On the ratification of the Loan Agreement (Loan for Structural Transformation of the Financial sector) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development

Home / RLA / On the ratification of the Loan Agreement (Loan for Structural Transformation of the Financial sector) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development

The Law of the Republic of Kazakhstan dated July 12, 1996 No. 25-I.

To ratify the Loan Agreement (Loan for Structural transformation of the financial sector) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development dated June 25, 1996.

President

Republic of Kazakhstan

Loan agreement*

* Note: The Russian text of the Loan Agreement cannot be considered as the original text of the Agreement. The original text is in English, agreed with the IBRD.

Agreement dated June 25, 1996 between the Republic of Kazakhstan (the Borrower) and the International Bank for Reconstruction and Development (the Bank).

Whereas (A) the Bank has received a letter from the Borrower dated May 28, 1996- 20-ii-5641 outlining the program of actions, tasks and policies aimed at implementing the sectoral transformation of the Borrower's financial sector (hereinafter referred to as the Program), with a statement of the Borrower's commitment to the Program and with a request to the Bank to support the Program during its implementation; and

(C) based on the above, taking into account other facts, the Bank has decided to support such a Program by providing a Loan in two tranches on the terms stipulated in this Agreement;

The Parties hereby agree on the following:

Article 1

General terms and conditions. Definitions

Section 1.01. "General Terms and Conditions Applicable to Loan and Guarantee Agreements" of the Bank dated January 1, 1985 (General Terms and Conditions), as amended below, are an integral part of this Agreement:

(a) Paragraph 11 of section 2.01 reads as follows:

"Project" means the program referred to in the Preamble to the Loan Agreement for which the Loan is being provided";

(b) The last sentence of section 3.02 is omitted;

"Except in cases where there is a different agreement between the Bank and the Borrower, funds are withdrawn from the Loan Account in the currency of the deposit account specified in Section 2.02 of the Loan Agreement";

(d) Section 5.01, as amended, reads as follows: "The Borrower has the right to withdraw Loan funds from the Loan Account in accordance with the provisions of the Loan Agreement and the provisions of the General Terms and Conditions. Except in cases where there is another agreement between the Bank and the Borrower, withdrawals are not made: (a) in respect of expenses in the territories of any country that is not a member of the Bank, or payment for goods produced and services provided from such territories; or (b) for the purpose of making payments to individuals or organizations, or to pay for the import of goods, if such payments or imports, according to the Bank, are prohibited by a decision of the United Nations Security Council adopted under Chapter VII of the Charter of the United Nations.";

(e) The last sentence of section 5.03 is omitted;

(f) In section 6.02, subparagraph (k) is renamed to subparagraph (1) and a new subparagraph (k) is added as follows:

"(k) An emergency situation has arisen in which any further withdrawal of Loan funds does not comply with the provisions of Article III, section 3 of the Articles of Agreement of the Bank";

(g) Section 9.07 (c), as amended, reads as follows:

"No later than six months after the Closing Date or a later date agreed upon between the Borrower and the Bank for this purpose, the Borrower will prepare and submit to the Bank a report on the implementation of the Program specified in the preamble to the Loan Agreement, as well as on the activities of the Borrower and the Bank to fulfill their obligations under the Loan Agreement and on the fulfillment of the objectives A loan, to the extent and with such a degree of detail as the Bank reasonably requests"; and

(h) Section 9.05 is omitted, and the numbering of sections 9.06, 9.07 (as indicated above), 9.08 and 9.09, respectively, becomes 9.05, 9.06, 9.07, 9.08.

Section 1.02. Unless the context otherwise requires, some terms defined in the General Terms and Conditions and the preamble to this Agreement have the meanings that correspond to those set out in these definitions, and additional terms have the following meanings:

(a) "Alem Bank" means Alembank, a banking institution organized and operating in accordance with the laws and regulations of the Borrower, and includes all legal successors;

(b) "Escrow Account" means the account referred to in section 2.02 (a) of this Agreement;

(c) "NBK" means the National Bank of the Republic of Kazakhstan, the central bank of the Borrower and the regulatory body of its banks, organized and functioning in accordance with the laws and regulations of the Borrower and includes all legal successors;

(d) "Rehabilitation Bank" means a Rehabilitation Bank, a specialized financial institution organized and operating in accordance with the laws and regulations of Borrowers, and includes all legal successors;

(e) "Exim Bank" means the State Export-Import Bank of the Republic of Kazakhstan, a banking institution organized and operating in accordance with the laws and regulations of the Borrower and includes all legal successors;

(e) "T" means tenge, the monetary unit of the Borrower;

(f) "Turan Bank" means a banking institution organized and operating in accordance with the laws and regulations of the Borrower and includes all legal successors.

Article II

Loan

Section 2.01. The Bank agrees, on the terms set forth or specified in the Loan Agreement, to provide the Borrower with a Loan in various currencies, which will have a total value equivalent to one hundred and eighty million US dollars (180,000,000 US dollars), representing the amount of funds withdrawn under the Loan, and each withdrawal is assessed by the Bank on the date such withdrawal.

Section 2.02.(a) Prior to submitting the first application to the Bank for withdrawal of funds from the Loan Account, the Borrower opens and subsequently maintains a deposit account (in dollars) with the National Bank on terms acceptable to the Bank. All funds withdrawn from the Loan Account are deposited by the Bank into an Escrow Account.

(b) In accordance with the provisions of paragraphs (c) and (d) of this section, the Borrower is entitled to withdraw the Loan funds from the Program Support Loan Account.

(c) The Borrower shall ensure that the Loan funds are not used for expenses that are not subject to financing in accordance with the provisions of Annex 1 to this Agreement. In the event that at any time the Bank determines that the Loan funds have been used to make payments for expenses excluded from financing, the Borrower immediately upon receipt of the Bank's notification: (i) deposits an amount equal to the amount of such payment into the Escrow Account or (ii) reimburses the Bank for such amount upon request. The amounts reimbursed to the Bank according to its request are credited to the loan account and are subject to cancellation.

(d) Withdrawal of funds from the Loan Account shall not be made after the total amount of borrowed funds withdrawn from the Loan Account has reached the equivalent of USD 90,000,000, until the Bank, as specified in Section 3.01 of this Agreement, is satisfied after an exchange of views based on evidence satisfactory to the Bank regarding: ((i) The results achieved by the Borrower in the implementation of the Program; and (ii) the implementation of the actions specified in Annex 3 to this Agreemen (d) Withdrawal of funds from the Loan Account shall not be made after the total amount of borrowed funds withdrawn from the Loan Account has reached the equivalent of USD 90,000,000, until the Bank, as specified in Section 3.01 of this Agreement, is satisfied after an exchange of views based on evidence satisfactory to the Bank regarding: ((i) The results achieved by the Borrower in the implementation of the Program; and (ii) the implementation of the actions specified in Annex 3 to this Agreement. In the event that, after the agreed exchange of views, the Bank has notified the Borrower that the results achieved and the measures taken are unsatisfactory, and within 90 days from the date of receipt of such notification by the Borrower, results have not been achieved and appropriate measures satisfactory to the Bank have not been taken, the Bank may, upon notification to the Borrower, cancel the outstanding Loan amount or any part of it.

Section 2.03. The closing date of the Loan Account is (March 31, 1997) or such later date as the Bank determines. The Bank shall promptly notify the Borrower of such a later date.

Section 2.04. The Borrower periodically pays the Bank commitment fees for the principal amount of the Loan that has not been withdrawn from the account at a rate of three quarters of one percent (3/4 of 1%) per year.

Section 2.05. (a) The Borrower shall periodically pay interest on the withdrawn and outstanding principal amount of the Loan at a rate for each interest accrual period equal to the cost of qualified borrowings determined in respect of the previous six months, plus 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 the interest accrued on the principal selected and outstanding Loan amount during the previous interest accrual period, calculated at the rate in effect during that interest accrual period.

(b) At the end of each half-year, the Bank notifies the Borrower as soon as possible of the cost of qualified borrowings determined in respect of such half-year.

(ii) "Interest Accrual Period" means a period of six months ending on the day immediately preceding each date specified in section 2.06 of this Agreement, beginning with the interest accrual period during which this Agreement is signed.

(ii) "Cost of qualified borrowings" means the cost reasonably determined by the Bank and expressed as an annual percentage of the value of the Bank's outstanding borrowings granted to it after June 30, 1982, excluding those borrowings or parts thereof that the Bank has allocated to finance: (A) the Bank's investments; (C) loans that may be granted By the Bank after July 1, 1989 at interest rates determined differently than specified in paragraph (a) of this section.

(iii) "Half-year" means the first six months or the second six months of a calendar year.

(d) On such date as the Bank may specify in a notification sent to the Borrower at least six months in advance, paragraphs (a), (b) and (c) (iii) of this section shall be amended as follows:

"(a) The Borrower periodically pays interest on the principal amount of the withdrawn and outstanding Loan funds at a quarterly rate equal to the cost of qualified borrowings determined in relation to the previous quarter, plus 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 the interest accrued on the principal outstanding amount of the Loan during the previous interest accrual period, calculated at the rate applicable to such interest accrual period."

"(b) At the end of each quarter, the Bank shall notify the Borrower as soon as possible of the cost of qualified borrowings determined in respect of such quarter."

(c) (iii) "Quarter" means a three-month period beginning on January 1, April 1, July 1, or October 1 of a calendar year."

Section 2.06. Interest and other fees are paid once every six months - on June 1st and December 1st of each year.

Section 2.07. The Borrower repays the principal amount of the Loan in accordance with the repayment schedule set out in Appendix 2 to this Agreement.

Article III

Special obligations

Section 3.01.(a) The Borrower and the Bank, at the request of one of the parties, regularly exchange views on the results achieved in the implementation of the Program and activities provided for in Annex 3 to this Agreement.

(b) Before the next exchange of views, the Borrower submits to the Bank for review and comment a report on the implementation of the Program in such detail as is reasonably requested by the Bank.

(c) Without prejudice to the provisions of paragraph (a) of this section, the Borrower shall exchange views with the Bank regarding any proposed actions after repayment of the Loan that will cause a significant change in the objectives of the Program, or any action taken under the Program, including all actions specified in Appendix 3 to this Agreement. Section 3.02. At the request of the Bank, the Borrower:

(i) conducts, with the help of independent auditors acceptable under the terms of the Bank, an audit of the Deposit Account in accordance with appropriate, consistently applied auditing principles;

(ii) submit to the Bank, as the aforementioned auditors prepare, but in each case no later than six months after the end of the financial year, a certified copy of the audit report to the extent and in such detail as the Bank reasonably requests; and

(iii) provides any other additional information regarding the Escrow Account and its audit in accordance with reasonable periodic requests from the Bank.

Article IV

Additional event for termination of lending

Section 4.01. According to section 6.02 (I) of the General Terms and Conditions, an additional condition for termination of the loan program is the occurrence of a situation that precludes the possibility of implementing all or a significant part of the Program.

Article V

Termination of the Agreement

Section 5.01. Period of sixty (60) days from the date of this Agreement

defined for the purposes of section 12.04 of the General Terms and Conditions.

Article VI

Representatives of the Borrower; addresses

Section 6.01. The Borrower's Minister of Finance is designated as

the Borrower's representative for the purposes of section 11.03 of the General Terms and Conditions.

Section 6.02. For the purposes of section 11.01 of the General Terms and Conditions, the following are defined

the following addresses:

For the Borrower:

Ministry of Finance

480091 Republic of Kazakhstan

97 Ablay Khan Avenue, Almaty

Telex: 251245 FILIN

For the Bank:

International Bank for

Reconstruction and Development

1818stret,N.W.

Washington, D.S.20433

United States of America

The Telegraph: Telex:

INBAFRAD 248423 (RCA)

Washington, D.C. 82987 (FTCC)

64145 (WUI) or 197688 (TRT)

In witness whereof, the Parties, acting through their duly authorized representatives,

duly authorized representatives have signed this Agreement

in the District of Columbia, United States of America, on the date and year specified

higher.

Appendix 1

Expenses that are not subject to financing

For the purposes of section 2.02 (c) of this Agreement, all of the following expenses are not eligible for Loan financing:

1. Expenses in the Borrower's currency or expenses for goods and services supplied from the Borrower's territory;

2. Expenses for goods and services provided under contracts with any national or international financial institution or organization, with the exception of those that will be financed by a Bank or Association, or for which there is an agreement on financing, or which will be financed by a Bank or Association, or for which there is an agreement on financing under another loan or loans;

3. Expenses for goods included in the following groups or

subgroups of goods of the International Standard Trade Classification

(MSTK), Revised Edition 3(SIT, Rev.3), published

By the United Nations in the publication "Stftistical Papers"(Series

M,No 34/Rev.31986.CITES) or any subsequent groups or subgroups

in accordance with the future revised versions of the MSTK, indicated

By the Bank in the notification to the Borrower:

Group The subgroup Product range

112 --- Alcoholic beverages

121 --- Tobacco, unprocessed,

tobacco waste

122 --- Processed tobacco

(containing or not

containing substitutes

tobacco)

525 --- Radioactive substances

and related

materials

667 --- Pearls, precious or

semi-precious stones,

processed or

unprocessed

718 718.1 Nuclear reactors, and details

These include fuel cells

(sleeves), non-radiating for

nuclear reactors.

728 728.43 Recycling equipment

tobacco

897 897.3 Gold jewelry,

silver or metals

platinum group (for

except for hours and

watch cases), and

also goldsmiths

craftsmen made of gold and

silver (including

precious stones in the frame)

971 --- Gold, non-monetary (for

with the exception of gold ores and

concentrates);

4. Expenses for goods intended for military or

for paramilitary purposes, as well as for luxury goods;

5. Expenses for environmentally harmful goods (for the purposes of this paragraph, the term "environmentally harmful goods" means goods, production, use or import of goods prohibited under the Borrower's legislation or under international agreements signed by the Borrower (as well as any other goods classified as environmentally harmful in accordance with an agreement between the Borrower and the Bank); and

6. In accordance with the objectives of section 5.01 of the General Terms and Conditions of Expenses (a)

on the territories of any country that is not a member of the Bank, or payment

purchased goods or services produced from such territories, or

(b) for the purpose of making payments to individuals or organizations, or for

payment for the import of goods, if such payments or imports, for information

Of the Bank, prohibited by the decision of the United Nations Security Council

Adopted in accordance with Chapter VII of the Charter of the United Nations

Of the United Nations.

Appendix 2

Loan repayment schedule

Payment date Payments of the principal amount (in USD)

December 1, 2001 3495000

June 1, 2002 3615000

December 1, 2002 3740000

June 1, 2003 3870000

December 1, 2003 4005000

June 1, 2004 4145000

December 1, 2004 4290000

June 1, 2005 4440000

December 1, 2005 4595000

June 1, 2006 4755000

December 1, 2006 4920000

June 1, 2007 5095000

December 1, 2007 5270000

June 1, 2008 5455000

December 1, 2008 5645000

June 1, 2009 5845000

December 1, 2009 6045000

June 1, 2010 6260000

December 1, 2010 6475000

June 1, 2011 6700000

December 1, 2011 6935000

June 1, 2012 7180000

December 1, 2012 7430000

June 1, 2013 7690000

December 1, 2013 7955000

June 1, 2014 8235000

December 1, 2014 8520000

June 1, 2015 8820000

December 1, 2015 9125000

June 1, 2016 9450000

* The numbers in this column represent the dollar equivalent,

determined on the relevant withdrawal date. See General Terms and Conditions,

sections 3.04 and 4.03.

Early repayment fees

In accordance with section 3.04 (b) of the General Terms and Conditions, the collection,

paid for early repayment of the principal amount of any Loan

The repayment period is a percentage determined based on

the corresponding moment of early repayment:

Early Repayment period Fee

The interest rate(in percent

per year), applied to the amount

Loan on the day of early repayment

repayments multiplied by:

No more than three years before the deadline

repayment of 0.15

More than three years, but no more

six years to maturity 0.30

More than six years, but no more

11 years to maturity 0.55

More than 11 years, but not more than 16

years to maturity 0.80

More than 16 years to maturity,

but not more than 18 years before the deadline

repayment 0.90

More than 18 years to maturity of 1.00

Appendix 3

The measures listed in section 2.02 (d) of this Agreement

1. Continuous maintenance of the macroeconomic policy structure consistent with the objectives of the Program, which is determined on the basis of economic indicators satisfactory to the Bank.

2. Adoption and publication by the Borrower or the Borrower's Accounting Standards Board of a new chart of accounts and a comprehensive set of accounting standards that substantially meet the requirements of international accounting standards (published by the International Accounting Standards Commission).

3. Offering for sale to private investors of all state-owned shares or withdrawal of banking licenses from all commercial banks, with the exception of no more than ten (except the National Bank), whose equity capital includes state-owned shares. The term "government shares" used means shares owned by the Borrower or the main block of shares legally owned by the Borrower.

4. Adoption of the Law on Promissory Notes and Bills of Exchange in accordance with the Unified Law on Treasury Obligations and Bills of Exchange, developed by the Geneva Convention in 1930.

5. The publication by the National Bank of Kazakhstan of legislative acts on the implementation of policy in relation to banks that have embarked on the path of banks of international standards agreed with the Bank.

6. Commencement of liquidation procedures for at least three insolvent corporate debtors of the Borrower's Rehabilitation Bank and reduction of the staff of at least five corporate debtors of the specified bank by 30 percent or more in each of them relative to the number of employees hired on November 1, 1995.

7. The beginning of negotiations with private investors on their acquisition of the main stake in Alembank.

8. Implementation of the main elements of the action plan agreed with the Bank in accordance with the provisions of the May 1996 agreement between the National Bank of the Republic of Kazakhstan and Turan Bank, or alternatively, transfer of Turan Bank to the National Bank for conservation.

9. Approval by the Borrower of a development plan acceptable to the Bank for the institutional strengthening of the State Export-Import Bank of the Republic of Kazakhstan.

10. The adoption of a bankruptcy law that includes adequate provisions for its application and enforcement, or the adoption of adequate provisions, regulations, and procedures for the application and enforcement of the Presidential Decree on Bankruptcy of 1995.

* * *

President

Republic of Kazakhstan

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