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CONFORMED COPY
CREDIT NUMBER 3731GH
GRANT NUMBER H0190GH
Development Financing Agreement
(Second Health Sector Program Support Project)
between
REPUBLIC OF GHANA
and
INTERNATIONAL DEVELOPMENT ASSOCIATION
Dated April 16, 2003
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CONFORMED COPY
CREDIT NUMBER 3731GH
GRANT NUMBER H0190GH
DEVELOPMENT FINANCING AGREEMENT
AGREEMENT, dated April 16, 2003, between REPUBLIC OF GHANA (the Borrower) and the INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association).
WHEREAS (A) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Association to assist in the financing of the Project;
(B)the Borrower and the Association intend, to the extent practicable, that the proceeds of the Grant be disbursed on account of expenditures in respect of the Project before disbursements of the proceeds of the Credit are made;
(C)the Association has received the following documents: (i) a Medium-Term Health Strategy, dated September 1995; and (ii) the five-year Program of Work (POW), dated January 2002, from the Borrower, part of which describes a program of actions, objectives and policies designed to implement activities under the Borrower's Medium-Term Health Strategy for the Fiscal Years 2002 to 2006 (the two documents shall collectively be referred to as the Program) and declaring the Borrower's commitment to the execution of the Program;
(D)the Borrower intends to obtain from various Development Partners
(as hereinafter defined) grants and loans to assist in financing the Program;
(E)the Borrower, the Association and the Co-operating Partners
(as hereinafter defined) have entered into a Memorandum of Understanding providing for common procedures on procurement, disbursement, cooperation and exchange of information; and
WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, to extend the financing to the Borrower upon the Credit and Grant 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 Development Credit Agreements” of the Association, dated January 1, 1985, (as amended through
October 6, 1999), with the modifications set forth in Schedule 5 to this Agreement
(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)"ADB" means the African Development Bank;
(b)“Affected Person” means a person who on account of the acquisition of land, for purposes of construction of health facilities under the Program had or would have his or her: (i) standard of living adversely affected; or (ii) right, title or interest in any house, or interest in or right to use any land (including premises, agricultural and grazing land) or right in annual or perennial crops and trees or any other fixed or movable asset, acquired or possessed, temporarily or permanently; or (iii) business, occupation, work or place of residence or habitat adversely affected, temporarily or permanently, and “Affected Persons” means, collectively, all persons who qualify as an Affected Person;
(c)“ATF Rules” means the Accounting, Treasury and Financial Reporting Rules and Instructions of the MOH issued on October 1, 1997 that sets out the financial management arrangements, organization structure (including internal audit function), staffing, standard accounting forms, books, ledgers for the implementation of activities under the Program;
(d)"BADEA" means Arab Bank for Economic Development in Africa;
(e)"BMC" means a Budget and Management Center, certified as having the capacities of carrying out financial management and procurement responsibilities under the Program at district, regional and national levels;
(f)"CIDA" means the Canadian International Development Agency;
(g)“Common Management Arrangements” means the common system and processes adopted at the Health Partners Summit on December 6, 2001;
(h)"Co-operating Partners" means, collectively, DANIDA, DFID, the Government of the Kingdom of the Netherlands, the European Union and the Association and other donors pooling at least a part of their funds into the Health Account (as hereinafter defined) and having signed the Memorandum of Understanding;
(i)"DANIDA" means the Danish International Development Assistance;
(j)“Development Partners” means collectively, the ADB, BADEA, the
Co-operating Partners, CIDA, WHO, UNICEF, UNFPA, USAID, GTZ, JICA, OPEC Fund and Saudi Fund for Development (as herein defined) and any other national or international agency contributing funds or technical assistance for the Program, and "Donor" means each and every donor individually;
(k)"DFID" means the Department for International Development of the United Kingdom of Great Britain and Northern Ireland;
(l)“Environmental Management Plan” means the set of mitigation, enhancement, monitoring, and institutional measures dated to be taken during implementation of the Project to eliminate any adverse environmental and social impacts, offset them, or reduce them to acceptable levels, or to enhance positive impacts;
(m)"EU" means European Union;
(n)“Financial Monitoring Report” or “FMR” means each report prepared in accordance with Section 4.02 of this Agreement;
(o)“Financial Procedures Supplement” means the supplement to the ATF Rules concerning the content and frequency of the regular financial monitoring reports and reporting formats, as may be amended from time to time with the prior agreement of the Association, and such term includes any schedules to the Financial Procedures Supplement;
(p)"Fiscal Year" or "FY" means the twelve-month period beginning January1 and ending December 31 of each year;
(q)"Ghanaian Cedi" and "C" mean the currency of the Borrower;
(r)"GHS" means the Ghana Health Service, established pursuant to the Ghana Health Service and Teaching Hospitals Act, 1996, Act 525;
(s)"GTZ" means Gesellschaft für Technische Zusammenarbeit;
(t)“Health Account” the separate book of accounts maintained by the Borrower in the accounting records of MOH to record the financial resources contributed by Co-operating Partners to the Program;
(u)"IGF" means Internally Generated Funds, funds which are generated by each BMC through cost-recovery measures, including donations and fees collected from patients;
(v)"JICA" means the Japan International Cooperation Agency;
(w)"MOH" means the Borrower’s Ministry of Health;
(x)"OPEC Fund" means the Organization of Petroleum Exporting Countries Fund for International Development;
(y)"Process for the Definition and Review of Capital Projects" means the policy document adopted by the Borrower dated March 26, 1997, which describes the process for approving and carrying out capital investment projects in the health sector under the Program; as may be amended from time to time with the prior agreement of the Association;
(z)“Procurement Manual” means the manual setting out the national and sectoral rules and procedures for national competitive bidding, standard bidding documents, and a negative list that identifies items that are not eligible for financing (including expenditures for personal emoluments under Government Classification Item 1), as shall have been agreed with the Association for purposes of the implementation of activities under the Program, as same may be amended from time to time with the prior agreement of the Association, and such term includes any schedules to the Procurement Manual;
(aa) “Procurement Plan” means the annual procurement plan which includes all procurement to be carried out under the Program for the following year;
(bb)“Report Based Disbursements” means withdrawal of funds from the Credit or Grant Accounts using the method referred to in paragraph 5(a) of Schedule 1 to this Agreement;
(cc)“Resettlement Policy Framework” means the Resettlement Policy Framework, dated September 2002 , which sets out a framework of principles and procedures governing land acquisition, resettlement and compensation, as well as reporting and monitoring arrangements to ensure compliance with said framework, as said framework may be revised from time to time with the agreement of the Association;
(dd)"Subprogram" means the annual program of activities included in the Program to be carried out in each Fiscal Year, as agreed upon between the Borrower, the Association and the Co-operating Partners;
(ee)"UNFPA" means the United Nations Population Fund;
(ff)"UNICEF" means the United Nations Children's Fund;
(gg)"USAID" means the United States Agency for International Development; and
(hh)"WHO" means the World Health Organization.
ARTICLE II
The Financing
Section 2.01. The Association agrees to:
(a)lend to the Borrower, on the terms and conditions set forth or referred to in this Agreement, an amount in various currencies equivalent to forty-three million five hundred thousand Special Drawing Rights (SDR 43,500,000) (the Credit); and
(b) make available to the Borrower, on the terms and conditions set forth or referred to in this Agreement, an amount in various currencies equivalent to twenty-four million five hundred thousand Special Drawing Rights (SDR 24,500,000) (the Grant).
Section 2.02. The amount of the Credit may be withdrawn from the Credit Account and the amount of the Grant may be withdrawn from the Grant Account in accordance with the provisions of Schedule 1 to this Agreement for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods, works and services required for a Subprogram and to be financed out of the proceeds of the Financing.
Section 2.03. The Closing Date shall be June 30, 2007, or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date.
Section 2.04. (a) The Borrower shall pay to the Association commitment charges on the principal amounts of the Credit and Grant not withdrawn from time to time at rates to be set by the Association as of June 30 of each year, but such rates not to exceed the rate of one-half of one percent (1/2 of 1%) per annum.
(b)The commitment charges shall accrue: (i) from the date sixty days after the date of this Agreement (the accrual date) to the respective dates on which amounts shall be withdrawn by the Borrower from the respective Credit or Grant Account or canceled; and (ii) at the rate set as of the June 30 immediately preceding the accrual date and at such other rates as may be set from time to time thereafter pursuant to paragraph (a) above. The rates set as of June 30 in each year shall be applied from the next date in that year specified in Section 2.06 of this Agreement.
(c)The commitment charges shall be paid: (i) at such places as the Association shall reasonably request; (ii) without restrictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section.
Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time.
Section 2.06. Commitment charges and service charges shall be payable semiannually on May 15 and November 15 in each year.
Section 2.07. (a) Subject to paragraphs (b), (c) and (d) below, the Borrower shall repay the principal amount of the Credit in semiannual installments payable on each May 15 and November 15, commencing May 15, 2013 and ending November 15, 2042. Each installment to and including the installment payable on November 15, 2022 shall be one percent (1%) of such principal amount, and each installment thereafter shall be two percent (2%) of such principal amount.
(b)Whenever: (i) the Borrower's per capita gross national product (GNP), as determined by the Association, shall have exceeded for three consecutive years the level established annually by the Association for determining eligibility to access the Association's resources; and (ii) the Bank shall consider the Borrower creditworthy for Bank lending, the Association may, subsequent to the review and approval thereof by the Executive Directors of the Association and after due consideration by them of the development of the Borrower's economy, modify the repayment of installments under paragraph (a) above by: (A) requiring the Borrower to repay twice the amount of each such installment not yet due until the principal amount of the Credit shall have been repaid; and (B) requiring the Borrower to commence repayment of the principal amount of the Credit as of the first semiannual payment date referred to in paragraph (a) above falling six months or more after the date on which the Association notifies the Borrower that the events set out in this paragraph (b) have occurred, provided, however, that there shall be a grace period of a minimum of five years on such repayment of principal.
(c)If so requested by the Borrower, the Association may revise the modification referred to in paragraph (b) above to include, in lieu of some or all of the increase in the amounts of such installments, the payment of interest at an annual rate agreed with the Association on the principal amount of the Credit withdrawn and outstanding from time to time, provided that, in the judgment of the Association, such revision shall not change the grant element obtained under the above-mentioned repayment modification.
(d)If, at any time after a modification of terms pursuant to paragraph (b) above, the Association determines that the Borrower's economic condition has deteriorated significantly, the Association may, if so requested by the Borrower, further modify the terms of repayment to conform to the schedule of installments as provided in paragraph (a) above.
Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions.
ARTICLE III
Execution of the Project
Section 3.01. (a) The Borrower declares its commitment to the objective of the Project as set forth in Schedule 2 to this Agreement, and, to this end, shall carry out the Project 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 Association shall otherwise agree, the Borrower shall carry out the Project in accordance with the Implementation Program set forth in Schedule 4 to this Agreement.
Section 3.02. Except as the Association 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 Financing shall be governed by the provisions of Schedule 3 to this Agreement.
Section 3.03. For the purposes of Section 9.06 of the General Conditions and without limitation thereto, the Borrower shall:
(a)prepare, on the basis of guidelines acceptable to the Association, and furnish to the Association 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 Association, a plan for the future operation of the Project; and
(b)afford the Association a reasonable opportunity to exchange views with the Borrower on said plan.
Section 3.04. In carrying out the Project, the Borrower shall, until completion of the Project, maintain a system, satisfactory to the Association and the Co-operating Partners, which shall provide for the flow of funds to the BMCs for the purposes of carrying out parts of the Project in their areas.
Section 3.05. In carrying out capital investments under the Program, the Borrower shall take all measures necessary to ensure that contracts for such investments are awarded in accordance with the Process for the Definition and Review of Capital Projects.
Section 3.06. The Borrower shall cause MOH to:
(a) carry out the Environmental Management Plan, and prior to construction and rehabilitation of health facilities, establish environmental impact assessment procedures satisfactory to the Association for the design and procurement of such works; and
(b) prior to construction of any health facilities under the Program which would displace any Affected Persons or adversely affect their standards of living, or their rights, usufructs or customary rights to land or other resources under the Project, ensure that:
(i)all rights to land, rights, usufructs or customary rights and other property are allocated or acquired, compensation therefor is paid, and resettlement is carried out in accordance with the principles and institutional procedures established in the Resettlement Policy Framework;
(ii)ensure that Affected Persons shall be compensated, resettled and rehabilitated in accordance with the Resettlement Policy Framework;
(iii)prepare and furnish to the Association, for each health facility where there are Affected Persons, a detailed resettlement action plan acceptable to the Association;
(iv)document the implementation arrangements for resettlement, including compensation, relocation and rehabilitation of Affected Persons; and
(v)complete the implementation of such resettlement action plan in a manner satisfactory to the Association.
ARTICLE IV
Financial Covenants
Section 4.01. (a) The Borrower shall cause MOH and the BMC’s to maintain a financial management system, including records and accounts, and to prepare financial statements, all in accordance with accounting standards acceptable to the Association, consistently applied, adequate to reflect the operations, resources and expenditures in respect of the Program of the BMC’s, departments or agencies of the Borrower responsible for carrying out the Program or any part thereof.
(b) The Borrower shall cause MOH and the BMC’s:
(i)to have the records, accounts and financial statements (statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association;
(ii)to furnish to the Association as soon as available, but in any case not later than nine months after the end of each such year: (A) certified copies of said financial statements reflecting the records and accounts referred to in paragraph (a) of this Section for such year as so audited; and (B) an opinion on such statements and report of such audit, by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and