On the ratification of the Loan Agreement (Loan to Support the Transformation of Public Sector Resource Management) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development dated September 4, 1997
The Law of the Republic of Kazakhstan dated November 15, 1997 N 190-I
To ratify the Loan Agreement (Loan to support the transformation of Public Sector Resource Management) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development dated September 4, 1997, signed in the District of Columbia, United States of America.
President
Republic of Kazakhstan
LOAN AGREEMENT
(Loan to support resource management transformations
public sector)
between THE REPUBLIC OF KAZAKHSTAN
and THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
dated September 4, 1997 N 4217 KZ
AGREEMENT between the Republic of Kazakhstan (the Borrower) and the International Bank for Reconstruction and Development (the Bank), dated September 4, 1997. SINCE (A) The Bank received a letter from the Borrower dated August 1, 1997 describing the action program, goals and directions developed to achieve structural changes in the Borrower's public resource management system (Program), in which the Borrower undertakes to implement the Program and requests the Bank to assist by supporting the Program during its implementation; and (B) Based on the above, among other things, the Bank has decided to provide such assistance to the Borrower in support of the Program by providing a Loan of three tranches, as set forth below; SINCE the Bank has agreed, based on, among other things, the above, to provide a Loan to the Borrower on the terms set forth further in this Agreement; the parties HEREBY agree as follows:
ARTICLE I General Terms and Conditions; Definitions Section 1.01 of the Bank's Document "General Terms and Conditions Applicable to Loan and Guarantee Agreements" dated January 1, 1985, as amended below (General Terms and Conditions), forms an integral part of this Agreement: (a) Section 2.01. paragraph 9 is amended as follows: "Project" means the program referred to in the Preamble of the Loan Agreement in support of which this loan is provided," (b) The last sentence of Section 3.02 is deleted.; (c) Section 4.01 has been amended as follows: "Except in cases where the Bank and the Borrower have reached a different agreement, Loan withdrawals will be made in the currency of the deposit account described in Section 2.02 of the Loan Agreement.(d) Section 5.01 has been amended as follows: "The Borrower will be entitled to withdraw the Loan funds in accordance with the terms of the Loan Agreement and these General Terms and Conditions."; (e) The last sentence of Section 5.03 will be deleted; (e) In Section 6.02, subparagraph (l) is marked with the letter (m) and a new subparagraph (l) is added as follows: "(l) In the event of an emergency in which further withdrawal of Loan funds from the account would not comply with the provisions of Article III, Section 3 of the Articles of Agreement of the Bank." (g) Section 9.07 (c) should be amended as follows: "(c) No later than six months after the End Date or later by agreement of the Borrower and the Bank. The Borrower will prepare and submit to the Bank a report in the volume and form in accordance with the Bank's requirements on the implementation of the Program referred to in the Preamble of the Loan Agreement, on the fulfillment by the Borrower and the Bank of their obligations under the Loan Agreement and the achievement of the Loan objectives"; and (h) Section 9.05 is deleted and Sections 9.06, 9.07 (in which the above changes were made), 9.08 and 9.09 are renumbered respectively as Sections 9.05, 9.06, 9.07 and 9.08. Section 1.02. In addition to the specified cases, some terms defined in the General Terms and Conditions and in the Preamble of this Agreement have the appropriate meaning, as indicated below, and the following additional terms have the following meanings: (a) "Deposit Account" means the account referred to in Section 2.02 (a) of this Agreement; and (b) "National Bank" means the National Bank of the Republic of Kazakhstan, the central bank of the Borrower and the regulator of its Banks, established and existing in accordance with the legislation of the Borrower, and includes any of its successors.
Article II LOAN Section 2.01. The Bank agrees to provide the Borrower, on the terms set out in the Loan Agreement, with funds in various currencies for a total amount equivalent to two hundred and thirty million dollars ($230,000), which is the amount of the Loan funds to be withdrawn, and each withdrawal from the account is assessed by the Bank on the date of such withdrawal. Section 2.02. (a) In accordance with the terms of paragraphs (b), (c), and (d) of this Section, the Borrower has the right to withdraw Loan funds from the Loan account in support of the Program. (b) Prior to submitting the first application to the Bank for withdrawal of funds from the Loan account, the Borrower will open a dollar deposit account on terms satisfactory to the Bank and will then maintain it with the National Bank. All withdrawals from the Loan account will be deposited by the Bank into the Escrow Account. (c) The Borrower undertakes that the Loan funds will not be used to finance costs excluded in accordance with the terms of Scheme 1 of this Agreement. If the Bank determines at any time that the Loan funds have been used to pay the expenses thus excluded. The Borrower, immediately upon receiving notification from the Bank, (1) deposits into the Escrow Account an amount equal to the amount of the specified payment; or (2) if requested by the Bank, reimburses the amount to the Bank. The amounts refunded to the Bank as a result of such a request will be debited from the Loan account. (d) Funds from the Loan Account may not be withdrawn: (1) after the total amount of funds withdrawn from the Loan Account has reached USD 80,000, unless the Bank is satisfied after an exchange of views, as described in Section 3.01 of this Agreement and based on evidence satisfactory to the Bank, as follows: (A) the progress made by the Borrower in implementing the Program; (B) that the actions described in Section 1 of Scheme 3 of this Agreement have been taken; and (C) that the Borrower's macroeconomic policy is in line with the objectives of the Program; (2) after the total amount of funds withdrawn from the Loan account has reached USD 155,000,000, unless the Bank is satisfied, after an exchange of views, as described in Section 3.01 of this Agreement and based on evidence satisfactory to the Bank, with the following: (A) the progress made by the Borrower in the implementation of the Program; (B) that the actions described in Section 2 of Scheme 3 of this Agreement have been taken; and (C) that the Borrower's macroeconomic policy is in line with the objectives of the Program; (e) If, after the aforementioned exchange of views, the Bank has notified the Borrower that the progress made and the actions taken are not satisfactory, and within ninety (90) days after receiving such notification, the Borrower has not made progress and has not taken actions satisfactory to the Bank, in this case, the Bank may, by notifying the Borrower, cancel the outstanding the amount of the Loan funds or part of it. Section 2.03. The End date of the Loan is December 31, 1999 or a later date set by the Bank. The Bank will promptly notify the Borrower of this date. Section 2.04. The Borrower will pay the Bank an account maintenance fee in the amount of three quarters of one percent (3/4 of 1%) per annum of the principal amount of the Loan that has not been withdrawn for this period. Section 2.05. (a) The Borrower will pay interest on the principal amount of the Loan, periodically withdrawn and outstanding, at a rate equal to the Cost of Qualified Borrowings, determined relative to the previous Semester plus half of one percent (1/2 of 1%), for each period for which interest is accrued. For each date specified in Section 2.06 of this Agreement. The Borrower will pay the interest accrued on the principal amount of the Loan outstanding during the previous interest-bearing period at the rate of that period. (b) At the end of each Semester, as soon as possible, the Bank will notify the Borrower of the Cost of Qualified Loans determined in relation to such Semester. (c) For the purposes of this section: (1) "Interest-bearing Period" means the six-month period ending on the day immediately preceding each date specified in Section 2.06 of this Agreement, beginning with the period when this Agreement was signed. (2) "Cost of Qualified Borrowings" means the cost determined by the Bank and expressed as annual interest on outstanding borrowings of the Bank after June 30, 1982, with the exception of such loans or parts thereof that the Bank intends to finance: (A) investments of the Bank; (B) loans provided by the Bank after July 1, 1989, at interest rates determined in a manner other than that specified in paragraph (a) of this Section. (3) "Semester" means the first six months or the second six months of a calendar year. (d) As of a date determined by the Bank and notified to the Borrower at least six months in advance, paragraphs (a), (b) and (c) (3) of this Section should be amended as follows: "(a) The Borrower will pay interest on the principal amount of the Loan, which is periodically withdrawn and outstanding, at a rate for each quarter equal to the Cost of Qualified Borrowings, determined relative to the previous quarter plus half of one percent (1/2 of 1%). On each date specified in Section 2.06 of this Agreement, the Borrower will pay the interest accrued on the principal amount outstanding during the previous interest-bearing period at the rate of that period."(b) As soon as possible, at the end of each quarter, the Bank will notify the Borrower of the Cost of Qualified Borrowings determined relative to each quarter."(c)(3) "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 payments will be made semi-annually on April 1 and October 1 each year. Section 2.07. The Borrower will pay the principal amount of the Loan in accordance with the depreciation schedule set out in Scheme 2 of this Agreement.
Article III Special Conditions Section 3.01. (a) The Borrower and the Bank will periodically, at the request of either party, exchange views on the results achieved during the implementation of the Program and the actions defined in Scheme 3 of this Agreement. (b) Prior to such an exchange of views, the Borrower will submit to the Bank for review and comment a report on the progress made during the implementation of the Program in as much detail as requested by the Bank. (c) Without prejudice to the provisions of paragraph (a) of this Section, the Borrower will exchange views with the Bank on proposed actions taken after repayment of the Loan that would lead to results contrary to the objectives of the Program, or any other actions under the Program, including those specified in Scheme 3 of this Agreement. Section 3.02. If requested by the Bank, the Borrower will: (1) conduct an audit of the Deposit Account in accordance with the relevant auditing principles consistently applied by independent auditors acceptable to the Bank; (2) submit to the Bank, as soon as it is prepared, but no later than six (6) months after receiving the Bank's request, a certified copy of the audit report of the said auditors in the volume and form in accordance with the Bank's requirements; (3) submit to the Bank other information regarding the Deposit Account and audit at the Bank's request.
ARTICLE IV Additional Condition for Loan Suspension Section 4.01. According to Section 6.02 (m) of the General Terms and Conditions, the following additional condition is defined, namely, in the event of a situation in which the implementation of the Program or
a significant part of it is impossible.
ARTICLE V
Termination of the Loan
Section 5.01. A period of ninety (90) days after the date of this The Agreement is defined for the purposes of Section 12.04 of the General Terms and Conditions.
ARTICLE VI
Representative of the Borrower; Addresses
Section 6.01. The Borrower's Minister of Finance is the Borrower's representative for the purposes of Section 11.03 of the General Terms and Conditions.
Section 6.02. The following addresses are defined for the purposes of Section 11.01 of the General Terms and Conditions:
For the Borrower:
Ministry of Finance
97 Ablay Khan Avenue
Almaty 480091
Republic of Kazakhstan
Telex:
251245 FILIN
For the Bank:
International Bank for Reconstruction and Development
1818 N Street, NW
Washington, DC 20433
USA
The Telegraph: Telex:
INDEVAS 248423 (MCI)
Washington, DC 64145 (MCI)
IN CONFIRMATION of the above, the parties, acting through their duly authorized representatives, have concluded this agreement. An agreement to be signed by the relevant persons in the District Colombia, United States of America, on the day and year indicated above.
REPUBLIC OF KAZAKHSTAN
Signed:
Authorized representative
INTERNATIONAL BANK
RECONSTRUCTION AND DEVELOPMENT
Signed:
Regional Vice President
across Europe and Central Asia
Asia
SCHEME 1
Excluded expenses
For the purposes of Section 2.02 (c) of this Agreement, the Loan funds will not be used to finance the following expenses: 1. expenses in the Borrower's currency, or for goods or services supplied from the Borrower's territory; 2. expenses for goods or services supplied under contracts financed or agreed to be financed by any national or international financial institution or an agency other than the Bank or Association, or which the Bank or Association finances or agrees to finance under another loan or loan; 3. expenses for goods included in the following groups or subgroups of the Standard International Trade Classification, 3rd Edition (CITES, Res.3), published in the UN Statistical Compendium, Series M, N 34/3 ed. (1986) (CITES), or subsequent groups or subgroups in the revised editions of CITES, determined by the Bank with the notification of the Borrower:
Group The subgroup Description of goods
------ --------- ----------------
112 - Alcoholic beverages
121 - Unprocessed tobacco, tobacco
wastes
122 - Processed tobacco (containing
or containing no substitutes
tobacco)
525 - Radioactive and related
materials
667 - Pearls, precious and
semi-precious stones,
processed or unprocessed
718 718.7 Nuclear reactors and their parts,
fuel cells (cartridges)
non-radioactive elements for
reactors
728.43 - Processing equipment
tobacco
897 897.3 Jewelry made of gold, silver or
platinum group metals
(except watches and their cases),
gold and silver products
(including jeweled frames
with stones)
971 - Gold, non-monetary (except
gold-bearing ores and
concentrates)
4. Expenses for goods intended for military purposes or related to them, or luxury goods.
5. expenses for environmentally hazardous goods (in this paragraph, the term "environmentally hazardous goods" means goods, industrial goods, the use or import of which is prohibited by the legislation of the Borrower or international agreements with the borrower. 6. expenses (a) on the territory of any country that is not a member of the Bank, or for goods or services purchased or provided from such territories, or (b) for payment to persons or organizations or import of goods, if such payment or import is prohibited by a decision of the UN Security Council adopted in accordance with Chapter
7 of the UN Charter; and
7. expenses under a contract, which, according to the Bank's definition, involved corruption or deception on the part of representatives of the Borrower or the recipient of the Loan during the procurement or execution of such a contract, and the Borrower did not take timely measures satisfactory to the Bank to remedy the situation.
SCHEME 2
Depreciation schedule
Payment date Payment of the principal amount
(in dollars)*
April 1, 2003 4565000
October 1, 2003 4720000
April 1, 2004 4880000
October 1, 2004 5040000
April 1, 2005 5210000
October 1, 2005 5385,000
April 1, 2006 5565000
October 1, 2006 5750000
April 1, 2007 5945000
October 1, 2007 6145000
April 1, 2008 6350000
October 1, 2008 6560000
April 1, 2009 6780000
October 1, 2009 7010000
April 1, 2010 7245000
October 1, 2010 7485,000
April 1, 2011 7735000
October 1, 2011 7995000
April 1, 2012 8265000
October 1, 2012 8540000
April 1, 2013 8825000
October 1, 2013 9120000
April 1, 2014 9430000
October 1, 2014 9745000
April 1, 2015 10070000
October 1, 2015 10405000
April 1, 2016 10755000
October 1, 2016 11115000
April 1, 2017 11490000
October 1, 2017 11875000
*The footnote. The figures in this column are presented in the dollar equivalent determined on the date of the corresponding withdrawal.
See the General Terms and Conditions, Section 3.04 and 4.03.
Premiums in case of early repayment of the Loan
According to Section 3.04(b) of the General Terms and Conditions, the premiums and the case of repayment of the principal amount of the Loan before the due date for a Loan with any maturity amount are a percentage determined depending on the time of early repayment of the Loan, as shown in the table below:
Early repayment time Prize
The interest rate (expressed as
annual interest) applied to the Loan on the day of early repayment, multiplied by:
No more than 3 years before the deadline of 0.15
repayments
More than 3 years, but no more. 0,30
6 years to maturity
More than 6 years, but not more than 0.55
11 years to maturity
More than 11 years, but not more than 0.80
16 years to maturity
More than 16 years, but not more than 0.90
18 years to maturity
More than 18 years before the deadline of 1.00
repayments
SCHEME 3
I. Actions listed in subparagraph (1) of paragraph (d) of the Section
2.02 of this Agreement
1. The Borrower submitted to the Bank a report on the functional characteristics of all institutions funded with the support of the Borrower's state budget, and based on this report, developed and published an implementation plan satisfactory to the Bank, providing for the termination of budget financing of institutions designated for privatization or liquidation.
2. The Borrower has submitted to the Bank a report on the completion of the census of all employees of all ministries and departments of the central executive authority of the Borrower, including an analysis of the census results, as well as an action plan to eliminate identified discrepancies, if any, between the results of the census and the list of government employees of the Borrower. 3. The Borrower has adopted the law on public procurement and issued relevant instructions on its application, both of which must be satisfactory to the Bank.
4. The Borrower has submitted a report to the Bank containing information satisfactory to the Bank that (i) the Borrower has liquidated all pension fund debts; and (ii) there is no increase in the total amount of non-pension debt accumulated by the central government and local authorities of the Borrower, as well as extra-budgetary funds, compared with the total level of such debt at the December 31, 1996.
5. The Borrower submitted a report to the Bank, demonstrating to the Bank's satisfaction that the Borrower's Ministry of Economy and Trade has prepared a database of all public investment projects proposed by line ministries and local authorities for inclusion in the Borrower's public investment program for 1999-2001.
6. The Borrower has issued instructions acceptable to the Bank, which establish a clear methodology and procedures for determining and regulating tariffs in the field of energy supply and utilities, including a timetable for their implementation. 7. The Borrower's 1998 State budget, as adopted, provides, in a form acceptable to the Bank, for a review of the benefits currently in effect with respect to utility tariffs and funded from the State budget, as well as the provision of sufficient resources for the housing benefit program.
8. The Borrower has taken all measures in accordance with the recapitalization plan of Bank TuranAlem agreed with the Bank.
9. The Borrower submitted a report to the Bank, demonstrating to the Bank's satisfaction that the Borrower has made satisfactory progress in implementing the technical assistance program related to the policy reforms mentioned in the Program. II. Actions listed in subparagraph (2) of paragraph (d)
Section 2.02 of this Agreement
1. The Borrower has submitted to the Bank a report containing information satisfactory to the Bank that the institutions designated for termination of budget support in the report referred to in paragraph 1 of Section 1 of this Annex have been privatized or the process of their liquidation has begun.
2. The Borrower has adopted a Civil Service Law and/or regulations that satisfy the Bank, and has submitted to the Bank a report demonstrating in a manner that satisfies the Bank that the Borrower has begun hiring civil servants on a competitive basis, in accordance with the Civil Service Law. 3. The Borrower has submitted to the Bank a report containing information satisfactory to the Bank that the procedures for concluding contracts involving payments from the State budget are applied in accordance with the law and regulations on public procurement referred to in paragraph 3 of Section 1 of this Annex, including a description of the difficulties identified during such application and an action plan to overcome such difficulties.
4. The Borrower has submitted to the Bank a report demonstrating to the satisfaction of the Bank that the total amount of debt incurred by the central Government, local government bodies and extra-budgetary funds of the Borrower does not exceed 50 percent of the total level of such debt as of December 31, 1997.
5. The Borrower has submitted to Parliament and published in its official gazette an audit report on all accounts and expenditures made in accordance with the republican budget for 1997.
6. The Borrower finalized the public investment program (covering the period from 1997 to 2001 inclusive) in accordance with the Resolution of the Government of Kazakhstan dated April 10, 1997 No. 528 P970528_ "On the procedure for the preparation, implementation and monitoring of projects included in the Public Investment Program" and submitted to the Bank a report containing information satisfactory to the Bank that all new investment projects to be launched from January 1, 1999 to December 31, 2001, They have been properly assessed and that the public investment program is in line with the external borrowing program and macroeconomic guidelines.
7. The Borrower has submitted to the Bank a report containing information satisfactory to the Bank that the institution or institutions responsible for regulating the activities of natural monopolies sets utility tariffs in accordance with the provisions referred to in paragraph 6 of Section I of this Annex.
President
Republic of Kazakhstan
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