of thorium 718 718.7 Nuclear reactors, and parts thereof, n.e.s. 897 897.3 Jewelry of gold, silver or platinum group metals (except watches and watch cases) and goldsmiths' or silversmiths' wares (including set gems) - 971.0 Gold, non-monetary (excluding gold ores and concentrates) - 10 - (b) expenditures in the currency of the Beneficiary or for goods or services supplied from the territory of the Beneficiary; (c) payments for expenditures made prior to the date of this Agreement; (d) expenditures for goods procured under contracts costing less than five thousand dollars ($5,000) equivalent; (e) expenditures for goods supplied under a contract which any national or international financing institution or agency, other than the Administrator, shall have financed or agreed to finance; (f) expenditures for goods intended for a military or paramilitary purpose or for luxury consumption; or (g) expenditures for petroleum products and foodstuffs. 3. No withdrawal shall be made and no commitment shall be entered into to pay amounts to the Beneficiary or others in respect of expenditures to be financed out of the proceeds of the Swiss Grant after the aggregate of the proceeds of the Swiss Grant withdrawn from the Swiss Grant Account and the total amount of such commitments shall have reached the equi- valent of seven million five hundred thousand Swiss francs (Sw F 7,500,000), unless and until IDA shall have released the second tranche of the IDA Credit. - 11 - SCHEDULE 2 Procurement 1. Contracts for the procurement of goods estimated to cost the equivalent of two million dollars ($2,000,000) or more each shall be awarded through international competitive bidding in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in May 1985 (the Guidelines), subject to the following modifications: (a) All references in the Guidelines to the Borrower, the Bank and to loans shall be deemed to be references to the Bene- ficiary, the Administrator and the Swiss Grant, respectively. (b) Paragraph 2.8 of the Guidelines is deleted and the following is substituted therefor: "2.8 Notification and Advertising The international community should be notified in a timely manner of the opportunity to bid. This will be done by advertising invitations to apply for inclusion in a bid- der's invitation list, to apply for prequalification, or to bid. Such advertisements should be placed in at least one newspaper of general circulation in the Borrower's country and, in addition, in at least one of the following forms: (i) a notice in the United Nations publication, Development Forum, Business Edition; or (ii) an advertisement in a newspaper, periodical or technical journal of wide international circula- tion; or (iii) a notice to local representatives of countries and territories referred to in the Guidelines, that are potential suppliers of the goods required." (c) The following is added at the end of paragraph 2.21 of the Guidelines:. "As a further alternative, bidding documents may require the bidder to state the bid price in a single currency, - 12 - widely used in international trade and specified in the bid- ding documents." (d) Paragraphs 2.55 and 2.56 of the Guidelines are deleted. 2. The eligibility requirements set forth in Section 2.02 (b) of this Agreement shall be stated in the tender or prequalifica- tion documents for the procurement of such goods and works. 3. Contracts for goods estimated to cost the equivalent of less than two million dollars ($2,000,000) each shall be awarded on the basis of the normal procurement procedures of the purchaser of such goods, except that at least three quotations shall be invited by Government purchasers unless there are fewer potential suppliers. 4. With respect to each contract referred to in paragraph 1 of this Schedule, the Beneficiary shall furnish to the Adminis- trator, prior to the submission to the Administrator of the first application for withdrawal of funds from the Swiss Grant Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids and recommendations for award, a description of the advertising and tendering procedures folluqed and such other information as the Administrator shall reasonably request. 5. With respect to each contract referred to in paragraph 2 of this Schedule, the Beneficiary shall furnish to the Administra- tor, prior to the submission to the Administrator of the first application for withdrawal of funds from the Swiss Grant Account in respect thereof, such documentation and information as the Administrator may reasonably request to support applications for withdrawal in respect of such contract. 6. The provisions of the preceding paragraphs 4 and 5 shall not apply to contracts on account of which the Administrator has authorized withdrawals from the Swiss Grant Account on the basis of statements of expenditure.