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May 11, 1982
LOAN A G R E E M E N T
dated 12 MAY 1982 between KREDITANSTALT FUR WIEDERAUFBAU and the REPUBLIC OF THE PHILIPPINES for DM 24,200,000.--
- Imelda Settlement Program Leyte -
LOAN A G R E E M E N T
between KREDITANSTALT FUR WIEDERAUFBAU, Frankfurt am Main,
("Kreditanstalt")
and
the REPUBLIC OF THE PHILIPPINES
("Borrower")
On the basis of the agreements dated May 19, 1979 and February 18, 1982 between the Government of the Federal
Republic of Germany and the Government of the Republic of the Philippines on financial co-operation ("Government
Agreements"), the Borrower and Kreditanstalt hereby conclude the following Loan Agreement.
ARTICLE 1
Amount and Purpose of the Loan
1.1 Kreditanstalt undertakes to extend to the Borrower
a Loan not exceeding
DM 24,200,000.--
(in words: twentyfour million two hundred
thousand Deutsche Mark).
1.2 The Borrower shall use the Loan exclusively to finance the Imelda Settlement Program Leyte {"Project"), and primarily to pay the foreign exchange costs. By separate agreement, the Borrower and Kreditanstalt shall determine the details of the Project as well as the goods and services to be financed from the Loan.
1.3 Taxes and other public charges to be borne by the Borrower and import duties shall not be financed from the Loan.
ARTICLE 2
Channeling of partial loan amounts
2.1 The Borrower shall stipulate in a subsidiary loan agreement with the Development Bank of the Philippines (DBP) to channel the loan amounts for the financing of the credit programme of the Project to the DBP at a rate of 2 % p.a.. The DBP shall extend these loan amounts to the settlers of the Project at a rate of 6 % p.a. and a term of up to 28 years (including up to 8 years of grace).
2.2 Prior to the first disbursement from the Loan, the Borrower shall furnish Kreditanstalt with a copy of the
subsidiary loan agreement specified in Art. 2.1.
ARTICLE 3
Disbursement
3.1 Kreditanstalt shall disburse the Loan upon request of the Borrower in accordance with the progress of the Project. By separate agreement, the Borrower and Kreditanstalt shall agree on the disbursement procedure, in particular on the evidence to be furnished by the Borrower for the disbursement of the Loan, proving the use of the loan amounts for the purpose stipulated in this Agreement.
3.2 Kreditanstalt shall have the right to refuse to make disbursements after December 31, 1992.
3.3 The Borrower shall be entitled to cancel any loan amounts which have not yet been requested, if Kreditanstalt and the Ministry of Agrarian Reform have consented thereto.
ARTICLE 4
Commitment Charge, Interest, and Repayments
4.1 The Borrower shall pay a commitment charge of 1/4 % p.a, (one quarter of one per cent per annum) on undisbursed loan amounts. The commitment charge shall be computed for a period beginning three months after the signing of this Agreement and ending at the respective dates at which disbursements are debited.
4.2 The Borrower shall pay interest on the Loan at a rate of 2 % p.a. (two per cent per annum). Interest shall be charged from the dates at which disbursements are debited to the dates at which repayments are credited to Kreditanstalt's account specified in Article 4.9.
4.3 The Borrower shall pay the commitment charge, the interest, and the interest on arrears pursuant to Article 4.5, if any, semi-annually on June 30 and on December 31 for the half-year then ending. The first commitment charge shall be due together with the first interest payment.
4.4 The Borrower shall repay the Loan as follows:4.5 If repayments are not at Kreditanstalt's disposal when due, Kreditanstalt shall be entitled to increase the rate of interest on arrears to the discount rate of Deutsche Bundesbank prevailing at the respective due date plus 3 % for the period beginning with the due date and ending at the date at which such repayments are credited. In the case of arrears of interest, Kreditanstalt shall be entitled to claim damages. Such damages shall not exceed the amount arrived at if interest on arrears were charged at the discount rate of Deutsche Bundesbank prevailing at the respective due date plus 3 %.
December 31, 1992 June 30, 1993 December 31, 1993 June 30, 1994 December 31, 1994 June 30, 1995 December 31, 1995 June
30, 1996 December 31, 1996 June 30, 1997 December 31, 1997 June 30, 1998 December 31, 1998 June 30, 1999 December 31, 1999 June 30, 2000 December 31, 2000 June 30, 2001 December 31, 2001 June 30, 2002 December 31, 2002 June 30, 2003 December 31, 2003 June 30, 2004 December 31, 2004 June 30, 2005 December 31, 2005 June 30, 2006 December 31, 2006 June 30, 2007 December 31, 2007 June 30, 2008 December 31, 2008 June 30, 2009 December 31, 2009 June 30, 2010 December 31, 2010 June 30, 2011 December 31, 2011 June 30, 2012 December 31, 2012
4.6 Commitment charge, interest, and additions for default pursuant to Article 4.5, if any, shall be computed on the basis of a 360-day year and of 30-day months.
4.7 Undisbursed or prematurely repaid loan amounts shall be set off against such redemption instalments as shall fall due last under the repayment schedule except as otherwise agreed upon in a particular case.
4.8 Kreditanstalt shall be entitled to set off, at its discretion, payments received against payments due under this Agreement or under other loan agreements concluded between Kreditanstalt and the Borrower.
4.9 The Borrower shall remit all payments in no other currency than Deutsche Mark to Kreditanstalt's account No. 504 091 00 with Deutsche Bundesbank, Frankfurt am Main, no set-off against such payments being permitted.
ARTICLE 5
Suspension of Disbursements and Premature Repayment
5.1 The Borrower shall be entitled at any time
(a) subject to his obligations under Article 8, to cancel any loan amounts not yet withdrawn, and
(b) to repay the Loan in whole or in part in advance of maturity.
5.2 Kreditanstalt shall be entitled to suspend disbursement only if
(a) the Borrower shall have failed to perform his obligation vis-a-vis Kreditanstalt to make payments when due;5.3 If any event specified in Article 5.2 (a), (b) or (c) shall have occurred and shall continue for a period to be specified by Kreditanstalt which shall, however, not be less than 30 days Kreditanstalt shall be entitled
(b) obligations under this Agreement or under separate agreements pertaining to this Agreement shall not have been duly performed;
(c) the Borrower shall not be able to prove the use of the loan amounts for the purpose stipulated in this Agreement or
(d) any extraordinary situation shall have arisen which shall preclude or seriously jeopardize the accomplishment of the purpose of the Loan, the execution of the Project or the performance of the payment obligations assumed by the Borrower under this Agreement.
(a) in the case of events specified in Article 5.2 (a) or 5.2 (b) to demand the immediate repayment of all loan amounts outstanding as well as payment of all interest accrued and all other incidental charges or
(b) in the case of the event specified in Article 5.2 (c) to demand the immediate repayment of such loan amounts which the Borrower is unable to prove to have been used for the purpose stipulated in this Agreement.ARTICLE 6
Costs and Public Charges
6.1 The Borrower shall make all payments to be made under this Agreement without any deduction for taxes, other public charges or other costs and shall pay any transfer and conversion costs arising in connection with the disbursement of the Loan.
6.2 The Borrower shall bear all taxes and other public charges imposed by the Republic of the Philippines accruing in connection with the conclusion and implementation of this Agreement.
ARTICLE 7
Validity of the Loan Agreement and Power of Attorney
7.1 In due course prior to the first disbursement the Borrower shall furnish Kreditanstalt with evidence satisfactory to Kreditanstalt proving that the Borrower has met all requirements under his constitution and other laws for the valid assumption of all his obligations under this Agreement.
7.2 The Minister of Finance and such persons as designated by him to Kreditanstalt and legitimized by specimen signature authenticated by him shall represent the Borrower in the implementation of this Agreement. In the event that a change in the representation shall occur the person authorized to represent the Borrower shall notify Kreditanstalt of the newly designated representative and of his address. The power of attorney shall expire only when its express revocation by the representative authorized at the time shall have been received by Kreditanstalt. 7.3 Amendments of, and additions to, this Agreement as well as any notice or statement which shall be given or made under this Agreement by the contracting parties shall be in writing. Any such notice or statement shall be deemed to have been received as soon as it shall have been delivered at the following address of the contracting party or at such other address as notified to the other contracting party:
For the Borrower: Postal address: Ministry of Finance Manila Republic of the Philippines
Any change in the above addresses shall be effective only when notification thereof shall have been received by the other contracting party.
ARTICLE 8
The Project
8.1 The Borrower shall
(a) prepare, carry out and maintain the Project in conformity with sound financial and engineering practices as well as substantially in accordance with the plans and data submitted to Kreditanstalt;8.2 The Borrower and Kreditanstalt shall lay down the details pertaining to Article 8.1 in a separate agreement.
(b) assign the preparation and supervision of the construction of the Project upon prior international public tender to independent qualified consulting engineers and the Project's execution to qualified firms upon prior public tender or solicitation of offers; the invitation to tender or solicitation of offers for civil works, minor tools and vehicles shall be limited to Philippine firms; offers for fertilizers and chemicals shall be put up for international solicitation of offers;
(c) secure the full financing of the Project and, upon request of Kreditanstalt, furnish it with evidence proving that all costs not to be paid from the Loan are covered;
(d) maintain, or cause to be maintained, books and records showing all costs of goods and services required for the Project and identifying the goods and services financed from the Loan;
(e) enable the representatives of Kreditanstalt at any time to inspect such books and records as well as any other documentation relevant to the execution of the Project and to visit the Project and all the installations related thereto;
(f) supply any information and reports on the Project and its further progress which Kreditanstalt may request;
(g) of his own accord promptly inform Kreditanstalt of any circumstances seriously affecting or jeopardizing the accomplishment of the purpose of this Agreement, above all the execution or the operation of the Project;
(h) ensure that all old settler families living in the Project area and actually cultivating less than 2.5 ha of arable land shall be provided with additional land so that they will have at least 3 ha of arable land; in order to achieve a satisfactory increase in income, utmost efforts shall be made to secure that up to 1 ha/settler family of the additional land is to be planted with high-yield coconut palms;
(i) ensure that all new settler families shall be provided with at least 3 ha of arable land; utmost efforts shall be made to secure that at least 1 ha is to be planted with high-yield coconut palms; the willingness to grow 1 ha of high-yield coconut palms is the precondition for the new settlers' claim for subsistence credits to be granted throughout several years;
(j) ensure that to avoid erosion, contours and terraces shall be built on all land to be cleared with a gradient of 10 - 18 % and over 18 % respectively;
(k) ensure that the Project area is provided with adequate agricultural extension services which meet the special requirements of high-yield cultivation (during Project years 1 to 10, about 1 extension officer per 150 settler families, thereafter the ratio shall be 1:300 approx.);
(l) ensure that all farmers with claims on land registered as forestry reserve land are given legally binding lease contracts and all other farmers at the latest after repayment of all debts are given land titles;
(m) ensure that for the establishment of the new coconut palm cultivations exclusively high-yield seeds of the Philippine Coconut Authority (PCA) are utilized;
(n) ensure that both old and new settlers are in time and in adequate amounts provided with the necessary credits (housing construction, investment, seasonal and subsistence credits);
(o) ensure that in years of extremely low producer prices for copra preventing the settlers from performing the debt services as agreed upon, the debt service will be suspended partly or fully and the debt rescheduling in line with the settlers' affordability will be effected, and
(p) ensure that compensation of employees assigned to the implementation of the Project shall be higher than that of similar positions in the Government Service; the compensation shall be in accordance with relevant regulations of the Philippines and shall be of the same levels as that of similar projects like the Second Rural Development Project of World Bank.
8.3 Regarding sea and air transport of the goods to be financed from the Loan the provisions of the Government Agreements, which are known to the Borrower, shall apply.
ARTICLE 9
Miscellaneous Provisions
9.1 The invalidity of one provision of this Agreement shall not affect the validity of the other provisions. Any gap resulting in consequence shall be filled by a provision consistent with the purpose of this Agreement.
9.2 The Borrower shall not assign or transfer, pledge or mortgage any rights under this Agreement.
9.3 This Agreement shall be governed by the law of the Federal Republic of Germany. The place of performance shall be Frankfurt am Main. In case of doubt as to the interpretation of this Agreement, the German text shall be controlling.
9.4 All disputes arising from this Agreement, including disputes on the validity of this Agreement and of the Arbitration Agreement, which cannot be settled amicably between the contracting parties shall be submitted to arbitration in accordance with the Arbitration Agreement forming an integral part of this Agreement.
DONE in four originals, two in German and two in English
KREDITANSTALT FUR WIEDERAUFBAU