Loan Number 4687 RU
LOAN AGREEMENT
(TUBERCULOSIS AND AIDS CONTROL PROJECT)
BETWEEN RUSSIAN FEDERATION AND INTERNATIONAL
BANK FOR RECONSTRUCTION AND DEVELOPMENT
(Moscow, 12.IX.2003)
Agreement, dated September 12, 2003, between Russian Federation (the Borrower) and International Bank for Reconstruction and Development (the Bank).
Whereas the Borrower, having satisfied itself as to the feasibility and priority of the project described in Schedule 2 to this Agreement (the Project), has requested the Bank to assist in the financing of the Project;
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 for Single Currency Loans" of the Bank, dated May 30, 1995 (as amended through October 6, 1999) (the General Conditions) constitute an integral part of this 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) "AIDS" means the acquired immune-deficiency syndrome, a severe life threatening disease which represents the late clinical stage of human infection with HIV (as hereinafter defined);
(b) "CSW" means commercial sex workers;
(c) "HIV" means the human immunodeficiency virus;
(d) "Financial Monitoring Report" or "FMR" means each report prepared in accordance with Section 4.02 of this Agreement;
(e) "IDU" means intravenous drug users;
(f) "MOF" means the Borrower's Ministry of Finance, or any successor or successors thereto;
(g) "MOH" means the Borrower's Ministry of Health, or any successor or successors thereto;
(h) "MOJ" means the Borrower's Ministry of Justice, or any successor or successors thereto;
(i) "Project Operational Manual" means a manual adopted by the Borrower pursuant to Section 6.01(c) of this Agreement and setting forth procedures, rules and criteria related to Project implementation, as the same may be amended from time to time;
(j) "Participating Region" means any oblast or other region of the Russian Federation which may from time to time have been selected by the Borrower for participation in the Project on the basis of the selection criteria set forth in the Project Operational Manual, and "Participating Regions" means, collectively, all these regions;
(k) "Project Implementation Agreement" means the agreement between the Borrower (represented by MOF, MOH and MOJ) and RHCF (as hereinafter defined) referred to in Section 3.02 of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Project Implementation Agreement;
(l) "Regional Participation Agreement" means the agreement to be entered into between RHCF and each Participating Region pursuant to Section 3.03 of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Regional Participation Agreement;
(m) "RHCF" means Russian Health Care Foundation, a non-commercial foundation established pursuant to Resolution of the Government of the Borrower No. 1295, dated October 31, 1996, and registered by the Borrower's Ministry of Justice, under Certificate of Registration No.IOP-33 dated November 28, 1996 (re-registered November 30, 2001), which is the entity authorized to implement the Project pursuant to the Project Implementation Agreement, or any successor thereto;
(n) "Special Account" means the account referred to in Section 2.02(b) of this Agreement;
(o) "STI" means sexually-transmitted infections;
(p) "ТВ" means tuberculosis; and
(q) "Working Group" means the working group for preparation and implementation of the Project established by MOH and referred to in paragraph 2 of Schedule 5 to this Agreement.
Section 1.03. Each reference in the General Conditions to the Project implementation entity shall be deemed as a reference to RHCF.
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, an amount equal to one hundred fifty million dollars (USD 150,000,000).
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 and to be financed out of the proceeds of the Loan.
(b) The Borrower may, for the purposes of the Project open and maintain in dollars a special deposit account in a commercial bank, acceptable to the Bank, on terms and conditions satisfactory to the Bank, including appropriate protection against set-off, seizure and attachment. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 6 to this Agreement.
Section 2.03. The Closing Date shall be December 31, 2008 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 fee in an amount equal to one percent (1%) of the amount of the Loan. Such fee shall be payable not later than 60 days after the Effective Date.
Section 2.05. 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 2.06. (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 LIBOR Base Rate plus LIBOR Total Spread.
(b) For the purposes of this Section:
(i) "Interest Period" means the initial period from and including the date of this Agreement to, but excluding, the first Interest Payment Date occurring thereafter, and after the initial period, each period from and including an Interest Payment Date to, but excluding the next following Interest Payment Date.
(ii) "Interest Payment Date" means any date specified in Section 2.07 of this Agreement.
(iii) "LIBOR Base Rate" means, for each Interest Period, the London interbank offered rate for six-month deposits in U.S. Dollars for value the first day of such Interest Period (or, in the case of the initial Interest Period, for value the Interest Payment Date occurring on or next preceding the first day of such Interest Period), as reasonably determined by the Bank and expressed as a percentage per annum.
(iv) "LIBOR Total Spread" means, for each Interest Period: (A) three-fourths of one percent (3/4 of 1%); (В) minus (or plus) the weighted average margin, for such Interest Period, below (or above) the London interbank offered rates, or other reference rates, for six-month deposits, in respect of the Bank's outstanding borrowings or portions thereof allocated by the Bank to fund single currency loans or portions thereof made by it that include the Loan; as reasonably determined by the Bank and expressed as a percentage per annum.
(c) The Bank shall notify the Borrower of LIBOR Base Rate and LIBOR Total Spread for each Interest Period, promptly upon the determination thereof.
(d) Whenever, in light of changes in market practice affecting the determination of the interest rates referred to in this Section 2.06, the Bank determines that it is in the interest of its borrowers as a whole and of the Bank to apply a basis for determining the interest rates applicable to the Loan other than as provided in said Section, the Bank may modify the basis for determining the interest rates applicable to the Loan upon not less than six (6) months' notice to the Borrower of the new basis. The new basis shall become effective on the expiry of the notice period unless the Borrower notifies the Bank during said period of its objection thereto, in which case said modification shall not apply to the Loan.
Section 2.07. Interest and other charges shall be payable semiannually in arrears on January 15 and July 15 in each year.
Section 2.08. 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. (a) The Borrower declares its commitment to the objectives of the Project, and, to this end, shall carry out the Project through MOH and MOJ with the assistance of RHCF, with due diligence and efficiency and in conformity with appropriate administrative, financial and public health practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project.
(b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Borrower and the Bank shall otherwise agree, the Borrower shall carry out the Project in accordance with the Project Operational Manual and the Implementation Program set forth in Schedule 5 to this Agreement.
Section 3.02. The Borrower, represented by MOF, MOH and MOJ, shall enter into the Project Implementation Agreement with RHCF, under terms and conditions which shall have been approved by the Bank, and which shall include, inter alia, the scope of RHCF's responsibilities, description of its activities to be carried out during the execution of the Project, project reporting, accounting and auditing requirements.
Section 3.03. Without limitation or restriction upon any of its other obligations under the Loan Agreement and except as the Borrower and the Bank shall otherwise agree, the Borrower shall cause RHCF, for the purposes of carrying out regional programs under Parts A and В of the Project, to enter into Regional Participation Agreements with each of the Participating Regions, under terms and conditions which shall have been approved by the Bank.
Section 3.04. Except as the Bank shall otherwise agree, procurement of the goods, works 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 3.05. For the purposes of Section 9.07 of the General Conditions and without limitation thereto, the Borrower shall:
(a) prepare, on the basis of guidelines acceptable to the Bank, and furnish to the Bank not later than six (6) months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Bank, a plan designed to ensure the continued achievement of the Project's objectives; and
(b) afford the Bank a reasonable opportunity to exchange views with the Borrower on said plan.
Article IV
Financial Covenants
Section 4.01. (a) The Borrower shall maintain, or cause to be maintained, a financial management system, including records and accounts, and prepare or cause to be prepared, financial statements in a format acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project.
(b) The Borrower shall cause RHCF to:
(i) have the records, accounts and financial statements (balance sheet, statements of sources and uses of funds and related statements) referred to in paragraph (a) of this Section and the records and accounts for the Special Account for each fiscal year audited, in accordance with auditing standards acceptable to the Bank, 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 the financial statements referred to in paragraph (a) of this Section for such year as so audited, and (B) an opinion on such statements, records and accounts and 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 and accounts, and the audit thereof, and concerning said auditors, as the Bank may 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 cause RHCF to:
(i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and separate 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) 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 RHCF to prepare and furnish to the Bank a financial monitoring report, in form and substance satisfactory to the Bank, which:
(i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided under the Loan and explains variances between the actual and planned uses of such funds;
(ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and
(iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report.
(b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each subsequent calendar quarter, and shall