Loan Number 3734 RU
LOAN AGREEMENT
(FINANCIAL INSTITUTIONS DEVELOPMENT PROJECT)
BETWEEN RUSSIAN FEDERATION AND INTERNATIONAL
BANK FOR RECONSTRUCTION AND DEVELOPMENT
(Washington, 22.VI.1994)
Agreement, dated June 22, 1994, between Russian Federation (the
Borrower) and International Bank for Reconstruction and
Development (the Bank).
Whereas A) the Borrower, having satisfied itself as to the
feasibility and priority of the Project described in Schedule 2 to
this Agreement, has requested the Bank to assist in the financing
of the Project;
B) the Borrower intends to contract from other sources of
finance (the Cofinanciers) grants (the Cofinance) in an aggregate
amount equivalent to 73,400,000 USD to assist in financing the
Project on the terms and conditions set forth in agreements (the
Cofinancing Grant Agreements) to be entered into between the
Borrower and the Cofinanciers;
C) the Borrower intends to contract from the European Bank for
Reconstruction and Development (EBRD) a loan (the EBRD Loan) in an
amount of 100,000,000 USD to assist in financing Part A of the
Project on the terms and conditions set forth in an agreement (the
EBRD Loan Agreement) to be entered into between the Borrower and
EBRD;
D) EBRD and the Bank intend to enter into an agreement (the Co-
Lenders Agreement) providing for arrangements whereby EBRD and the
Bank would process jointly applications for withdrawal relating to
certain expenditures under the Project and the Bank would make
available certain portions of the proceeds of the Loan, together
with similar proceeds of the EBRD Loan to be made available by
EBRD, for the financing of such expenditures on a pari passu
basis, and regulating certain other matters of common interest in
connection with such financing; and
Whereas the Bank has agreed, on the basis, inter alia, of the
foregoing, to extend the Loan to the Borrower upon the terms 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 Loan and
Guarantee Agreements" of the Bank, dated January 1, 1985, with the
modifications set forth below (the General Conditions) constitute
an integral part of this Agreement:
a) The last sentence of Section 3.02 is deleted.
b) In Section 6.02, sub-paragraph "k" is re-lettered as sub-
paragraph (1) and a new sub-paragraph "k" is added to read:
"(k) An extraordinary situation shall have arisen under which
any further withdrawals under the Loan would be inconsistent with
the provisions of Article III, Section 3 of the Bank's Articles of
Agreement."
Section 1.02. 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) "Subsidiary Loan Agreement" means any agreement which shall
have been entered into by the Borrower, pursuant to Section 3.02
"c" of this Agreement with a Participating Bank, in respect of an
Institutional Development Sub-project involving such Participating
Bank, as the same agreement may be amended from time to time, and
such term includes all schedules to such Subsidiary Loan
Agreement.
b) "Subsidiary Loan" means any loan provided to a Participating
Bank for an Institutional Development Sub-project pursuant to
Section 3.02 of this Agreement.
c) "Participating Bank" means any banking institution in the
territory of the Borrower duly accredited in accordance with the
criteria set forth in Schedule 6 to this Agreement, which shall
have been accepted for participation in accordance with Section
3.02 "a" of this Agreement.
d) "Institutional Development Sub-project" means a specific
program of institutional development of a Participating Bank
intended to be carried out by such Participating Bank utilizing
the proceeds of a Subsidiary Loan.
e) "CBR" means the Central Bank of the Borrower, established
and operating pursuant to the Borrower's Law on the Russian
Federation Central Bank (Bank of Russia) dated December 2, 1990,
as the same may be amended from time to time.
f) "MOF" means the Borrower's Ministry of Finance.
g) "Bank Review Unit" means the unit referred to in Section
3.04 "b" of this Agreement.
h) "PIU" means the unit referred to in Section 3.04 "a" of this
Agreement.
i) "Project Preparation Advance" means the project preparation
advance granted by the Bank to the Borrower pursuant to an
exchange of letters dated September 30, 1993, and October 13, 1993
between the Borrower and the Bank.
j) "Special Account" means the account referred to in Section
2.02 "b" of this Agreement.
Article II
The Loan
Section 2.01. The Bank agrees to lend to the Borrower, on the
terms and conditions set forth or referred to in the Loan
Agreement, various currencies that shall have an aggregate value
equivalent to the amount of two hundred million dollars
(200,000,000 USD), being the sum of withdrawals of the proceeds of
the Loan, with each withdrawal valued by the Bank as of the date
of such withdrawal.
Section 2.02. a) The amount of the Loan may be withdrawn from
the Loan Account in accordance with the provisions of Schedule 1
to this Agreement for expenditures made (or, if the Bank shall so
agree, to be made) in respect of the reasonable cost of goods and
services required for the Project described in Schedule 2 to this
Agreement and to be financed out of the proceeds of the Loan.
b) The Borrower shall, for the purposes of the Project, open
and maintain in Dollars a special deposit account in a commercial
bank on terms and conditions satisfactory to the Bank, including
appropriate protection against set-off, seizure or attachment.
Deposits into, and payments out of, the Special Account shall be
made in accordance with the provisions of Schedule 7 to this
Agreement.
c) Promptly after the Effective Date, the Bank shall, on behalf
of the Borrower, withdraw from the Loan Account and pay to itself
the amount required to repay the principal amount of the Project
Preparation Advance withdrawn and outstanding as of such date and
to pay all unpaid charges thereon. The unwithdrawn balance of the
authorized amount of the Project Preparation Advance shall
thereupon be cancelled.
Section 2.03. The Closing Date shall be December 31, 1998 or
such later date as the Bank shall establish. The Bank shall
promptly notify the Borrower of such later date.
Section 2.04. The Borrower shall pay to the Bank a commitment
charge at the rate of three-fourths of one percent (3/4 of 1%) per
annum on the principal amount of the Loan not withdrawn from time
to time.
Section 2.05. a) The Borrower shall pay interest on the
principal amount of the Loan withdrawn and outstanding from time
to time, at a rate for each Interest Period equal to the Cost of
Qualified Borrowings determined in respect of the preceding
Semester, plus one-half of one percent (1/2 of 1%). On each of the
dates specified in Section 2.06 of this Agreement, the Borrower
shall pay interest accrued on the principal amount outstanding
during the preceding Interest Period, calculated at the rate
applicable during such Interest Period.
b) As soon as practicable after the end of each Semester, the
Bank shall notify the Borrower of the Cost of Qualified Borrowings
determined in respect of such Semester.
c) For the purposes of this Section:
i) "Interest Period" means a six-month period ending on the
date immediately preceding each date specified in Section 2.06 of
this Agreement, beginning with the Interest Period in which this
Agreement is signed.
ii) "Cost of Qualified Borrowings" means the cost, as
reasonably determined by the Bank and expressed as a percentage
per annum, of the outstanding borrowings of the Bank drawn down
after June 30, 1982, excluding such borrowings or portions thereof
as the Bank has allocated to fund:
A) the Bank's investments; and
B) loans which may be made by the Bank after July 1, 1989
bearing interest rates determined otherwise than as provided in
paragraph "a" of this Section.
iii) "Semester" means the first six months or the second six
months of a calendar year.
d) On such date as the Bank may specify by no less than six
months' notice to the Borrower, paragraphs "a", "b" and "c"iii" of
this Section shall be amended to read as follows:
"a) The Borrower shall pay interest on the principal amount of
the Loan withdrawn and outstanding from time to time, at a rate
for each Quarter equal to the Cost of Qualified Borrowings
determined in respect of the preceding Quarter, plus one-half of
one percent (1/2 of 1%). On each of the dates specified in Section
2.06 of this Agreement, the Borrower shall pay interest accrued on
the principal amount outstanding during the preceding Interest
Period, calculated at the rates applicable during such Interest
Period."
"b) As soon as practicable after the end of each Quarter, the
Bank shall notify the Borrower of the Cost of Qualified Borrowings
determined in respect of such Quarter."
"c) iii) 'Quarter' means a three-month period commencing on
January 1, April 1, July 1 or October 1 in a calendar year."
Section 2.06. Interest and other charges shall be payable
semiannually on March 15 and September 15 in each year.
Section 2.07. The Borrower shall repay the principal amount of
the Loan in accordance with the amortization schedule set forth in
Schedule 3 to this Agreement.
Article III
Execution of the Project
Section 3.01. The Borrower declares its commitment to the
objectives of the Project as set forth in Schedule 2 to this
Agreement, and, to this end, shall carry out Part C of the Project
through MOF, and shall carry out Part B of the Project through the
CBR under arrangements satisfactory to the Bank, all with due
diligence and efficiency and in conformity with appropriate
financial, economic and administrative practices, and shall
provide, promptly as needed, the funds, facilities, services and
other resources required for such Parts of the Project.
Section 3.02. Without limitation or restriction upon any of its
other obligations under this Agreement, the Borrower shall, for
purposes of carrying out Part A of the Project, and unless the
Bank shall otherwise agree:
a) solicit and approve proposals from candidate banks in
accordance with the eligibility criteria and procedures for
approval of Institutional Development Sub-projects set forth or
referred to in Schedule 5 to this Agreement;
b) cause the Participating Banks to carry out their respective
Institutional Development Sub-projects in accordance with the same
eligibility criteria and the terms of the respective Subsidiary
Loan Agreements, and shall not take or permit to be taken any
action which would prevent or interfere with the carrying out by
such Participating Banks of their respective activities under the
Institutional Development Sub-projects;
c) make available to each such Participating Bank the amount of
financing required for such Institutional Development Sub-project,
including the applicable portions of the proceeds of the Loan as
referred to in Schedule 5 to this Agreement, under one or more
subsidiary loan agreements to be entered into between the Borrower
and such Participating Bank, under terms and conditions which
shall have been approved by the Bank, and which shall include,
without limitation, those set forth in Section III of Schedule 5
to this Agreement; and
d) exercise its rights under the Subsidiary Loan Agreements in
such 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, the Borrower shall not assign, amend,
abrogate or waive any such Subsidiary Loan Agreement or any
provision thereof.
Section 3.03. For purposes of the efficient carrying out of the
Project and ensuring the effective supervision of the execution of
the Institutional Development Sub-projects, and without limitation
on the provisions of Sections 3.01 and 3.02 of this Agreement, the
Borrower shall cause to an agreement to be entered into between
MOF and CBR concerning the carrying out by MOF of responsibilities
connected with supervision of the performance of the Participating
Banks in respect of their adherence to accreditation standards
applicable under the Project, as set forth or referred to in
Schedule 6 to this Agreement, in any areas which might be
concerned with banking supervision requirements generally
applicable to such banks under the laws and regulations of the
Borrower, and other matters satisfactory to the Bank.
Section 3.04. In order to facilitate the efficient carrying out
of the Project, the Borrower shall establish and thereafter
maintain with membership, staff and other resources and under
terms of reference satisfactory to the Bank:
a) a Project Implementation Unit (PIU) to be responsible for
the daily coordination of the execution of the Project; and
b) a Bank Review Unit, reporting to the MOF and CBR, and
advising on such matters, as shall have been defined by the
Borrower acceptable to the Bank, which may be concerned with
monitoring of Participating Banks' performance and developing of
administrative or corrective measures for Participating Banks
carrying out the Institutional Development Sub-projects under Part
A of the Project.
Section 3.05. Except as the Bank shall otherwise agree,
procurement of the goods and consultants' services required for
the Project and to be financed out of the proceeds of the Loan
shall be governed by the provisions of Schedule 4 to this
Agreement.
Section 3.06. The Bank and the Borrower hereby agree that the
obligations set forth in Sections 9.04, 9.05, 9.06, 9.07, 9.08 and
9.09 of the General Conditions (relating to insurance, use of
goods and services, plans and schedules, records and reports,
maintenance and land acquisition, respectively) in respect of Part
A of the Project shall be carried out by the Participating Banks.
Article IV
Financial Covenants
Section 4.01. a) The Borrower shall maintain or cause to be
maintained records and accounts adequate to reflect in accordance
with sound accounting practices the operations, resources and
expenditures in respect of Parts B and C of the Project of the
departments or agencies of the Borrower responsible for carrying
out the Project or any part thereof.
b) The Borrower shall:
i) have the records and accounts referred to in paragraph "a"
of this Section including those for the Special Account for each
fiscal year audited, in accordance with appropriate auditing
principles consistently applied, by independent auditors
acceptable to the Bank;
ii) furnish to the Bank as soon as available, but in any case
not later than six months after the end of each such year, the
report of such audit by said auditors, of such scope and in such
detail as the Bank shall have reasonably requested; and
iii) furnish to the Bank such other information concerning said
records and accounts and the audit thereof as the Bank shall from
time to time reasonably request.
c) For all expenditures with respect to which withdrawals from
the Loan Account for Parts B and C were made on the basis of
statements of expenditure, the Borrower shall:
i) maintain or cause to be maintained, in accordance with
paragraph "a" of this Section, records and accounts reflecting
such expenditures;
ii) retain, until at least one year after the Bank has received
the audit report for the fiscal year in which the last withdrawal
from the Loan Account or payment out of the Special Account was
made, all records (contracts, orders, invoices, bills, receipts
and other documents) evidencing such expenditures;
iii) enable the Bank's representatives to examine such records;
and
iv) ensure that such records and accounts are included in the
annual audit referred to in paragraph "b" of this Section and that
the report of such audit contains a separate opinion by said
auditors as to whether the statements of expenditure submitted
during such fiscal year, together with the procedures and internal
controls involved in their preparation, can be relied upon to
support the related withdrawals.
Section 4.02. a) The Borrower shall cause the Participating
Banks to maintain records and accounts adequate to reflect in
accordance with sound accounting practices the operations and
financial condition of the Participating Banks.
b) The Borrower shall cause Participating Banks to:
i) have their records, accounts and financial statements
(balance sheets, statements of income and expenses and related
statements) and the records and accounts for the Special Account
for each fiscal year audited, in accordance with appropriate
auditing principles consistently applied, by independent auditors
acceptable to the Bank;
ii) furnish to the Bank as soon as available, but in any case
not later than six months after the end of each such year:
A) certified copies of their financial statements for such year
as so audited, and
B) the report of such audit by said auditors, of such scope and
in such detail as the Bank shall have reasonably requested; and
iii) furnish to the Bank such other information concerning such
records, accounts and financial statements and the audit thereof
as the Bank shall from time to time reasonably request.
c) For all expenditures with respect to which withdrawals from
the Loan Account for Part A of the Project were made on the basis
of statements of expenditure, the Borrower shall cause
Participating Banks to:
i) maintain, in accordance with paragraph "a" of this Section,
records and accounts reflecting such expenditures;
ii) retain, until at least one year after the Bank has received
the audit report for the fiscal year in which the last withdrawal
from the Loan Account or payment out of the Special Account was
made, all records (contracts, orders, invoices, bills, receipts
and other documents) evidencing such expenditures;
iii) enable the Bank's representatives to examine such records;
and
iv) ensure that such records and accounts are included in the
annual audit referred to in paragraph "b" of this Section and that
the report of such audit contains a separate opinion by said
auditors as to whether the statements of expenditure submitted
during such fiscal year, together with the procedures and internal
controls involved in their preparation, can be relied upon to
support the related withdrawals.
Article V
Remedies of the Bank
Section 5.01. Pursuant to Section 6.02 (1) of the General
Conditions, the following additional events are specified:
a) i) Subject to subparagraph "ii" of this paragraph:
A) the right of the Borrower to withdraw the proceeds of any
loan or grant made to the Borrower for the financing of the
Project shall have been suspended, cancelled or terminated in
whole or in part, pursuant to the terms therefor, or
B) any such loan shall have become due and payable prior to the
agreed maturity thereof.
ii) Subparagraph "i" of this paragraph shall not apply if the
Borrower establishes to the satisfaction of the Bank that:
A) such suspension, cancellation, termination or prematuring is
not caused by the failure of the Borrower to perform any of its
obligations under such agreement; and
B) adequate funds for the Project are available to the Borrower
from other sources on terms and conditions consistent with the
obligations of the Borrower under this Agreement.
b) the agreement referred to in Section 3.03 of this Agreement
shall have been amended, suspended, abrogated, repealed or waived
so as to affect materially and adversely the ability of the
Borrower, the Participating Banks, MOF, the PIU, or the Bank
Review Unit to carry out the Project or to perform any of their
obligations under this Agreement or the Subsidiary loan
Agreements.
Section 5.02. Pursuant to Section 7.01 "h" of the General
Conditions, the following additional event is specified, namely,
that the event specified in paragraph "i" of Section 5.01 of this
Agreement shall occur, subject to the proviso of paragraph "ii" of
that Section.
Article VI
Effective Date; Termination
Section 6.01. The following events are specified as additional
conditions to the effectiveness of the Loan Agreement within the
meaning of Section 12.01 "c" of the General Conditions:
a) all conditions precedent to the effectiveness of EBRD Loan
Agreement have been fulfilled, other than those related to the
effectiveness of this Agreement;
b) Subsidiary Loan Agreements for institutional strengthening
have been concluded with at least three Participating Banks;
c) the agreement referred to in Section 3.03 of this Agreement
has been concluded;
d) two senior bankers have been appointed to the Bank Review
Unit; and
e) a consultants' contract for technical services relating to
project implementation for assistance to the PIU in the carrying
out the activities referred to in Section 3.04 "a" of this
Agreement, has been concluded acceptable to the Bank.
Section 6.02. The following is specified as an additional
matter, within the meaning of Section 12.02 "c" of the General
Conditions, to be included in the opinion or opinions to be
furnished to the Bank, namely, that the Subsidiary Loan Agreements
referred to in Section 6.01 "b" of this Agreement have been duly
authorized or ratified by the Borrower and the respective
Participating Banks and are legally binding upon the Borrower and
the respective Participating Banks in accordance with the terms
thereof.
Section 6.03. The date ninety (90) days after the date of this
Agreement is hereby specified for the purposes of Section 12.04 of
the General Conditions.
Article VII
Representative of the Borrower; Addresses
Section 7.01. The Minister of Finance or the Deputy Minister of
Finance of the Borrower is designated as representative of the
Borrower for the purposes of Section 11.03 of the General
Conditions.
Section 7.02. The following addresses are specified for the
purposes of Section 11.01 of the General Conditions:
For the Borrower:
Ministry of Finance
103097 Moscow
Ilyinka Street 9
Russian Federation
Telex:
112008
For the Bank:
International Bank for
Reconstruction and Development
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Cable address: Telex:
INTBAFRAD 248423 (RCA)
Washington, D.C. 82987 (FTCC)
64145 (WUI) or
197688 (TRT)
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.
SCHEDULE 1
WITHDRAWAL OF THE PROCEEDS OF THE LOAN
1. The table below sets forth the Categories of items to be
financed out of the proceeds of the Loan, the allocation of the
amounts of the Loan to each Category and the percentage of
expenditures for items so to be financed in each Category:
-----------------------T------------------T----------------------¬
¦ Category ¦ Amount of the ¦ % of ¦
¦ ¦ Loan Allocated ¦ Expenditures ¦
¦ ¦ (Expressed in ¦ to be Financed ¦
¦ ¦Dollar Equivalent)¦ ¦
+----------------------+------------------+----------------------+
¦1) Part A of the ¦ ¦ ¦
¦ Project ¦ ¦ ¦
¦ ¦ ¦ ¦
¦i) Goods ¦ 139,400,000 ¦100% of foreign ¦
¦ ¦ ¦expenditures, ¦
¦ ¦ ¦100% of local ¦
¦ ¦ ¦expenditures ¦
¦ ¦ ¦(ex-factory cost) and ¦
¦ ¦ ¦70% of local ¦
¦ ¦ ¦expenditures for other¦
¦ ¦ ¦items procured ¦
¦ ¦ ¦locally ¦
¦ ¦ ¦ ¦
¦ii) Consultants' ¦ 35,500,000 ¦67% ¦
¦services for ¦ ¦ ¦
¦institutional ¦ ¦ ¦
¦strengthening programs¦ ¦ ¦
¦under Part A"i" of the¦ ¦ ¦
¦Project ¦ ¦ ¦
¦ ¦ ¦ ¦
¦iii) Consultants' ¦ ¦ ¦
¦services for systems ¦ 11,500,000 ¦100% ¦
¦modernization under ¦ ¦ ¦
¦Part A"ii" of the ¦ ¦ ¦
¦Project ¦ ¦ ¦
¦ ¦ ¦ ¦
¦iv) Training ¦ 8,000,000 ¦100% ¦
¦and study ¦ ¦ ¦
¦tours ¦ ¦ ¦
¦ ¦ ¦ ¦
¦2) Part B of the ¦ ¦ ¦
¦ Project ¦ ¦ ¦
¦ ¦ ¦ ¦
¦i) Consultants' ¦ 2,000,000 ¦100% ¦
¦services ¦ ¦ ¦
¦ ¦ ¦ ¦
¦ii) Equipment ¦ 100,000 ¦100% of foreign ¦
¦ ¦ ¦expenditures, ¦
¦ ¦ ¦100% of local ¦
¦ ¦ ¦expenditures ¦
¦ ¦ ¦(ex-factory cost) and ¦
¦ ¦ ¦70% of local ¦
¦ ¦ ¦expenditures for other¦
¦ ¦ ¦items procured ¦
¦ ¦ ¦locally ¦
¦ ¦ ¦ ¦
¦3) Part C of the ¦ ¦ ¦
¦ Project ¦ ¦ ¦
¦ ¦ ¦ ¦
¦i) Goods ¦ 100,000 ¦100% of foreign ¦
¦ ¦ ¦expenditures, ¦
¦ ¦ ¦100% of local ¦
¦ ¦ ¦expenditures ¦
¦ ¦ ¦(ex-factory cost) and ¦
¦ ¦ ¦70% of local ¦
¦ ¦ ¦expenditures for other¦
¦ ¦ ¦items procured ¦
¦ ¦ ¦locally ¦
¦ ¦ ¦ ¦
¦ii) Consultants' ¦ 1,400,000 ¦100% ¦
¦services ¦ ¦ ¦
¦ ¦ ¦ ¦
¦iii) Study tours ¦ 500,000 ¦100% ¦
¦ ¦ ¦ ¦
¦4) Consultants' ¦ 0 ¦100% ¦
¦ services and ¦ ¦ ¦
¦ goods for Part D ¦ ¦ ¦
¦ of the Project ¦ ¦ ¦
¦ ¦ ¦ ¦
¦5) Refunding of ¦ ¦Amounts due ¦
¦ Project ¦ ¦pursuant to ¦
¦ Preparation ¦ ¦Section 2.02 "c" ¦
¦ Advance ¦ 1,500,000 ¦of this Agreement ¦
+----------------------+------------------+----------------------+
¦ TOTAL ¦ 200,000,000 ¦ ¦
L----------------------+------------------+-----------------------
2. For the purposes of this Schedule:
a) the term "foreign expenditures" means expenditures in the
currency of any country other than that of the Borrower for goods
or services supplied from the territory of any country other than
that of the Borrower; and
b) the term "local expenditures" means expenditures in the
currency of the Borrower or for goods or services supplied from
the territory of the Borrower; provided, however, that if the
currency of the Borrower is also that of another country from the
territory of which the goods and services are supplied,
expenditures in such currency for such goods or services shall be
deemed to be "foreign expenditures".
3. Notwithstanding the provisions of paragraph 1 above, no
withdrawals shall be made in respect of:
a) payments made for expenditures prior to the date of this
Agreement;
b) payments for expenditures under Category (1) of this
Schedule to finance an Institutional Development Sub-project under
any Subsidiary Loan, until the Bank shall have communicated its
acceptance to the Borrower of evidence that a Subsidiary Loan
Agreement has been duly executed on behalf of, and is legally
binding upon, the Borrower and the Participating Bank concerned in
respect of such Subsidiary Loan; and
c) expenditures under Category (2) of this Schedule until the
arrangements with the CBR referred to in Section 3.01 of this
Agreement have been concluded in accordance with the provisions of
said Section.
4. The Bank may require withdrawals from the Loan Account to be
made on the basis of statements of expenditure for expenditures
under contracts for goods and training not exceeding 50,000 USD
equivalent, under such terms and conditions as the Bank shall
specify by notice to the Borrower.
SCHEDULE 2
DESCRIPTION OF THE PROJECT
The objectives of the Project are to increase the quantity and
improve the quality of banking services, promote banking
stability, and contribute to a more efficient allocation of bank
credit by modernizing the regulatory framework and strengthening
the institutional capabilities of the Borrower's financial system.
The Project consists of the following parts, subject to such
modifications thereof as the Borrower and the Bank may agree upon
from time to time to achieve such objectives:
Part A:
The financing, through the provision of loans, including
Subsidiary Loans, of specific Institutional Development Sub-
projects consisting of:
i) institutional development programs for strengthening the
organization, management and operations of the Participating
Banks, including the provision of staff training; and
ii) systems modernization, including the acquisition and
installation of computer hardware and software in connection with
the implementation of said institutional strengthening programs.
Part B:
The carrying out by CBR of programs to develop further the
financial system, including the provision of training and
technical assistance for:
i) the development of on-site bank inspectors;
ii) the preparation of documents relating to on-site
inspection;
iii) the reform of bank accounting practices; and
iv) development of the legal and regulatory environment for the
banking sector.
Part C:
The carrying out by the Borrower of programs to develop the
accounting and auditing practices including the provision of
training and technical assistance for:
i) the reform of enterprise accounting practice; and
ii) the establishment of a Chamber of Auditors and the
development of the auditing profession.
Part D:
Provision of technical assistance for the operations of the PIU
to support:
i) the establishment, maintenance and updating of project
accounting, procurement, and reporting systems;
ii) the initial stages of its operations; and
iii) training of staff.
* * *
The Project is expected to be completed by June 30, 1998.
SCHEDULE 3
AMORTIZATION SCHEDULE
------------------------------------T----------------------------¬
¦ Date Payment Due ¦ Payment of Principal ¦
¦ ¦(expressed in dollars) <*> ¦
+-----------------------------------+----------------------------+
¦On each March 15 and September 15 ¦ ¦
¦ ¦ ¦
¦ beginning September 15, 1999 ¦ ¦
¦ through September 15, 2010 ¦ 8,335,000 ¦
¦ ¦ ¦
¦On March 15, 2011 ¦ 8,295,000 ¦
L-----------------------------------+-----------------------------
--------------------------------
<*> The figures in this column represent dollar equivalents
determined as of the respective dates of withdrawal. See General
Conditions, Sections 3.04 and 4.03.
PREMIUMS ON PREPAYMENT
Pursuant to Section 3.04 "b" of the General Conditions, the
premium payable on the principal amount of any maturity of the
Loan to be prepaid shall be the percentage specified for the
applicable time of prepayment below:
--------------------------------T--------------------------------¬
¦ Time of Prepayment ¦ Premium ¦
+-------------------------------+--------------------------------+
¦ ¦The interest rate (expressed ¦
¦ ¦as a percentage per annum) ¦
¦ ¦applicable to the Loan on ¦
¦ ¦the day of prepayment ¦
¦ ¦multiplied by: ¦
¦ ¦ ¦
¦Not more than three years ¦ 0.18 ¦
¦ before maturity ¦ ¦
¦ ¦ ¦
¦More than three years but ¦ 0.35 ¦
¦ not more than six years ¦ ¦
¦ before maturity ¦ ¦
¦ ¦ ¦
¦More than six years but ¦ 0.65 ¦
¦ not more than 11 years ¦ ¦
¦ before maturity ¦ ¦
¦ ¦ ¦
¦More than 11 years but not ¦ 0.88 ¦
¦ more than 15 years ¦ ¦
¦ before maturity ¦ ¦
¦ ¦ ¦
¦More than 15 years before ¦ 1.00 ¦
¦ maturity ¦ ¦
L-------------------------------+---------------------------------
SCHEDULE 4
PROCUREMENT AND CONSULTANTS' SERVICES
Section I. PROCUREMENT OF GOODS
Part A
International Competitive Bidding
1. Except as provided in Part C hereof, goods shall be procured
under contracts awarded 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 1992 (the Guidelines).
a) For fixed-price contracts, the invitation to bid referred to
in paragraph 2.13 of the Guidelines shall provide that, when
contract award is delayed beyond the original bid validity period,
the successful bidder's bid price will be increased for each week
of delay by two predisclosed correction factors acceptable to the
Bank, one to be applied to all foreign currency components and the
other to the local currency component of the bid price. Such an
increase shall not be taken into account in the bid evaluation.
b) In the procurement of goods in accordance with this Part A,
the Borrower shall use the relevant standard bidding documents
issued by the Bank, with such modifications thereto as the Bank
shall have agreed to be necessary for the purposes of the Project.
Where no relevant standard bidding documents have been issued by
the Bank, the Borrower shall use bidding documents based on other
international recognized standards forms agreed with the Bank.
Part B
Preference for Domestic Manufacturers
In the procurement of goods in accordance with the procedures
described in Part A hereof, goods manufactured in Russian
Federation may be granted a margin of preference in accordance
with, and subject to, the provisions of paragraphs 2.55 and 2.56
of the Guidelines and paragraphs 1 through 4 of Appendix 2
thereto.
Part C
Other Procurement Procedures
1. Limited-source mainframe computer / network equipment, and
special software, up to an aggregate amount equivalent to
8,500,000 USD, may be procured under contracts awarded through
limited international bidding procedures on the basis of
evaluation and comparison of bids invited from a list of at least
three qualified suppliers eligible under the Guidelines and in
accordance with the procedures set forth in Sections I and II of
the Guidelines (excluding paragraphs 2.8, 2.9, 2.55 and 2.56
thereof);
2. Items or groups of items for goods estimated to cost the
equivalent of 300,000 USD or less per contract, up to an aggregate
amount equivalent to 15,000,000 USD, may be procured under
contracts awarded on the basis of comparison of price quotations
obtained from at least three suppliers from at least three
different countries eligible under the Guidelines, in accordance
with procedures acceptable to the Bank.
3. Contracts for equipment and spare parts of a proprietary
nature, or which are required to ensure standardization and
compatibility with existing equipment and facilities, may be
procured by direct contracting with the suppliers thereof. Such
contracts shall require prior approval by the Bank and shall not
exceed an aggregate amount of 22,000,000 USD.
4. Items or groups of items for goods estimated to cost the
equivalent of 50,000 USD or less per contract, up to an aggregate
amount equivalent to 5,000,000 USD, may be procured under
contracts awarded on the basis of comparison of price quotations
obtained from at least three suppliers eligible under the
Guidelines, in accordance with procedures acceptable to the Bank.
5. Items or groups of items for goods estimated to cost the
equivalent of 300,000 USD or less per contract, up to an aggregate
amount equivalent to 3,500,000 USD, may be procured under
contracts awarded on the basis of competitive bidding, advertised
locally in accordance with procedures satisfactory to the Bank.
Part D
Review by the Bank of Procurement Decisions
1. Review of invitations to bid and of proposed awards and
final contracts:
a) With respect to each contract for goods estimated to cost
the equivalent of 300,000 USD or more, the procedures set forth in
paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply.
Where payments for such contract are to be made out of the Special
Account, such procedures shall be modified to ensure that the two
conformed copies of the contract required to be furnished to the
Bank pursuant to said paragraph 2 "d" shall be furnished to the
Bank prior to the making of the first payment out of the Special
Account in respect of such contract.
b) With respect to each contract not governed by the preceding
paragraph, the procedures set forth in paragraphs 3 and 4 of
Appendix 1 to the Guidelines shall apply. Where payments for such
contract are to be made out of the Special Account, said
procedures shall be modified to ensure that the two conformed
copies of the contract together with the other information
required to be furnished to the Bank pursuant to said paragraph 3
shall be furnished to the Bank as part of the evidence to be
furnished pursuant to paragraph 4 of Schedule 7 to this Agreement.
c) The provisions of the preceding subparagraph "b" shall not
apply to contracts on account of which withdrawals are to be made
on the basis of statements of expenditure.
2. The figure of 15% is hereby specified for purposes of
paragraph 4 of Appendix 1 to the Guidelines.
Section II. EMPLOYMENT OF CONSULTANTS
1. In order to assist the Borrower in carrying out the Project,
the Borrower shall or shall cause to employ consultants whose
qualifications, experience and terms and conditions of employment
shall be satisfactory to the Bank. Such consultants shall be
selected in accordance with principles and procedures satisfactory
to the Bank on the basis of the "Guidelines for the Use of
Consultants by World Bank Borrowers and by the World Bank as
Executing Agency" published by the Bank in August 1981. For
complex, time-based assignments, the Borrower shall employ such
consultants under contracts using the standard form of contract
for consultants' services issued by the Bank, with such
modifications as shall have been agreed by the Bank. Where no
relevant standard contract documents have been issued by the Bank,
the Borrower shall use other standard forms agreed with the Bank.
2. Notwithstanding the provisions of paragraph 1 of this
Section, the provisions of the Consultant Guidelines requiring
prior Bank review or approval of budgets, short lists, selection
procedures, letters of invitation, proposals, evaluation reports
and contracts, shall not apply to a) contracts for the employment
of consulting firms estimated to cost less than 100,000 USD
equivalent each or b) contracts for the employment of individuals
estimated to cost less than 50,000 USD equivalent each. However,
said exceptions to prior Bank review shall not apply to a) the
terms of reference for such contracts, b) single - source
selection of consulting firms, c) assignments of a critical
nature, as reasonably determined by the Bank, d) amendments to
contracts for the employment of consulting firms raising the
contract value to 100,000 USD equivalent or above, or e)
amendments to contracts for the employment of individual
consultants raising the contract value to 50,000 USD equivalent or
above.
3. Notwithstanding the provisions of paragraph 1 of this
Section, consultants to be employed by the Borrower or by a
Participating Bank to assist in the carrying out of institutional
strengthening programs (twinning) may be selected in accordance
with procedures acceptable to the Bank.
SCHEDULE 5
ELIGIBILITY, APPROVAL PROCEDURES AND PRINCIPAL TERMS
AND CONDITIONS OF SUBSIDIARY LOAN AGREEMENTS
Section I
Eligibility of Participating Banks
A Subsidiary Loan Agreement shall be entered into only with a
banking institution duly established and operating under the laws
of the Borrower, which shall have:
a) established and maintained its creditworthiness,
b) established and satisfactorily demonstrated its compliance
with the accreditation criteria set forth or referred to in
Schedule 6 to this Agreement,
c) developed specific plans for institutional development and
automation proposed to be carried out as an Institutional
Development Sub-project under Part A of the Project, and
d) submitted to the PIU monthly financial returns and quarterly
progress reports,
all to the satisfaction of the Borrower and the Bank, on the
basis of guidelines acceptable to the Bank.
Section II
Approval Procedures
1. The candidate bank shall adopt and submit for approval by
the PIU:
i) an institutional development plan and time-table acceptable
to the Bank;
ii) an automation plan and timetable acceptable to the Bank;
and
iii) forecast financial statements for three fiscal years
prepared according to the same principles as the quarterly
statements referred to in Section I of this Schedule.
2. Prior to approving a Subsidiary Loan, the PIU shall verify:
undergoing by the candidate bank of audit conducted by an
international auditing firm in accordance with international
accounting and auditing principles and a satisfactory report of
such auditors.
Section III
Terms and Conditions of Subsidiary Loans
A. Terms:
1. The principal amount of each Subsidiary Loan shall be
denominated in Dollars in an amount determined by the Borrower to
be the amount actually required to be made available to the
Participating Bank, to enable the Participating Bank to carry out
the Institutional Development Sub-project, calculated as the
percentage of the estimated total sub-project costs, up to a
maximum of 100% of such estimated subproject costs.
2. Amounts made available to a Participating Bank under a
Subsidiary Loan shall be eligible for financing out of the Loan
where, pursuant to the Co-Lenders' Agreement, the proceeds of the
Loan, combined with proceeds of the EBRD Loan which are available
for financing such amount in accordance with the EBRD Loan
Agreement, may be blended at a 2:1 ratio.
3. Financing of an institutional strengthening program for a
Participating Bank shall be achieved through the blending of the
combined proceeds of the Loan and EBRD Loan with grant funds
available under the Cofinance in such a manner as to effect more
favorable terms, up to maximum ratio of grant funds to loan funds
of 1:1.
4. a) During each six-month period commencing on January 1 and
July 1 of each calendar year, each Subsidiary Loan shall be
charged on the principal amount thereof, withdrawn and outstanding
from time to time, interest at a floating rate equivalent to two
and one-half percent above the weighted average rate of the six-
month LIBOR as onethird of said rate and the interest rate
determined in accordance with Section 2.05 of this Agreement as
two-thirds of said rate; and
b) for the purposes of this paragraph, "six-month LIBOR" is the
London InterBank Offered Rate of major banks for deposits in
Dollars, designated as page 3750 on the Tolerate Service (or such
other page as may replace the Tolerate Page 3750) for the purpose
of displaying such LIBOR rates for deposits in Dollars.
5. Each Subsidiary Loan for system modernization shall have a
maturity of not more than 12 years, inclusive of a grace period of
4 years. Each Subsidiary Loan for institutional strengthening
shall have a maturity of not more than 8 years, inclusive of a
grace period of 3 years.
B. Conditions:
1. The right of each Participating Bank to the use of the
proceeds of its respective Subsidiary Loan, shall be subject to:
a) suspension upon failure by such party to perform any of its
obligations under its respective Subsidiary Loan Agreement; and
b) cancellation if the right of the Participating Bank to make
withdrawals under the Subsidiary Loan shall have been suspended
pursuant to sub-paragraph "a" hereof for a continuous period of 60
days.
2. Each Subsidiary Loan Agreement shall contain provisions
pursuant to which the Participating Bank shall undertake to:
a) carry out the Institutional Development Sub-project with due
diligence and efficiency and conduct its operations and affairs in
accordance with sound administrative, technical and financial
standards and appropriate practices, with qualified management and
staff, and provide, promptly as needed, the funds, facilities,
services and other resources required for the purpose;
b) i) employ consultants with qualifications, experience and
terms of reference satisfactory to the Bank, to assist it in the
carrying out of such Institutional Development Sub-project; and
ii) procure the goods and consultants services to be financed
out of the proceeds of the Loan in accordance with the provisions
of Schedule 4 to this Agreement, and use such goods and services
exclusively in the carrying out of such Institutional Development
Sub-project;
c) exchange views with, and furnish all such information to,
the Borrower or the Bank, as may be reasonably requested by the
Borrower or the Bank, with regard to the progress of the
Institutional Development Sub-project, the performance of its
obligations under any Subsidiary Loan Agreements, and other
matters relating to the purposes of said Institutional Development
Sub-project;
d) promptly inform the Borrower and the Bank of any condition
which interferes or threatens to interfere with the progress of
its activities under the Institutional Development Subproject or
the performance of its obligations under the respective Subsidiary
Loan Agreement; and
e) i) maintain records and accounts adequate to reflect in
accordance with sound accounting practices its operations and
financial condition;
ii) have its financial statements (balance sheets, statements
of income and expenses and related statements) for each fiscal
year audited, in accordance with appropriate auditing principles
consistently applied, by independent auditors acceptable to the
Bank;
iii) furnish to the Borrower and the Bank, as soon as
available, but in any case not later than six months after the end
of each such year certified copies of said financial statements
and accounts for such year as so audited, and the report of such
audit by said auditors in such scope and detail as the Borrower or
the Bank shall have reasonably requested; and
iv) furnish to the Borrower or the Bank such other information
concerning said records, accounts and financial statements as well
as the audit thereof as the Borrower or the Bank shall from time
to time reasonably request.
SCHEDULE 6
ACCREDITATION CRITERIA
Participating Banks shall be accredited for participation in
the Institutional Development Program if they are able to meet,
and maintain conformity with, all applicable prudential standards
established by the CBR, and the following additional criteria,
based on internationally recognized norms for evaluating
commercial banks:
A. Capital Adequacy
1. Maintaining a total capital to risk-adjusted assets ratio of
4 percent in 1994 and reaching a total capital to risk-adjusted
assets ratio of 8 percent by 1998, applying risk-weightings
satisfactory to the Bank.
2. Maintaining minimum equity capital of 5 million USD
equivalent.
3. Realistically provisioning for possible loan losses in
accordance with CBR instructions and international standards.
В. Profitability
Demonstrating financial solvency and profitability as measured
by net income (adjusted for inflation and loan loss provisions in
accordance with international accounting standards) providing a
positive return on assets during the previous two years.
C. Quality of Lending Process and Loan Portfolio
1. Limiting maximum exposure to a single borrower and its
connected parties to 50 percent of equity capital in 1994; and
then to 35 percent in 1995 and 25 percent in 1996.
2. Limiting maximum aggregate large exposures (defined as any
credit and offbalance sheet exposures to a single party exceeding
10 percent of bank's equity capital) to 12 times equity capital in
1994; and subsequently to 10 times in 1995 and 8 times in 1996.
3. Maintaining single loans to shareholders / directors at less
than 30 percent of capital and the aggregate total of such loans
at 100 percent of capital in 1994; these percentages would
subsequently decrease to 10 percent and 20 percent by 1998.
4. Maintaining a loan portfolio of which
i) no more than 20 percent has been rescheduled (excluding
working capital financing of up to 90 days of sales), and
ii) less than 5 percent has been rescheduled more than once.
5. Actively engaging in lending.
6. Maintaining a total collection rate (total amount of current
and overdue principal and interest collected as a percentage of
current and overdue amounts due in the year, calculated before
loan reschedulings) greater than 85 percent.
7. Limiting the remaining principal value of loans in arrears
to 8 percent of the total portfolio and the remaining principal
value of loans in arrears for a period exceeding 12 months to 2
percent of the total portfolio.
8. Maintaining a minimum 1:1 ratio between loan loss provisions
and the sum of doubtful and loss assets, where "doubtful assets"
are those where collection or liquidation in full is highly
improbable and "loss assets" are those considered uncollectible.
9. Maintaining an interest rate structure reflecting a
satisfactory assessment and monitoring of risk and return.
10. Demonstrating a satisfactory set of policies and practices
for assessing the environmental effects of projects it finances.
D. Resource Mobilization and Liquidity
1. Sourcing no more than 10 percent of loan funds from directed
credits (credit allocated according to Government's special
decision).
2. Maintaining a non-inter-bank loans to non-inter-bank
deposits ratio of less than 80 percent.
E. Managerial Autonomy
Demonstrating substantial managerial autonomy to the
satisfaction of the World Bank, EBRD, MOF, and the CBR through:
a) sources of funds,
b) legal and ownership structure,
c) composition of and locus of authority for appointment of
Board of Directors,
d) management and staff selection and promotion policies and
practices, and
е) loan approval procedures (equal treatment of shareholders
and non-shareholders and the absence of shareholders on the credit
committee).
F. Management Effectiveness
Demonstrating adequate policies, procedures, and performance in
the following functional areas:
a) market strategy,
b) organizational structure,
c) credit,
d) financial management (ALM, foreign exchange, accounting),
e) planning and budgeting,
f) internal audit,
g) management information systems, and
h) training.
G. Private Sector Orientation
1. Demonstrating a significant level of lending to the private
sector.
2. Demonstrating significant share ownership by private sector.
H. Exemptions for Banks in Special Circumstances
Banks not meeting one or several of the above criteria may
still be accredited for participation in the Project provided that
they agree with MOF on a plan of action for addressing their
deficiencies and an explicit set of targets for monitoring their
progress in meeting the accreditation standards.
SCHEDULE 7
SPECIAL ACCOUNT
1. For the purposes of this Schedule:
a) the term "eligible Categories" means Categories 1 "i", 1
"iii", (2), (3), and (4) set forth in the table in paragraph 1 of
Schedule 1 to this Agreement;
b) the term "eligible expenditures" means expenditures in
respect of the reasonable cost of goods and services required for
the Project and to be financed out of the proceeds of the Loan
allocated from time to time to the eligible Categories in
accordance with the provisions of Schedule 1 to this Agreement;
and
c) the term "Authorized Allocation" means an amount equivalent
to 1,000,000 USD to be withdrawn from the Loan Account and
deposited in the Special Account pursuant to paragraph 3 "a" of
this Schedule.
2. Payments out of the Special Account shall be made
exclusively for eligible expenditures in accordance with the
provisions of this Schedule.
3. After the Bank has received evidence satisfactory to it that
the Special Account has been duly opened, withdrawals of the
Authorized Allocation and subsequent withdrawals to replenish the
Special Account shall be made as follows:
a) For withdrawals of the Authorized Allocation, the Borrower
shall furnish to the Bank a request or requests for a deposit or
deposits which do not exceed the aggregate amount of the
Authorized Allocation. On the basis of such request or requests,
the Bank shall, on behalf of the Borrower, withdraw from the Loan
Account and deposit in the Special Account such amount or amounts
as the Borrower shall have requested.
b) i) For replenishment of the Special Account, the Borrower
shall furnish to the Bank requests for deposits into the Special
Account at such intervals as the Bank shall specify.
ii) Prior to or at the time of each such request, the Borrower
shall furnish to the Bank the documents and other evidence
required pursuant to paragraph 4 of this Schedule for the payment
or payments in respect of which replenishment is requested. On the
basis of each such request, the Bank shall, on behalf of the
Borrower, withdraw from the Loan Account and deposit into the
Special Account such amount as the Borrower shall have requested
and as shall have been shown by said documents and other evidence
to have been paid out of the Special Account for eligible
expenditures.
All such deposits shall be withdrawn by the Bank from the Loan
Account under the respective eligible Categories, and in the
respective equivalent amounts, as shall have been justified by
said documents and other evidence.
4. For each payment made by the Borrower out of the Special
Account, the Borrower shall, at such time as the Bank shall
reasonably request, furnish to the Bank such documents and other
evidence showing that such payment was made exclusively for
eligible expenditures.
5. Notwithstanding the provisions of paragraph 3 of this
Schedule, the Bank shall not be required to make further deposits
into the Special Account:
a) if, at any time, the Bank shall have determined that all
further withdrawals should be made by the Borrower directly from
the Loan Account in accordance with the provisions of Article V of
the General Conditions and paragraph "a" of Section 2.02 of this
Agreement; or
b) once the total unwithdrawn amount of the Loan allocated to
the eligible Categories, less the amount of any outstanding
special commitment entered into by the Bank pursuant to Section
5.02 of the General Conditions with respect to the Project, shall
equal the equivalent of twice the amount of the Authorized
Allocation.
Thereafter, withdrawal from the Loan Account of the remaining
unwithdrawn amount of the Loan allocated to the eligible
Categories shall follow such procedures as the Bank shall specify
by notice to the Borrower. Such further withdrawals shall be made
only after and to the extent that the Bank shall have been
satisfied that all such amounts remaining on deposit in the
Special Account as of the date of such notice will be utilized in
making payments for eligible expenditures.
6. a) If the Bank shall have determined at any time that any
payment out of the Special Account: i) was made for an expenditure
or in an amount not eligible pursuant to paragraph 2 of this
Schedule; or ii) was not justified by the evidence furnished to
the Bank, the Borrower shall, promptly upon notice from the Bank:
A) provide such additional evidence as the Bank may request; or B)
deposit into the Special Account (or, if the Bank shall so
request, refund to the Bank) an amount equal to the amount of such
payment or the portion thereof not so eligible or justified.
Unless the Bank shall otherwise agree, no further deposit by the
Bank into the Special Account shall be made until the Borrower has
provided such evidence or made such deposit or refund, as the case
may be.
b) If the Bank shall have determined at any time that any
amount outstanding in the Special Account will not be required to
cover further payments for eligible expenditures, the Borrower
shall, promptly upon notice from the Bank, refund to the Bank such
outstanding amount.
c) The Borrower may, upon notice to the Bank, refund to the
Bank all or any portion of the funds on deposit in the Special
Account.
d) Refunds to the Bank made pursuant to paragraphs 6 "a", "b"
and "c" of this Schedule shall be credited to the Loan Account for
subsequent withdrawal or for cancellation in accordance with the
relevant provisions of this Agreement, including the General
Conditions.
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