OFFICIAL DOCUMENTS I I Ii LOAN NUMBER 8616-CN .il ·~ I ~ Loan Agreement (BuDding a Modem Fiscal System Technical Assistance Project) i r :I between ) !I PE()PLE'S REPUBUC OF CHINA i t and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ~ Dated M~ ~I ,2016 I I LOAN NUMBER 8616-CN LOAN AGREEMENT Agreement dated ~~I· , . 2016, between PEOPLE'S REPUBLIC OF CIDNA (..Borrower'') and ~TIONAL BANK FOR RECONSTRUCTION AND . DEVELOPMENT ("Bank''). The Borrower and the Bank hereby agree . as follows: ARTICLE I - GENERAL CONDmONS; DEFINITIONS 1.01. The General Conditio~ (as defined in the Appendix to this Agreement) constitute an integral part of this Agreement; provided, however, that each reference in the General Conditions to the Project Implementing Entity shall be deemed to be a reference to a Subproject Implementing Agency; and provided further, that each reference in the General Conditions to the Project Agreement shall be deemed to be inapplicable. I .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 ll -LOAN 2.0 1. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in this Agreement, the amount of twenty two million Dollars ($22,000,000), as such amount may be converted from time· to time through a Currency Conversion in accordance with the provisions of Section 2.08 of this Agreement (..Loan"), to assist in financing the project descriPed in Schedule 1 to this Agreement (..Project''). 2.02. The Borrower may withdraw the proceeds of the Loan in accordance with Section IV of Schedule 2 to this Agreement. 2.03. The Front-end Fee payable by the Borrower shall be equal to one quarter of one percent (0.25%) of the Loan amount. 2.04. The Commitment Charge. payable by the Borrower shall be equal to one quarter of one percent (0.2S%) per annum on the Unwithdrawn Loan Balance. 2.05. The interest payable by the Borrower for each Interest Period shall be at a rate equal to the Reference Rate for the Loan Currency plus the Variable Spread; provided, that upon a Conversion of all or any portion of the principal amount of the Loan, the interest payable by the Borrower during the Conversion Period on such amount shall be determined in accordance with the relevant provisions of Article IV of the General Conditions. · Notwithstanding the foregoing, if any amount of the Withdrawn Loan Bahince remains unpaid when due and such non-payment continues for a period of thirty days, then the interest payable by the Borrowet shall instead be calculated as provided in Section 3.02 (e) ofthe General Conditions .. 2.06. _The Payment Dates are April IS and October IS in each year. -2- 2.07. The principal amount of the Loan shall be repaid in accordance with the·amortization schedule set forth in Schedule 3 to this Agreement. 2.08. (a) The Borrower may at any time request any of the following Conversions of the terms of the Loan. in order to facilitate prudent debt management: (i) a change of the Loan Currency of all or any portion of the principal amount of the Loan, withdrawn or unwithdrawn, to an Approved Gurrency; (ii) a change of the interest rate basis applicable to: (A) all or any portion of the principal amount of the Loan withdrawn and outstanding from a Variable Rate to a Fixed Rate, or vice versa; or (B) !fall or any portion of the principal amount of the Loan withdrawn and outstaDding from a Variable Rate based on a Reference Rate and the Variable Spread"to1l Variable Rate based on a Fixed Reference Rate and the Variable Spread, or vice versa; or (C) all of the principal amount of the Loan withdrawn aiJ.d outstanding from a Variable Rate based on a Variable Spread to a Variable Rate bas~ on a Fixed Spread; and (iii) the setting of limits on the Variable Rate or .the Reference Rate applicable to all or any portion of the ·principal amount of the Loan withdrawn and outstanding by the establishment of an Interest Rate Cap or Interest Rate Collar on the Variable Rate or the Reference -Rate. (b) Any conversion requested pursuant to paragraph {a) of this Section that is accepted by the Bank shall be considered a "Conveision", as defined in the General Conditions, and sball be effected in accordance with the provisions of Article N of the General Conditions and of the Conversion Guidelines. (c) Promptly following the Execution Date for an Interest Rate Cap or Interest Rate Collar for which the Borrower has requested thirt the premium be paid out of the proceeds of the Loan, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and pay to itself the ·amounts required to pay any premium payable in accordance with Section 4.05 (c) of the General Conditions up to the amount allocated from time to time for the purpose in the table in Section N of Schedule 2 to this Agreement. 2.09. (a) If on any given day, the Total Exposure exceeds the Standard Exposure Limit {as said terms are defined in sub-paragraphs (b)(ii) and (b){iii) of this Section), the Borrower shall pay to the Bank a surcharge at the rate of one half of one percent (0.5%) per annum of the Allocated Excess Exposure Amount {as defined in sub- paragraph (b)(i) of this Section) for each said day ("Exposure Surcharge',. The Exposure Surcharge (if any) sball be payable semi-annually in arrears on each Payment Date. (b) For purposes of this Section the following terms have the meanings set forth below: (i) "Allocated Excess Exposure Amount" means for each day during which the Total Exposure exceeds the Standard Exposure Limit, the product of: (A) the total amount of said excess; and (B) the ratio of all {or, if the Bank so determines, a portion) of the Loan to the aggregate amount of all -3- (or the equivalent portions) of the loans made by the Bank to the Borrower and to other borrowers guaranteed by the Borrower that are also subject to an exposure surcharge, as said excess and ratio are reasonably determined from time to time by the Bank. (ii) "Standard Exposure Limit" means the standard limit on the Bank's financial exposure to the Borrower which, if exceeded, would subject the Loan to the Exposure Surcharge, as determined from time to time by the Bank. . ~ (iii) "Total ~e" means for any given day, the Bank's total financial exposuife to the Borrower, as reasonably determined by the Bank. ARTICLE :DI-PROJECT 3.01. The Borrower declares its commitment to the objectives of the Project. To this end, the Borrower sba1.l carry out the Project through MOF and the Subproject lmplem~nting Agencies in accordance with the provisions of Article V of~ General Conditions. . . 3.02. Without limitation upon the provisions of Section 3.01 ofthis Agreement, and except as the Borrower and the: Bank shall otherwise agree, the Borrower shall ensure that the Project is carried out in accordance with the provisions of Schedule 2 to this Agreement. ARTICLE IV- EFFECTIVENESS; TERMINATION 4.01. The Additional Condition of Effectiveness consists of the following, namely that the . Implementation Agre~ent has been duly executed on behalf of MOF and the CDM C~er. · 4.02. The Effectiveness Deadline is the date ninety (90) days after the date of this Agreement. ARTICLE V'- REPRESENTATIVE; ADDRESSES 5.01. The Borrower's Representative is its Minister ofFinance. 5.02. Tiie Borrower~s Address is: Ministry of Finance Sanlihe · Beijing 100820 People's Republic o(China Facsimile: 86-10-6855-2740 -4- 5.03.. The Bank's Address is: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: Facsimile: INTBAFRAD 248423(MCI) or 1-202-477-6391 Washington, D.C. 641i5~CI) AGREED at Beijing, People's Republic of China, as of the day and year first above written. PEOPLE'S REPUBLIC OF CIDNA Name: ---'8,~~-'----'/-IP-+-f.;;_~-=;..:._--- Title: Co~lr7 £>,~-h...> ~~ -5- SCHEDULEl Project Description The objective of the Project is. to inform the design and implementation of the central government's fiscal reform program and to improve the government's capacity in public financial management. The Project consists of the following parts: Part A Key Elements Y,r China's Public Finance System 1. Carrying out of Subprojects consisting of, inter alia, strategic plans, sectoral research, technical studies, implementation rep~, staff exchangeS, training and workshops, all relating to informing policy formulation and implementation for the strengthening of the Borrower's public finance system. 2. Provision of support to the PMO, SIAs and the CDM Center to enhance their management capacity through training, and the provision of consulting services,· including :Project management support and monitoring and evaluation. Part B Fiscal Policy and Sustainable Development Carrying out of Subprojects consisting of, inter alia, strategic plans, sectoral research, technical studies, training and workshops, and development of analytical capacity and tools, all relating to increasing the Bo~wer' s overall capacity to make fiscal policy more effective and analyze linkages between economic growth and fiscal policy. -6- SCBEDULEl Project Execution Section I. Institutional and Implementation Arrangements A. Operations Manual 1. The Borrower; through the PMO, shall carry out the Project, and shall cause the SIAs to carry out the Subprojects, in accordance with tl,.e Operations Manual in a timely and efficient manner satisfactory !Jto the Bank. The Borrower shall not amend, suspend, or waive said Operations Manu81 or any provision or schedule thereo(, without the prior written concurrence of tlie Ba:ilk.• In the event of any inconsistency between the terms of the Operations Manual and those of this Agreement, the provisions of this Agreement shall preVail. B. Institutional Arrangements 1. The Borrower, through MOF, shall maintain the PMO throughout the implementation of the Project and assign qualified staff in adequate. numbers, funds and other resources as shall be necessary to enable the PMO to provide overall coordination, management, monitoring and reporting, and implementation of the Project, undertake the review and selection of proposed · Subprojects, and monitor, evaluate and supervise the implementation ·or Subprojects by SIAs. 2. To assist the PMO with the day-to-day implementation of the Project (including procurement, financial inanagement, accounting, contract management, monitoring and reporting), the Borrower, through MOF, shall enter into an agreement ("Implementation Agreement") with the CDM Center, under terms and conditions acceptable to the Bait.k:, which shall include those set forth in the Annex to this Schedule. 3. The Borrower, through MOF, shall exercise its rights· under the 'Implementation Agreement in such a manner as to protect the interests of the Borrower and the Bank, and to accomplish the purposes of the Loan, and except as the Bank shall otherwise agree, not assign. amend, abrogate or waive the Implementation Agreement or any provision thereof. 4. In the case of any inconsistency between the provisions of the Implementation Agreement and the provisions of this Agreement, the provisions of this Agreement shall prevail. 5. The Borrower, through the PMO, shall cause each SIA to appoint and maintain until the completion of the relevant Subproject or Subprojects, a Subproject Management Team at the SIA level, headed by a qualified officer and assigned staff in adequate numbers to enable the SIA to design proposals for and implement its respective Stibproject(s). -7- C. Subprojeds L All Subprojects shall support the overall development objective of the Project. ·All Subproject proposals shall be duly prepared and submitted to the PMO by SIAs, selected and approved by the PMO, and furnished to the Bank for its no-objection, following the eligibility criteria, procedures and teehnical requirements set forth to that effect in the Operations Manual. The Borrower, through the PMO, shall ensure that no activity under any Subproject is commenced until the proposal for such Subproject has received the Bank's prior no-objection in accordance with the foregoing requirements. 2. To assist in the carry:ini out of Subprojects, the Borrower, through the PMO, shall make the proceeds of the Loan·· available to the SIAs under arrangements satisfactory to the Bank. ,: .. 3. The ·Borrower, through the PMO, shaii, and shall cause each SIA to, obtain the Bank's prior no-objection for changing any of the SIA's Subproject design and/or implementation ammgements, as applicable. The Borrower, through the PMO, shall promptly inform the Bank of any situation that would adversely affect the carrying out of a Subproject and shall promptly take action, satisfactory to the Bank, to address such situation. 4. The Borrower shall cause the PMO artd each SIA,. as applicable, to ensure that every Subproject to be supported under the Project is carried out under terms of reference satisfactory to the Bank, and that such termS of reference are consistent with, and pay due attention to, the Bank's Safeguards Policies. D. Anti-Corruption The Borrower shall ensure that the Project is carried ·out in accordance with the provisions of the Anti-Corruption Guidelines. · Section D. Project Monitoring. Reoorting and Evaluation A. Project Reports L The Borrower shall, through the PMO, monitor and evaluate the progress of the Project and prepare Project· Reports fu accordance with the provisions of Section 5.08 of the General Conditions and on the basis of the indicators set forth in the Operations Manual. Each Project Report shall cover· the period of one calendar semester, and shall be :fi.nnished to the Bank not later than forty-five (45) days ·after the end of the period covered by such report. 2. Without limitation to the provisions of paragraph A.l above, the Borrower shall, through the PMO, prepare, under terms of reference satisfactory to the Bank, and finnish to the Bank no later than June 30, 2019, a consolidated mid-term review report for the Project, summarizing the results of the monitoring and evaluation activities carried out from the inception of the Project, and setting out the measures recommended to ensure the efficient cotDpletion of the Project and to further the objectives thereof. -8- B. Financial Management, Financial Reports and Audits 1. The Borrower shall maintain or cause to be maintained a financial management system in accordance with the provisions of Section 5.09 of the General Conditions. 2. Without limitation on the provisions ofPart A of this Section, the Borrower shall prepare and furnish to the Bank, not later than forty-five (45) days after the end ofeach calendar semester, interim unaudited fmancial reports for the Project covering the semester, in ., form and substance satisfactory to the Bank. - 3. The Borrower shall have~i_its Financial Statements audited in accordance with the provisions of Section 5.09 (b) of the General Conditions. Each audit of the Financial Statements shall cover the '~od of one (I) fiscal year of the Borrower. The audited Financial Statements for each such period shall be furnished to the Banknot later than six (6) months after the end of such period. The Borrower shall make the atidited Financial Statements publicly available in a timely fashion and in a manner acceptable to the Bank. Section m. Procurement A. General 1. G:oods and Non-consulting Services. All goods and non-consulting services required for the Project and to be financed out of the proceeds of the Loan shall be procured in accordance with the requirements set forth or referred to in Section I of the Procurement Guidelines, and _with the provi~ions of this Section. 2. Consultants' Services. All C<;)nsultants' services required for·the Project and.to be financed out of the proceeds of the Loan shall be procured in accordance with the requirements set forth or referred to in Sections I and IV of the Consultant Guidelines and with the provisions of this. Section. 3. Def"mitions. The capitalized terms used below in this Section to describe particular procurement methods or methods of review by the Bank of particular contracts refer to the corresponding method described in Sections n and ill of the Procurement Guid(ilines, or Sections n, ill, IV an~ V of the Consultant Guidelines, as the case may be. B. . Particular Methods of Procurement of Goods and Non-consulting Services 1. International Competitive Bidding. Except as otherwise provided in paragraph 2 below, -goods and non-consulting services shall be procured under contracts awarded on the basis of International Competitive Bidding. 2. Other Methods of Procurement of Goods and Non-consulting Services. The following methods, other than International Competitive Bidding, may be used for procurement of goods and non-consulting services for those contracts specified in the Procmement Plan: (a) National Competitive Bidding, subject to the additional provisions set forth in the box below; (b) Direct Contracting; (c) Shopping; and (d) Framework Agreement. -9- The procedures applicable to the procurement of goods, works, and non-consulting services under contracts awarded on the basis of National Competitive Bidding (''NCB,) shall be the open tendering procedures set forth in the Borrower's Law on Tendering and Bidding promulgated by its Order No. 21 dated August 30, 1999; · provided, however, that such procedures shall be subject to the provisions of Section I, Paragraphs 3.3 and. 3.4 of Section m, and Appendix 1 of the Procurement Guidelines, and the additional provisions in the following. In tb.e event of a ·conflict between the Borrower's procedures and these NCB Procedure Modifications, the latter shall govern. (i) Eligibility to participate in a procurement process and to be awarded a Bank- financed C()ntract shall be as ·defined under Section I of the Procurement Guidelines; accordingly, no bidder or potential bidder shall be declared ineligible for such ooritract for reasons other than those provided in Section I of the ProCurement Guidelines. No restriction: based on nationality of bidders and/or origin of goods shall apply, and foreign bidders shall be allowed to participate in NCB without application of restrictive conditions. (ii) All invitations to prequalify or bid shall be advertised in a national newspaper of wide circulation in the Borrower's countrY, or on a widely used website I electronic portal with free national and international access acceptable to the Bank except for goods or non-consulting services contracts that are estirilated to cost less than $300,000 equivalent each, or works contracts that are estimated to cost less than $2,000,000 each, which may be advertised in a provincial daily newspaper. Such advertisement shall be made in sufficient time for prospective bidders to obtain prequali.flcation or bidding documents and prepare and submit their responses. In any event, a minimum of thirty . (30) days shall be given to bidders between the date of such advertisement (or the date of availability of bidding documents, whichever is later) and the deadline for the submission of bids, and the advertisement and bidding documents shall specify the deadline for the submission of bids. In the case of such advertisement on a website I electronic portal, the· notice shall remain readily accessible nationhlly and internationally until at least the deadline .for the submission of bids. Potential bidders shall be allowed to inspect and purchase bidding documents at any time prior to the .deadline for the submission of bids. ') (iii) Standard Bidding Documents acceptable to the Bank shall be used. (iv) Qualification requirements of bidders and the method of evaluating the qualification of each bidder shall be specified in detail in the bidding documents. (v) Prequalificanon procedures and documents acceptable to the Bank shall be used for· large, complex and/or specialized works. · Verification of the information upon which a bidder was prequalified, including current commitments, shall be carried out at the time of contract award, along with the - 10- bidder's capability with respect to personnel and equipment. All bidders that meet the qualification criteria set out in the pre-qualification documents shall be allowed to bid, and there shall be no limit on the number of pre-qualified bidders. Where pre-qualification is not used, the qualification of the bidder who is recommended for award of contract shall ·be assessed by post- qualification, applying the qualification criteria stated in the bidding documents. . . (vi) Registration shall not be used to assess bidders' qualifications. A bidder shall not be required to register as a condition for inspecting or purchasing bidding documents, subffiitting its bid or receiving contract award. A bidder determined to be the lowest evaluated responsive bidder, shall be given reasonable opporti'.ini~ of registering (if required) before contract signing without any let or hindrance. Bidding shall not be restricted to any particular class ofcontractors, and non-classified contractors shall also be eligible to bid. (vii) No margins of preference of any sort shall be given to bidders, such as on the basis of their location, place of incotporation, 9r affinity with the geographical area in which the Project activities will take place. (viii) All bidders who are awarded contracts for works and single-responsibility contracts shall be required to provide performance secmity in an amount SUfficient to protect the Borrower or the Project Implementing Entity I Entities, as the case may be, in case of breach of contract by the contractor, and the bidding documents shall specify the required form and amount of such security and any other potential damages for such breach. (ix) Bidders shall be allowed to submit bids by mail or in person. (x) All bids shall be opened in public; all bidders shall be offered an opportunity to be present (either in person or through their representatives) at the time of bid opening, but bidders shall not be required to be present at the bid opening. (xi) All bid evaluation criteria shall be disclosed in the bidding documents and quantified in monetary terms or expressed in the form of pass/fail requirer:D.ents. · (xii) No bid may be rejected solely on the basis that the bid price exceeds any cost estimate or falls outside any margin or bracket of prices or average bids established by the Borrower orthe Project Implementing Entity I Entities, as the case may be. Rejection of all bids or re-bidding shall not be allowed solely because the number of bids is less than three (3), and rejection of all bids or rebidding shall.nottake place without the Bank's prior written agreement. (xiii) Each contract shall be awarded to the lowest evaluated responsive bidder, that is, the bidder who meets the appropriate standards of capability and resources and whose bid has been determined: (A) to be substantially responsive to the bidding documents; and (B) to offer $e lowest evaluated cost. The winning bidder shall not be required, as a condition of awa.r