Loan Number 3898 RU
LOAN AGREEMENT
(SECOND REHABILITATION LOAN)
BETWEEN THE RUSSIAN FEDERATION AND INTERNATIONAL BANK
FOR RECONSTRUCTION AND DEVELOPMENT
(Washington, 7.VII.1995)
Agreement, dated July 7, 1995 between Russian Federation (the
Borrower) and International Bank for Reconstruction and
Development (the Bank).
Whereas: (A) the Bank has received a letter dated August 30,
1994 from the Borrower describing a program of actions, objectives
and policies designed to achieve economic stabilization and
systemic reforms in the Borrower's economy (hereinafter called the
Program), declaring the Borrower's commitment to the execution of
the Program, and requesting assistance from the Bank in the
financing of urgently needed imports required during such
execution; and
(B) on the basis, inter alia, of the foregoing, the Bank has
decided in support of the Program to provide such assistance to
the Borrower by making the Loan as hereinafter provided;
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 thereof set forth below (the General Conditions)
constitute an integral part of this Agreement:
(a) Section 2.01, paragraph 11, shall be modified to read:
"Project' means the imports and other activities that may be
financed out of the proceeds of the Loan pursuant to the
provisions of Schedule 1 to the Loan Agreement."
(b) The last sentence of Section 3.02 is deleted.
(c) 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."
(d) Section 9.07 (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 Bank, the Borrower shall prepare and furnish to the Bank a
report, of such scope and in such detail as the Bank shall
reasonably request, on the execution of the program referred to in
the Preamble to the Loan Agreement, the performance by the
Borrower and the Bank of their respective obligations under the
Loan Agreement and the accomplishment of the purposes of the
Loan."
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) "SITC" means the Standard International Trade
Classification, Revision 3 (SITC, Rev. 3), published by the United
Nations in Statistical Papers, Series M, No. 343 (1986); and
(b) "Central Bank" means the Central Bank of the Russian
Federation.
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 six hundred million dollars
(600,000,000 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. The amount of the Loan may be withdrawn from the
Loan Account in accordance with the provisions of Schedule 1 to
this Agreement.
Section 2.03. The Closing Date shall be June 30, 1996 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 May 1 and November 1 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 2 to this Agreement.
Section 2.08. (a) The Central Bank is designated as
representative of the Borrower 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.
(b) Without limitation or restriction to the foregoing, the
Borrower hereby entrusts the Central Bank with responsibility for
the preparation of withdrawal applications and for the collection
of the documents and other evidence to be furnished to the Bank in
support of such applications, including the relevant customs
certificates for imports eligible for financing out of the
proceeds of the Loan.
Article III
Particular Covenants
Section 3.01. (a) The Borrower and the Bank shall from time to
time, at the request of either party, exchange views on the
progress achieved in carrying out the Program.
(b) Prior to each such exchange of views, the Borrower shall
furnish to the Bank for its review and comment a report on the
progress achieved in carrying out the Program, in such detail as
the Bank shall reasonably request.
(c) Without limitation upon the provisions of paragraph (a) of
this Section, the Borrower and the Bank shall, on or about August
1, 1995, carry out a review on the allocation of access to oil
export pipelines.
Section 3.02. Except as the Bank shall otherwise agree,
procurement of the goods to be financed out of the proceeds of the
Loan shall be governed by the provisions of Schedule 3 to this
Agreement.
Section 3.03. a) The Borrower shall maintain or cause to be
maintained records and accounts adequate to reflect in accordance
with consistently maintained sound accounting practices the
expenditures financed out of the proceeds of the Loan.
(b) The Borrower shall:
(i) have the records and accounts referred to in paragraph
(a) of this Section audited for each fiscal year, 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 copy of 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 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 was made, all records
(contracts, orders, invoices, bills, receipts and other
documents or customs certificates, as appropriate) 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 audits 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 IV
Additional Event of Suspension
Section 4.01. Pursuant to Section 6.02 (l) of the General
Conditions, the following additional event is specified, namely,
that a situation has arisen which shall make it improbable that
the Program, or a significant part thereof, will be carried out.
Article V
Termination
Section 5.01. 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 VI
Representatives of the Borrower; Addresses
Section 6.01. Except as provided in Section 2.08 (a) of this
Agreement, the Minister of Finance or 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 6.02. 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. Subject to the provisions set forth or referred to in this
Schedule, the proceeds of the Loan may be withdrawn from the Loan
Account for expenditures made (or, if the Bank shall so agree, to
be made) in respect of the reasonable cost of goods 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 prior to the date of this Agreement
(b) expenditures for goods included in the following SITC
groups or subgroups, or any successor groups or subgroups under
future revisions to the SITC, as designated by the Bank by notice
to the Borrower:
-------T-------------T-------------------------------------------¬
¦Group ¦ Subgroup ¦ Description of Items ¦
+------+-------------+-------------------------------------------+
¦ 112 ¦ - ¦Alcoholic beverages ¦
¦ ¦ ¦ ¦
¦ 121 ¦ - ¦Tobacco, unmanufactured, tobacco refuse ¦
¦ ¦ ¦ ¦
¦ 122 ¦ - ¦Tobacco, manufactured (whether or not ¦
¦ ¦ ¦containing tobacco substitutes) ¦
¦ 525 ¦ - ¦Radioactive and associated materials ¦
¦ ¦ ¦ ¦
¦ 667 ¦ - ¦Pearls, precious and semiprecious stones, ¦
¦ ¦ ¦unworked or worked ¦
¦ ¦ ¦ ¦
¦ 718 ¦ 718.1 ¦Nuclear reactors, and parts thereof, fuel ¦
¦ ¦ ¦elements (cartridges), nonirradiated or ¦
¦ ¦ ¦nuclear reactors ¦
¦ ¦ ¦ ¦
¦ 728 ¦ 728.43 ¦Tobacco processing machinery ¦
¦ ¦ ¦ ¦
¦ 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 ¦ - ¦Gold, nonmonetary (excluding gold ores and ¦
¦ ¦ ¦concentrates) ¦
L------+-------------+--------------------------------------------
(c) expenditures in the currency of the Borrower or for goods
supplied from the territory of the Borrower;
(d) payments made for expenditures in respect of goods imported
prior to the date of this Agreement;
(e) expenditures for goods procured under contracts costing
less than 50,000 USD equivalent;
(f) expenditures for goods supplied under a contract which any
national or international financing institution or agency other
than the Bank shall have financed or agreed to finance; and
(g) expenditures for goods intended for a military or
paramilitary purpose or for luxury consumption.
3. No withdrawal shall be made and no commitment shall be
entered into to pay amounts to or on the order of the Borrower in
respect of expenditures to be financed out of the proceeds of the
Loan once the aggregate of the proceeds of the Loan withdrawn from
the Loan Account and the total amount of such commitments shall
have reached the equivalent of 300,000,000 (USD) unless the Bank
shall be satisfied, after the completion of the review as
described in Section 3.01 (c) of this Agreement, that the Borrower
has undertaken by such date the actions and measures in respect of
allocation of access to oil export pipelines as agreed by the
Borrower and the Bank.
4. Withdrawals for expenditures under contracts for the
procurement of goods estimated to cost less than 5,000,000 USD
equivalent may be permitted by the Bank upon the basis of
statements of expenditures under such terms and conditions as the
Bank shall specify.
SCHEDULE 2
AMORTIZATION SCHEDULE
---------------------------------T--------------------------------¬
¦ Date Payment Due ¦ Payment of Principal ¦
¦ ¦ (expressed in dollars) <*> ¦
+--------------------------------+--------------------------------+
¦On each May 1 and November 1 ¦ ¦
¦ beginning November 1, 2000 ¦ ¦
¦ through November 1, 2011 ¦ 25,000,000 ¦
¦ ¦ ¦
¦And on May 1, 2012 ¦ 25,000,000 ¦
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 3
PROCUREMENT
1. Contracts for the procurement of goods estimated to cost the
equivalent of 5,000,000 (USD) or more shall be awarded through
international competitive bidding in accordance with procedures
consistent with those set forth in Sections I and III of the
"Guidelines for Procurement under IBRD Loans and IDA Credits"
published by the Bank in May 1992 (the Guidelines), subject to the
following modifications:
(a) 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 bidder'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
Business; or
(ii) an advertisement in a newspaper, periodical or technical
journal of wide international circulation; or
(iii) a notice to local representatives of countries and
territories referred to in the Guidelines, that are potential
suppliers of the goods required."
(b) 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 widely used in
international trade and specified in the bidding documents."
(c) Paragraphs 2.55 and 2.56 of the Guidelines are deleted.
(d) 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.
(e) In the procurement of goods in accordance with this
paragraph, 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 internationally recognized standard forms agreed with the
Bank.
2. Contracts for the procurement of goods estimated to cost the
equivalent of less than 5,000,000 USD shall be awarded in
accordance with established commercial practices followed by
public sector and private enterprises.
3. Subject to the prior approval of the Bank, commonly traded
commodities may be procured through organized international
commodity markets or other channels of competitive procurement
acceptable to the Bank, in accordance with procedures acceptable
to the Bank.
4. With respect to each contract referred to in paragraph 1 of
this Schedule, the Borrower shall furnish to the Bank, prior to
the submission to the Bank of the first application for withdrawal
of funds from the Loan Account in respect of such contract, two
conformed copies of such contract, together with an analysis of
the respective bids and recommendations for award, a description
of the advertising and tendering procedures followed and such
other information as the Bank shall reasonably request.
5. With respect to each contract referred to in paragraphs 2
and 3 of this Schedule, the Borrower shall furnish to the Bank,
prior to the submission to the Bank of the first application for
withdrawal of funds from the Loan Account in respect there of,
such documentation and information as the Bank may reasonably
request to support withdrawal applications in respect of such
contract.
6. The provisions of the preceding paragraph 5 of this Schedule
shall not apply to contracts on account of which withdrawals from
the Loan Account are to be made on the basis of statements of
expenditures.
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