Z A K O N
Z A K O N
O POTVRĐIVANJU UGOVORA O KREDITU BR. CRS1033 01 C IZMEĐU FRANCUSKE AGENCIJE ZA RAZVOJ, KAO ZAJMODAVCA I REPUBLIKE SRBIJE, KAO ZAJMOPRIMCA
Član 1.
Potvrđuje se Ugovor o kreditu br. CRS1033 01 C između Francuske agencije za razvoj, kao Zajmodavca i Republike Srbije, kao Zajmoprimca, koji je potpisan u Beogradu, 26. xxxx 2023. godine, u originalu na engleskom jeziku.
Član 2.
Tekst Ugovora o kreditu br. CRS1033 01 C između Francuske agencije za razvoj, kao Zajmodavca i Republike Srbije, kao Zajmoprimca, u originalu na engleskom jeziku i prevodu na srpski jezik glasi:
AFD AGREEMENT N° CRS1033 01 C
CREDIT FACILITY AGREEMENT
dated as of 26 June 2023 between
AGENCE FRANÇAISE DE DEVELOPPEMENT
The Lender
and
THE REPUBLIC OF SERBIA
The Borrower
TABLE OF CONTENTS
1. DEFINITIONS AND INTERPRETATION 6
1.1 Definitions 6
1.2 Interpretation 6
2. FACILITY, PURPOSE AND CONDITIONS OF UTILISATION 6
2.1 Facility 6
2.2 Purpose 6
2.3 Absence of Liability 6
2.4 Conditions precedent 6
3. DRAWDOWN OF FUNDS 7
3.1 Drawdown number 7
3.2 Drawdown request 7
3.3 Payment completion 8
3.4 Payment mechanics 9
3.5 Deadline for the first Drawdown 11
3.6 Deadline for Drawdown of Funds 12
4. INTEREST 12
4.1 Interest Rate 12
4.2 Calculation and payment of interest 14
4.3 Late payment and default interest 14
4.4 Communication of Interest Rates 15
4.5 Effective Global Rate (Taux Effectif Global) 15
5. CHANGE TO THE CALCULATION OF INTEREST 15
5.1 Market Disruption 15
5.2 Replacement of Screen Rate 16
6. FEES 17
6.1 Commitment Fees 17
6.2 Appraisal Fee 17
7. REPAYMENT 17
8. PREPAYMENT AND CANCELLATION 18
8.1 Voluntary prepayment 18
8.2 Mandatory prepayment 18
8.3 Cancellation by the Borrower 19
8.4 Cancellation by the Lender 19
8.5 Restrictions 19
9. ADDITIONAL PAYMENT OBLIGATIONS 20
9.1 Costs and expenses 20
9.2 Cancellation Indemnity 20
9.3 Prepayment Indemnity 20
9.4 Taxes and duties 20
9.5 Additional Costs 21
9.6 Currency indemnity 21
9.7 Due dates 21
10. REPRESENTATIONS AND WARRANTIES 22
10.1 Power and authority 22
10.2 Validity and admissibility in evidence 22
10.3 Binding obligations 22
10.4 No filing or stamp taxes 22
10.5 Transfer of funds 23
10.6 No conflict with other obligations 23
10.7 Governing Law and Enforcement 23
10.8 No Default 23
10.9 No Misleading Information 23
10.10 Pari Passu Ranking 24
10.11 Licit Origin of the funds and Prohibited Practices 24
10.12 No Material Adverse Effect 24
10.13 No Immunity 24
10.14 List of activities excluded from the Expenditure Framework 24
10.15 Procurement 25
11. UNDERTAKINGS 25
11.1 Compliance with Laws, Regulations and Obligations 25
11.2 Authorisations 25
11.3 Operation Documents 25
11.4 Implementation and Preservation of the Operation 25
11.5 Environmental and Social Responsibility 26
11.6 Additional Financing 27
11.7 Pari Passu Ranking 27
11.8 Inspections 27
11.9 Operation Evaluation 27
11.10 Financial Sanctions Lists and Embargo 27
11.11 Licit Origin, absence of Prohibited Practices 28
11.12 Investigation 28
11.13 Visibility and Communication 29
11.14 Designated Account 29
11.15 Procurement 29
11.16 Implementation arrangements 30
12. INFORMATION UNDERTAKINGS 31
12.1 Financial Information 31
12.2 Operation Implementation 31
12.3 Progress Report 31
12.4 Co-Financing 31
12.5 Additional Information 31
13. EVENTS OF DEFAULTS 32
13.1 Events of Default 32
13.2 Acceleration 33
13.3 Notification of an Event of Default 34
14. ADMINISTRATION OF THE FACILITY 34
14.1 Payments 34
14.2 Set-off 34
14.3 Business Days 34
14.4 Currency of payment 35
14.5 Day count convention 35
14.6 Place of payment 35
14.7 Payment Systems Disruption 35
15. MISCELLANEOUS 36
15.1 Language 36
15.2 Certifications and determinations 36
15.3 Partial invalidity 36
15.4 No Waiver 36
15.5 Assignment 36
15.6 Legal effect 37
15.7 Entire agreement 37
15.8 Amendments 37
15.9 Confidentiality – Disclosure of information 37
15.10 Limitation 37
15.11 Hardship 37
16. NOTICES 38
16.1 In writing and addresses 38
16.2 Delivery 38
16.3 Electronic communications 39
17. GOVERNING LAW, ENFORCEMENT AND CHOICE OF DOMICILE 39
17.1 Governing Law 39
17.2 Arbitration 39
17.3 Service of process 40
18. DURATION 40
SCHEDULE 1A – DEFINITIONS 42
SCHEDULE 1B - CONSTRUCTION 54
SCHEDULE 2 - OPERATION DESCRIPTION 55
SCHEDULE 3A - FINANCING PLAN 63
SCHEDULE 3B – EXPENDITURE FRAMEWORK 64
SCHEDULE 3C – RESULT FRAMEWORK 72
SCHEDULE 3D – ENVIRONMENTAL AND SOCIAL COMMITMENT PLAN 80
SCHEDULE 4 - CONDITIONS PRECEDENT 84
SCHEDULE 5A - FORM OF DRAWDOWN REQUEST 86
SCHEDULE 5B - FORM OF CONFIRMATION OF DRAWDOWN AND RATE 88
SCHEDULE 5C - FORM OF RATE CONVERSION REQUEST 90
SCHEDULE 5D - FORM OF RATE CONVERSION CONFIRMATION 91
SCHEDULE 6 - INFORMATION THAT MAY BE PUBLISHED ON THE FRENCH GOVERNMENT WEBSITE AND THE LENDER’S WEBSITE 92
SCHEDULE 7 - NON-EXHAUSTIVE LIST OF ENVIRONMENTAL AND SOCIAL DOCUMENTS WHICH THE BOROWER PERMITS TO BE DISCLOSED IN CONNECTION WITH ES GRIEVANCE MANAGEMENT PROCEDURES 93
SCHEDULE 8 – AFD’S COVENANT OF INTEGRITY 94
SCHEDULE 9 – LIST OF EXCLUSIONS 95
CREDIT FACILITY AGREEMENT
BETWEEN:
(1) REPUBLIC OF SERBIA represented by the Government of the Republic of Serbia, through Minister of Finance, Mr. Xxxxxx Xxxx, who is duly authorized to sign this Agreement
(“Republic of Serbia” or the “Borrower”);
AND
(2) AGENCE FRANCAISE DE DEVELOPPEMENT, a French public entity governed by French law, with registered office at 0, Xxx Xxxxxx Xxxxxxx, 00000 Xxxxx Xxxxx 00, Xxxxxx, registered with the Trade and Companies Register of Paris under number 000 000 000, represented by represented by Xx. Xxxxxxxxx Xxxxxxxxxx, in his capacity as Head of Western Balkans regional office, duly authorised to sign this Agreement,
(“AFD” or the “Lender”);
(hereinafter jointly referred to as the “Parties” and each a “Party”);
WHEREAS:
(A) The Borrower intends to implement an Operation entitled Improving Public Financial Management for the Green Transition consisting of a combination of green investments, public financial management reforms and technical assistance (the “Operation”), as described further in Schedule 2 (Operation Description).
(B) The Borrower has requested that the Lender make a facility available for the purposes of participating in the financing of the Operation.
(C) The IBRD as Co-Financier intends to provide a parallel financing for an amount of up to sixty-nine million three hundred thousand euros (EUR 69,300,000), of which three million euros (EUR 3,000,000) will be provided as a joint financing for the technical assistance.
(D) Pursuant to a resolution n° C20230130 of the Comité des Etats Etrangers dated March 15, 2023, the Lender has agreed to make the Facility available to the Borrower pursuant to the terms and conditions of this Agreement.
THEREFORE, THE PARTIES HAVE AGREED AS FOLLOWS:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
Capitalised words and expressions used in this Agreement (including those appearing in the recitals above and in the Schedules) shall have the meaning given to them in Schedule 1A (Definitions), except as otherwise provided in this Agreement.
1.2 Interpretation
Words and expressions used in this Agreement shall be construed pursuant to the provisions of Schedule 1B (Construction), unless the contrary intention appears.
2. FACILITY, PURPOSE AND CONDITIONS OF UTILISATION
2.1 Facility
Subject to the terms of this Agreement, the Lender makes available to the Borrower a Facility in a maximum aggregate amount of sixty-nine million three hundred thousand Euros (EUR 69, 300,000) divided into two tranches:
- A tranche of sixty-six million three hundred thousand Euros (EUR 66,300,000) which will be used to finance the Borrower’s budget as per the Expenditure Framework (hereafter, the “Budget Support Tranche”) ;
- A tranche of three million Euros (EUR 3,000,000) which will be used by the Borrower to finance specific Technical Assistance activities (hereafter, the “Technical Assistance Tranche”).
2.2 Purpose
The purpose of the Facility is to finance the Borrower’s Operation as described in Schedule 2 (Operation Description), in accordance with the Financing Plan described in Schedule 3A (Financing Plan), the Expenditure Framework described in Schedule 3B (Expenditure Framework) and the Result Framework described in Schedule 3C (Result Framework).
2.3 Absence of Liability
The Lender shall not be held responsible for the use of any amount borrowed which is not in accordance with the provisions of this Agreement.
2.4 Conditions precedent
(a) No later than the Signing Date, the Borrower shall provide to the Lender all of the documents set out in Part I of Schedule 4 (Conditions Precedent).
(b) A Drawdown Request may not be delivered to the Lender unless:
(a) this Agreement has become effective upon the satisfaction of the conditions stipulated in the Part II of Schedule 4 (Conditions Precedent);
(b) in the case of the first Drawdown under the Budget Support Tranche, the Lender has received all of the documents listed in Part III of Schedule 4 (Conditions Precedent) and has notified the Borrower that such documents are satisfactory in form and substance;
(c) in the case of any subsequent Drawdown under the Budget Support Tranche, the Lender has received all of the documents set out in Part IV of Schedule 4 (Conditions Precedent) and has notified the Borrower that such documents are satisfactory in form and substance;
(d) in the case of the first Drawdown under the Technical Assistance Tranche, the Lender has received all of the documents listed in Part V of Schedule 4 (Conditions Precedent) and has notified the Borrower that such documents are satisfactory in form and substance;
(e) in the case of any Drawdown under the Technical Assistance Tranche, the Lender has received from the Co-Financier the Disbursement Notice advising the Lender make the requested Drawdown available to the Borrower; and
(f) on the date of the Drawdown Request and on the proposed Drawdown Date for the relevant Drawdown, no Payment Systems Disruption Event has occurred and the conditions set out in this Agreement have been fulfilled, including:
(1) no Event of Default is continuing or would result from the proposed Drawdown;
(2) no Co-Financier has suspended its payments in relation to the Operation;
(3) the Drawdown Request has been made in accordance with the terms of Clause 3.2 (Drawdown request);
(4) each representation given by the Borrower in relation to Clause 10 (Representations and warranties) is true.
3. DRAWDOWN OF FUNDS
3.1 Drawdown number
The Facility will be made available to the Borrower during the Availability Period, in several Drawdowns, provided that the number of Drawdowns shall not exceed forty (40).
3.2 Drawdown request
(a) Provided that the conditions set out in Clause 2.4(b) (Conditions precedent) are satisfied, the Borrower may draw on the Facility by delivery to the Lender of a duly completed Drawdown Request. Each Drawdown Request shall be delivered by the Borrower to the AFD office director at the address specified in Clause 16.1 (In writing and addresses).
(b) With respect to Drawdowns of the Budget Support, the Borrower may - notwithstanding the provisions of Clause 2.4(b)(c) and Part IV of Schedule 4 (Conditions Precedent) - withdraw an amount not to exceed sixteen million five hundred thousand euros (EUR 16,500,000) as an advance against the future achievement of one or more DLRs – provided, however, that if the relevant DLRs, in the opinion of the Lender, are not achieved or only partially achieved by the Deadline for Drawdown of Funds the Borrower shall refund such advance (or the portion corresponding to such advance corresponding to the unachieved portion of the DLR, as determined by the Lender) to the Lender. Except as otherwise agreed with the Borrower, the Lender shall cancel the amount so refunded. Any further withdrawals requested as an advance under the Budget Support shall be permitted only on such terms and conditions as the Lender shall specify by notice to the Borrower.
(c) With respect to Drawdowns under the Technical Assistance Tranche only, an electronic copy of the Drawdown Request duly completed and signed, together with all the supporting documents required for the relevant conditions precedent fulfilment, shall at first be submitted, to the Co-Financier, simultaneously with submission of the relevant Withdrawal Application under the IBRD loan in accordance with the terms and conditions of the IBRD Loan Agreement.
Payments will be made under the Technical Assistance Tranche in accordance with the instructions in the Disbursement and Financial Information Letter (DFIL), updated if necessary, issued by the Co- Financier.
Unless an exception is granted by the Lender, each Drawdown Request shall be made concurrently with a Withdrawal Application under the IBRD Loan Agreement for respective amounts to meet the pari passu financing indicated in Schedule 3A (Financing Plan).
(d) Each Drawdown Request is irrevocable and will be regarded as having been duly completed if:
(i) the Drawdown Request is substantially in the form set out in Schedule 5A (Form of Drawdown Request);
(ii) the Drawdown Request is received by the Lender at the latest fifteen (15) Business Days prior to the Deadline for Drawdown of Funds;
(iii) the proposed Drawdown Date is a Business Day falling within the Availability Period;
(iv) the amount of the Drawdown complies with Clause 3.1 (Drawdown number); and
(v) all of the documents set out in Part III and/or IV, as the case may be, of Schedule 4 (Conditions Precedent) for the purposes of the Drawdown are attached to the Drawdown Request, comply with the abovementioned Schedule and with the requirements of Clause 3.4 (Payment mechanics), and are in form and substance satisfactory to the Lender.
3.3 Payment completion
3.3.1 Payment completion under Budget Support Tranche
Subject to Clause 14.7 (Payment Systems Disruption), if each of the relevant conditions set out in Clause 2.4(b) (Conditions precedent) of this Agreement has been met, the Lender shall make the requested Drawdown available to the Borrower not later than the Drawdown Date.
The Lender shall provide the Borrower with a letter of Drawdown confirmation substantially in the form set out in Schedule 5B (Form of confirmation of drawdown and rate).
3.3.2 Payment completion under Technical Assistance Tranche
In application of the Co-Financing Agreement, once the Co-Financier has received a Withdrawal Application and the relevant supporting documents as described in Clause 3.2 above, the Co-Financier, on behalf and in the name of the Lender, will:
(a) assess all these supporting documents submitted, in compliance with the its applicable internal rules and procedures; and
(b) verify that the amount requested in the Drawdown Request complies with the co-financing requirements under the Co-Financing Agreement.
If the result of the assessment and the verification mentioned above is satisfactory to the Co-Financier, the latter will notify the Lender in writing of such result through a disbursement notice (the “Disbursement Notice”).
Subject to Clause 14.7 (Payment Systems Disruption), if each of the conditions set out in Clause 2.4(b) (Conditions precedent) of this Agreement has been met, the Lender shall make the requested Drawdown available to the Borrower not later than the Drawdown Date.
The Lender shall provide the Borrower with a letter of Drawdown confirmation substantially in the form set out in Schedule 5B (Form of confirmation of drawdown and rate).
3.4 Payment mechanics
3.4.1 Payment mechanics under Budget Support Tranche
The proceeds of the Drawdowns under the Budget Support Tranche shall be paid to the Borrower’s Treasury Account or any other account which details will be duly notified by the Borrower to the Lender.
3.4.2 Payment mechanics under Technical Assistance Tranche – Advance
The proceeds of the Drawdowns under the Technical Assistance Tranche can be made available by the Lender in the form of advances (“Advance(s)”) and paid into the Designated Account.
(a) Opening of the Designated Account
The Borrower shall open and maintain an account in the name of the Operation (the “Designated Account”), at the National Bank of Serbia (“NBS”), for the sole purpose of (i) receipt of the proceeds of the Drawdowns under the Technical Assistance Tranche in the form of Advances, and (ii) payment of the Technical Assistance Eligible Expenditures.
The Borrower hereby undertakes, and procure that the NBS waives, any right of set-off such party may have in respect of the Designated Account and any other account opened in the name of the Borrower at the NBS, or against any other debt of the Borrower.
(b) Initial Advance
Provided that the conditions set out in Clause 2.4 (Conditions precedent) have been satisfied, the Lender shall pay to the Designated Account an initial Advance of the amount specified in the corresponding Disbursement Notice submitted by the Co-Financier to the Lender.
(c) Additional Advances
Additional Advances will be made upon the Borrower’s request in accordance with the same procedure required under the IBRD Loan Agreement and subject to the conditions referred to in Clause 2.4 (Conditions precedent).
(d) Final Advance
Unless the Lender agrees otherwise, the final Advance shall be paid in accordance with the same conditions as the other Advances and, if applicable, shall take into account any change in the financing plan of the Operation agreed between the Parties.
(e) Justification for use of Advances
The Borrower agrees to deliver to the Lender:
(a) no later than the Deadline for Use of Funds, a certificate signed by an authorised signatory of the Borrower certifying that one hundred per cent (100%) of both the penultimate Advance and the final Advance have been used and providing a detailed
breakdown of the sums paid in respect of the Technical Assistance Eligible Expenditures in the relevant period; and
(b) a final audit report of the Designated Account (the “Final Audit Report”), carried out in accordance with the provisions of the IBRD Loan Agreement and the instructions in the DFIL. The appointed auditor shall verify that all amounts drawn under the Technical Assistance Tranche and paid into the Designated Account have been used in accordance with the terms and conditions of this Agreement.
(f) Applicable exchange rate
If any Technical Assistance Eligible Expenditure is denominated in a currency other than Euro, the Borrower shall convert the invoice amount into the equivalent amount in Euros in accordance with the provisions of the IBRD Loan Agreement and the Operation Implementation Manual.
(g) Deadline for Use of Funds
The Borrower agrees that all funds paid in the form of Advances shall be used in full to pay Technical Assistance Eligible Expenditures no later than the Deadline for Use of Funds.
(h) Control – Audit
The Borrower agrees that, during the Drawdown Period, the Designated Account shall be audited in accordance with the provisions of the IBRD Loan Agreement and the instructions in the DFIL. The auditor shall verify that all amounts drawn under the Technical Assistance Tranche and paid into the Designated Account have been used in accordance with the terms of this Agreement.
Audit reports shall be made available by the Borrower to the Lender through the Co-Financier.
During the Drawdown Period, the Lender may carry out, or procure that a third party carries out on its behalf and at the cost of the Borrower, random inspections rather than systematic control of documentary evidence.
(i) Failure to justify the use of Advances by the Deadline for Use of Funds
The Lender may request that the Borrower repays all amounts in respect of which utilisation has not been duly or sufficiently justified in accordance with the IBRD Loan Agreement, together with all other sums standing to the credit of the Designated Account on the Deadline for Use of Funds. The Borrower shall repay such amounts to the Lender within twenty (20) calendar days of receipt of such notification from the Lender. Any repayment by the Borrower under this clause shall be treated as a mandatory prepayment in accordance with the provisions of Clause 8.2 (Mandatory prepayment).
(j) Retention of documents
The Borrower shall retain documentary evidence and other documents in connection with the Designated Account and use of the Advances for a period of ten (10) years from the date of the last Drawdown under the Facility.
The Borrower undertakes to deliver such documentary evidences and other documents to the Lender, or to any auditing firm appointed by the Lender, upon the Lender’s request.
3.4.3 Payment mechanics under Technical Assistance Tranche – Refinancing
The proceeds of the Drawdowns under the Technical Assistance Tranche can be paid directly to the Borrower in accordance with the terms and conditions of this Agreement provided that evidence of payment of the Technical Assistance expenses by the Borrower referred to in the Drawdown Request, has been delivered to the Lender through the Co-Financier in form and substance satisfactory to the Lender.
The Lender may request directly or through the Co-Financier that the Borrower provides such other evidence showing that works or services corresponding to the Technical Assistance Eligible Expenditures have been implemented.
3.4.4 Payment mechanics under Technical Assistance Tranche – Direct payment
The Borrower may request that the proceeds of the Drawdowns of the Technical Assistance are made available directly to a provider for the payment of Technical Assistance Eligible Expenditures.
The Borrower hereby authorises the Lender to make direct payments in accordance with paragraphs above from the proceeds of a Drawdown. The Lender will not be bound, at any time, to verify whether there is a restriction of any nature in connection with the requested Drawdown. The Lender reserves the right to reject such a request if it becomes aware of any such restriction.
The Lender shall not be liable in any way whatsoever in relation to the Drawdowns and the Borrower waives any action it may have against the Lender in this respect. The Borrower shall indemnify the Lender against any cost, loss or liability which the Lender incurs in relation to third party actions against the Lender in respect of such Drawdowns.
The Borrower acknowledges that any amount paid by the Lender pursuant to this Clause 3.4.4 will be a Drawdown and that it shall repay in full to the Lender all amounts paid under the Facility pursuant to this Clause 3.4.40, together with, and including but not limited to, all interest accrued on those amounts as from the relevant Drawdown Dates.
3.5 Deadline for the first Drawdown
The first Drawdown shall occur at the latest on the Deadline for the First Drawdown.
If the first Drawdown does not occur in the above-mentioned period, the Lender may cancel the Facility in accordance with Clause 8.4(b) (Cancellation by the Lender).
The Deadline for the First Drawdown may not be postponed without the prior consent of the Lender.
Any postponement of the Deadline for the First Drawdown will be (i) subject to fees and/or new financial conditions and (ii) formalized in writing between the Parties.
3.6 Deadline for Drawdown of Funds
The full drawdown of the Facility shall occur at the latest on the Deadline for Drawdown of Funds.
If the full drawdown does not occur by the above-mentioned date, the Lender may cancel the Facility in accordance with Clause 8.4 (Cancellation by the Lender).
The Deadline for Drawdown of Funds may not be postponed without the prior consent of the Lender.
Any postponement of the Deadline for Drawdown of Funds will be (i) subject to fees and/or new financial conditions and (ii) formalized in writing between the Parties.
4. INTEREST
4.1 Interest Rate
4.1.1 Selection of Interest Rate
The Borrower may select a fixed Interest Rate or a floating Interest Rate for the Facility, which shall apply to the amount set out in the Drawdown Request, by stating the selected Interest Rate, i.e., fixed or floating, in the Drawdown Request delivered to the Lender substantially in the form set out in Schedule 5A (Form of Rate Conversion Request), subject to the following conditions:
(a) Floating Interest Rate
The Borrower may select a floating Interest Rate, which shall be the percentage rate per annum, being the aggregate of:
- six-month EURIBOR, or, as the case may be, the Replacement Benchmark plus any Adjustment Margin, as determined in accordance with the provisions of Clause 5 (Change to the calculation of interest) of the Agreement; and
- the Margin.
Notwithstanding the above, for each Drawdown, in the case of the first Interest Period, if the first Interest Period is less than
one hundred and thirty-five (135) days, the applicable EURIBOR shall be:
- one-month EURIBOR, or, as the case may be, the Replacement Benchmark plus any Adjustment Margin, as determined in accordance with the provisions of Clause 5 (Change to the calculation of interest) of the Agreement, if the first Interest Period is less than sixty
(60) days; or
- three-month EURIBOR, or, as the case may be, the Replacement Benchmark plus any Adjustment Margin, as determined in accordance with the provisions of Clause 5 (Change to the calculation of interest) of the Agreement if the first Interest Period is between sixty
(60) days and one hundred and thirty-five (135) days.
(b) Fixed Interest Rate
Provided that the amount of a requested Drawdown is equal to or greater than three million Euros (EUR 3,000,000), the Borrower may select a fixed Interest Rate for such requested Drawdown. The fixed Interest Rate shall be the Fixed Reference Rate increased or decreased by any fluctuation of the Index Rate between the Signing Rate Setting Date and the Rate Setting Date for each Drawdown.
The Borrower may specify in the Drawdown Request a maximum amount for fixed Interest Rate. If the fixed Interest Rate as calculated on the Rate Setting Date exceeds the maximum amount for fixed Interest Rate specified in the relevant Drawdown Request, such Drawdown Request shall be cancelled and the Drawdown amount specified in the cancelled Drawdown Request shall be credited to the Available Facility.
The Interest Rate determined in accordance with Clause 4.1.1 (Selection of Interest Rate), regardless of the elected option, shall not be less than zero point twenty-five per cent (0.25%) per annum, notwithstanding any decline in the Interest Rate.
4.1.3 Conversion from a floating Interest Rate to a fixed Interest Rate
The floating Interest Rate applicable to the Drawdown, as the case may be, shall be converted to a fixed Interest Rate in accordance with the conditions set out below:
(a) Rate Conversion upon the Borrower’s request
The Borrower may request at any time that the Lender converts the floating Interest Rate applicable to the Drawdown to a fixed Interest Rate.
To this effect, the Borrower shall send to the Lender a Rate Conversion Request substantially in the form set out in Schedule 5C (Form of Rate Conversion Request). The Borrower may specify in the Rate Conversion Letter a maximum amount for fixed Interest Rate. If the fixed Interest Rate as calculated on the Rate Setting Date exceeds the maximum amount for fixed Interest Rate specified by the Borrower in the Rate Conversion Request, such Rate Conversion Request will be automatically cancelled.
The fixed Interest Rate will be effective two (2) Business Days after the Rate Setting Date.
(b) Rate Conversion mechanics
The fixed Interest Rate applicable to the Drawdown shall be determined in accordance with Clause 4.1.1(b) (Fixed Interest Rate) above on the Rate Setting Date referred to in subparagraph (i) above. The Lender shall send to
the Borrower a letter of confirmation of Rate Conversion substantially in the form set out in Schedule 5D (Form of Rate Conversion Confirmation).
A Rate Conversion is final and at no costs.
4.2 Calculation and payment of interest
The Borrower shall pay accrued interest on the Drawdown on each Payment Date.
The amount of interest payable by the Borrower on a relevant Payment Date and for a relevant Interest Period shall be equal to the sum of any interest owed by the Borrower on the amount of the Outstanding Principal in respect of the Drawdown. Interest owed by the Borrower in respect of the Drawdown shall be calculated on the basis of:
(a) the Outstanding Principal owed by the Borrower in respect of the Drawdown as at the immediately preceding Payment Date or, in the case of the first Interest Period, on the corresponding Drawdown Date;
(b) the exact number of days which have accrued during the relevant Interest Period on the basis of a three hundred and sixty (360) day year; and
(c) the applicable Interest Rate determined in accordance with the provisions of Clause 4.1 (Interest Rate).
4.3 Late payment and default interest
(a) Late payment and default interest on all amounts due and unpaid (except for interest)
If the Borrower fails to pay any amount payable by it to the Lender under this Agreement (whether a payment of principal, a Prepayment Indemnity, any fees or incidental expenses of any kind except for any
unpaid overdue interest) on its due date, interest shall accrue on the overdue amount, to the extent permitted by law from the due date up to the date of actual payment (both before and after an arbitral award, if any) at the Interest Rate applicable to the current Interest Period (default interest) increased by three point five percent (3.5%) (late- payment interest). No formal prior notice from the Lender shall be necessary.
(b) Late payment and default interest on unpaid overdue interest
Interest which has not been paid on its due date shall bear interest, to the extent permitted by law, at the Interest Rate applicable to the ongoing Interest Period (default interest), increased by three point five percent (3.5%) (late-payment interest), to the extent that such Interest has been due and payable for at least one (1) year. No formal prior notice from the Lender shall be necessary.
The Borrower shall pay any outstanding interest under this Clause 4.3 (Late payment and default interest) immediately on demand by the Lender or on each Payment Date following the due date for the outstanding payment.
(c) Receipt of any payment of late payment interest or default interest by the Lender shall neither imply the grant of any payment extension to the Borrower, nor operate as a waiver of any of the Lender’s rights hereunder.
4.4 Communication of Interest Rates
The Lender shall promptly notify the Borrower of the determination of each Interest Rate in accordance with this Agreement.
4.5 Effective Global Rate (Taux Effectif Global)
In order to comply with Articles L. 314-1 to L.314-5 and R.314-1 et seq. of the French Consumer Code and L. 313-4 of the French Monetary and Financial Code, the Lender informs the Borrower, and the Borrower accepts, that the effective global rate (taux effectif global) applicable to the Facility may be valued at an annual rate of three point eighty-three per cent (3.83%) on the basis of a three hundred and sixty-five (365) day year, and an Interest Period of six (6) months, at a period rate of one point ninety per cent (1.90%), subject to the following:
(a) the above rate is given for information purposes only;
(b) the above rate is calculated on the basis that:
(a) drawdown of the Facility is in full at fixed rate on the Signing Date;
(b) the fixed rate for the duration of the facility should be equal to three point seventy per cent (3.70%);
will remain fixed and will apply until the expiry of the term of this Agreement.
5. CHANGE TO THE CALCULATION OF INTEREST
5.1 Market Disruption
(a) If a Market Disruption Event affects the interbank market in the Eurozone and it is impossible:
(i) for the fixed Interest Rate, to determine the fixed Interest Rate applicable to a Drawdown, or
(ii) for the variable Interest Rate, to determine the applicable EURIBOR for the relevant Interest Period,
the Lender shall inform the Borrower.
(b) Upon the occurrence of the event described in paragraph (a) above, the applicable Interest Rate, as the case may be, for the relevant Drawdown or for the relevant Interest Period will be the sum of:
(i) the Margin; and
(ii) the percentage rate per annum corresponding to the cost to the Lender of funding the relevant Drawdowns(s) from whatever source it may reasonably select. Such rate shall be notified to the Borrower as soon as possible and, in any case, prior to (1) the first Payment Date for interest owed under such Drawdown for the fixed Interest Rate or (2) the Payment Date for interest owed under such Interest Period for the variable Interest Rate.
5.2 Replacement of Screen Rate
5.2.1 Definitions
"Relevant Nominating Body" means any central bank, regulator, supervisor or working group or committee sponsored or chaired by, or constituted at the request of any of them.
"Screen Rate Replacement Event" means any of the following events or series of events:
(a) the definition, methodology, formula or means of determining the Screen Rate has materially changed;
(b) a law or regulation is enacted which prohibits the use of the Screen Rate, it being specified, for the avoidance of doubt, that the occurrence of this event shall not constitute a mandatory prepayment event;
(c) the administrator of the Screen Rate or its supervisor publicly announces:
(i) that it has ceased or will cease to provide the Screen Rate permanently or indefinitely, and, at that time, no successor administrator has been publicly nominated to continue to provide that Screen Rate;
(ii) that the Screen Rate has ceased or will cease to be published permanently or indefinitely; or
(iii) that the Screen Rate may no longer be used (whether now or in the future);
(d) a public announcement is made about the bankruptcy of the administrator of that Screen Rate or any other insolvency proceedings against it, and, at that time, no successor administrator has been publicly nominated to continue to provide that Screen Rate; or
(e) in the opinion of the Lender, the Screen Rate has ceased to be used in a series of comparable financing transactions.
"Screen Rate" means EURIBOR or, following the replacement of this rate by a Replacement Benchmark, the Replacement Benchmark.
"Screen Rate Replacement Date" means:
– with respect to the events referred to in items a), d) and e) of the above definition of Screen Rate Replacement Event, the date on which the Lender has knowledge of the occurrence of such event, and,
– with respect to the events referred to in items b) and c) of the above definition of Screen Rate Replacement Event, the date beyond which the use of the Screen Rate will be prohibited or the date on which the administrator of the Screen Rate permanently or indefinitely ceases to provide the Screen Rate or the date beyond which the Screen Rate may no longer be used.
5.2.2 Each Party acknowledges and agrees for the benefit of the other Party that if a Screen Rate Replacement Event occurs and in order to preserve the economic balance of the Agreement, the Lender may replace the Screen Rate with another rate (the "Replacement Benchmark") which may include an adjustment margin in order to avoid any transfer of economic value between the Parties (if any) (the "Adjustment Margin") and the Lender will determine the date from which the Replacement Benchmark and, if any, the Adjustment Margin shall replace the Screen Rate and any other amendments to the Agreement required as a result of the replacement of the Screen Rate by the Replacement Benchmark.
5.2.3 The determination of the Replacement Benchmark and the necessary amendments will be made in good faith and taking into account, (i) the recommendations of any Relevant Nominating Body, or (ii) the recommendations of the administrator of the Screen Rate, or (iii) the industry solution recommended by professional associations in the banking sector or, (iv) the market practice observed in a series of comparable financing transactions on the replacement date.
5.2.4 In case of replacement of the Screen Rate, the Lender will promptly notify the Borrower of the replacement terms and conditions to replace the Screen Rate with the Replacement Benchmark, which will be
applicable to Interest Periods starting at least two Business Days after the Screen Rate Replacement Date.
5.2.5 The provisions of Clause 5.2 (Replacement of Screen Rate) shall prevail over the provisions of Clause 5.1 (Market Disruption).
6. FEES
6.1 Commitment Fees
Starting from one hundred and eighty (180) calendar days after the Signing Date onwards, the Borrower shall pay to the Lender a commitment fee of zero point twenty five per cent (0.25%) per annum.
The commitment fee shall be computed at the rate specified above on the amount of the Available Facility pro-rated for the actual number of days elapsed increased by the amount of any Drawdowns to be made available by the Lender in accordance with any pending Drawdown Requests.
The first commitment fee shall be calculated for the period from (i) the date falling sixty (60) calendar days after the Signing Date (excluded) up to (ii) the immediately following Payment Date (included). Subsequent commitment fees shall be calculated for periods commencing on the day immediately following (included) a Payment Date and ending on the next Payment Date (included).
The accrued commitment fee shall be payable (i) on each Payment Date within the Availability Period; (ii) on the Payment Date following the last day of the Drawdown Period; and (iii) in the event the Available Facility is cancelled in full, on the Payment Date following the effective date of such cancellation.
6.2 Appraisal Fee
No later than one hundred and eighty (180) calendar days after the Signing Date, and prior to the first Drawdown, the Borrower shall pay to the Lender an appraisal fee of zero point twenty five per cent (0.25%) calculated on the maximum amount of the Facility.
7. REPAYMENT
Following expiry of the Grace Period, the Borrower shall repay the Lender the principal amount of the Facility in eight (8) semi-annual instalments, due and payable on each Payment Date.
The first instalment shall be due and payable on October 15, 2029, and the last instalment shall be due and payable on April 15, 2033.
At the end of the Drawdown Period, the Lender shall deliver to the Borrower an amortisation schedule in respect of the Facility taking into account, if applicable, any potential cancellation of the Facility pursuant to Clauses 8.3 (Cancellation by the Borrower) and/or 8.4 (Cancellation by the Lender).
8. PREPAYMENT AND CANCELLATION
8.1 Voluntary prepayment
The Borrower shall not be entitled to prepay the whole or any part of the Facility prior to the expiration of the Drawdown Period. As from the day following the expiration of the Drawdown Period, the Borrower may prepay the whole or any part of the Facility, subject to the following conditions:
(b) the amount to be prepaid shall be equal to one or several instalment(s) in principal;
(c) the contemplated prepayment date shall be a Payment Date;
(e) there is no outstanding unpaid amount; and
On the Payment Date on which the prepayment is made, the Borrower shall pay the full amount of the Prepayment Indemnities due and payable pursuant to Clause 9.3 (Prepayment Indemnity).
8.2 Mandatory prepayment
The Borrower shall immediately prepay the whole or part of the Facility upon receipt of a notice from the Lender informing the Borrower of any of the following events:
(a) Illegality: it becomes unlawful for the Lender pursuant to its applicable law to perform any of its obligations as contemplated by this Agreement or to fund or maintain the Facility;
(b) Additional Costs: the amount of any Additional Costs referred to in Clause 9.5 (Additional Costs) is significant and the Borrower has refused to pay such Additional Costs;
(c) Default: the Lender declares an Event of Default in accordance with Clause 13 (Events of Defaults);
(d) Prepayment to a Co-Financier: the Borrower prepays whole or part of any amounts owed to a Co-Financier, in which case the Lender shall be entitled to request that the Borrower prepays, as the case may be, the Facility or an amount of the outstanding Facility in proportion with the amount prepaid to the Co-Financier.
In the case of each of the events specified in paragraphs (a), (b) and (c) above, the Lender reserves the right, after having notified the Borrower in writing, to exercise its rights as a creditor in the manner specified in paragraph (b) of Clause 13.2 (Acceleration).
8.3 Cancellation by the Borrower
Prior to the Deadline for Drawdown of Funds, the Borrower may cancel the whole or any part of the Available Facility by giving the Lender a three (3) Business Days’ prior notice.
Upon receipt of such notice of cancellation, the Lender shall cancel the amount notified by the Borrower, provided that the expenses, as specified in the Financing Plan, are covered in a manner satisfactory to the Lender, except in the event that the Operation is abandoned by the Borrower.
8.4 Cancellation by the Lender
The Available Facility shall be immediately cancelled upon delivery of a notice to the Borrower, which shall be immediately effective, if:
(a) the Available Facility is not equal to zero on the Deadline for Drawdown of Funds; or
(b) the first Drawdown has not occurred on the Deadline for the First Drawdown; or
(c) an Event of Default has occurred and is continuing; or
(d) an event referred to in Clause 8.2 (Mandatory Prepayment) has occurred.
8.5 Restrictions
(a) Any notice of prepayment or cancellation given by a Party pursuant to this Clause 8 (Prepayment and Cancellation) shall be irrevocable, and, unless otherwise provided in this Agreement, any such notice shall specify the date or dates on which the relevant prepayment or cancellation is to be made and the amount of that prepayment or cancellation.
(c) Any prepayment under this Agreement shall be made together with payment of (i) accrued interest on the prepaid amount, (ii) outstanding fees, and (iii) the prepayment indemnity referred to in Clause 9.3 (Prepayment Indemnity) below.
9. ADDITIONAL PAYMENT OBLIGATIONS
9.1 Costs and expenses
9.2 Cancellation Indemnity
If the Facility is cancelled in full or in part in accordance with the terms of Clauses 8.3 (Cancellation by the Borrower) and/or 8.4 (Cancellation by the Lender) paragraphs (a), (b) and (c), the Borrower shall pay a cancellation indemnity computed at two point five per cent (2.5%) on the cancelled amount of the Facility.
Each cancellation indemnity shall be due and payable on the Payment Date immediately following a cancellation of all or part of the Facility.
9.3 Prepayment Indemnity
On account of any losses suffered by the Lender as a result of the prepayment of the whole or any part of the Facility in accordance with Clauses 8.1 (Voluntary prepayment) or 8.2 (Mandatory prepayment), the Borrower shall pay to the Lender an indemnity equal to the aggregate amount of:
(a) the Prepayment Compensatory Indemnity; and
9.4 Taxes and duties
9.5 Additional Costs
The Borrower shall pay to the Lender, within ten (10) Business Days of the Lender’s request, all Additional Costs incurred by the Lender as a result of: (i) the coming into force of any new law or regulation, or any amendment to, or any change in the interpretation or application of any existing law or regulation; or (ii) compliance with any law or regulation made after the Signing Date.
In this Clause 9.5, “Additional Costs” means:
(a) any cost arising after the Signing Date out of one of the event referred to in the first paragraph of this Clause 9.5 and not taken into account by the Lender to compute the financial conditions of the Facility; or
(b) any reduction of any amount due and payable under this Agreement;
which is incurred or suffered by the Lender as a result of (i) making the Facility available to the Borrower or (ii) entering into or performing its obligations under the Agreement.
9.6 Currency indemnity
If any sum due by the Borrower under this Agreement, or any order, judgment or award given or made in relation to such a sum, has to be converted from the currency in which that sum is payable into another currency, for the purpose of:
(a) making or filing a claim or proof against the Borrower; or
(b) obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,
the Borrower shall indemnify the Lender against and, within ten (10) Business Days of the Lender’s request and as permitted by law, pay to the Lender, the amount of any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between: (A) the exchange rate used to convert the relevant sum from the first currency to the second currency; and
(B) the exchange rate or rate(s) available to the Lender at the time of its
receipt of that sum. This obligation to indemnify the Lender is independent of any other obligation of the Borrower under this Agreement.
The Borrower waives any right it may have in any jurisdiction to pay any amount due under this Agreement in a currency or currency unit other than that in which it is expressed to be payable.
9.7 Due dates
Any indemnity or reimbursement payable by the Borrower to the Lender under this Clause 9 (Additional Payment Obligations) is due and payable on the Payment Date immediately following the circumstances which have given rise to the relevant indemnity or reimbursement.
Notwithstanding the above, any indemnity to be paid in connection with a prepayment pursuant to Clause 9.3 (Prepayment Indemnity) is due and payable on the date of the relevant prepayment.
10. REPRESENTATIONS AND WARRANTIES
All the representations and warranties set out in this Clause 10 (Representations and warranties) are made by the Borrower for the benefit of the Lender on the Signing Date. All the representations and warranties in this Clause 10 (Representations and warranties) are also deemed to be made by the Borrower on the date on which all of the conditions precedent listed in Part III and IV of Schedule 4 (Conditions Precedent) are satisfied, on the date of each Drawdown Request, on each Drawdown Date and on each Payment Date, except that the repeating representations contained in Clause 10.9 (No Misleading Information) are deemed to be made by the Borrower in relation to the information provided by the Borrower since the date on which the representation was last made.
10.1 Power and authority
The Borrower has the power to enter into, perform and deliver this Agreement and to perform all contemplated obligations. The Borrower has taken all necessary action to authorise its entry into, performance and delivery of this Agreement.
10.2 Validity and admissibility in evidence
All Authorisations required:
(b) to make this Agreement admissible in evidence in the courts of the jurisdiction of the Borrower or in arbitration proceedings as defined under Clause 17 (Governing Law, Enforcement and Choice of Domicile),
have been obtained and are in full force and effect, and no circumstances exist which could result in the revocation, non-renewal or modification, in whole or in part, of any such Authorisations.
10.3 Binding obligations
The obligations undertaken by the Borrower under this Agreement comply with all laws and regulations applicable to the Borrower in its jurisdiction and are legal, valid, binding and enforceable obligations which are effective in accordance with their written terms.
10.4 No filing or stamp taxes
Under the laws of the jurisdiction of the Borrower, it is not necessary that this Agreement be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any stamp, registration or similar taxes or fees be paid on or in relation to this Agreement or the transactions contemplated therein.
10.5 Transfer of funds
All amounts due by the Borrower to the Lender under this Agreement whether as principal or interest, late payment interest, Cancellation Indemnity, Prepayment Indemnity, incidental costs and expenses or any other sum are freely convertible and transferable.
This representation shall remain in full force and effect until full repayment of all sums due to the Lender. In the event that the repayment dates of the Facility are extended by the Lender, no further confirmation of this representation shall be necessary.
The Borrower shall obtain Euros necessary for compliance with this representation in due course.
Should any difficulty in respect of Xxxxxx’x right of conversion and free transfer of any sum under this Agreement occur for any reason, including but not limiting to: (i) the coming into force of any new law or regulation, or any amendment to, or any change in the interpretation or application of any existing law or regulation; or (ii) compliance with any law or regulation made after the Signing Date; the Borrower will secure, without delay, all required certificates/confirmations from competent authorities (including National Bank of Serbia) in order to enable that all due sums under this Agreement are freely convertible and transferable.
10.6 No conflict with other obligations
The entry into and performance by the Borrower of, and the transactions contemplated by, this Agreement do not conflict with any domestic or foreign law or regulation applicable to it, its constitutional documents (or any similar documents) or any agreement or instrument binding upon the Borrower or affecting any of its assets.
10.7 Governing Law and Enforcement
10.8 No Default
No Event of Default is continuing or is reasonably likely to occur.
No breach of the Borrower is continuing in relation to any other agreement binding upon it, or affecting any of its assets, which has, or is reasonably likely to have, a Material Adverse Effect.
10.9 No Misleading Information
All information and documents supplied by the Borrower to the Lender were true, accurate and up-to-date as at the date they were provided or, if appropriate, as at the date at which they are stated to be given and have not been varied, revoked, cancelled or renewed on revised terms, and are not misleading in any material respect as a result of an omission, the occurrence of new circumstances or the disclosure or non-disclosure of any information.
10.10 Pari Passu Ranking
The Borrower’s payment obligations under this Agreement rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors.
10.11 Licit Origin of the funds and Prohibited Practices
The Borrower represents and warrants that:
(a) all the funds allocated to support the Operation are from the proceeds of the Facility, the Co-Financing and the State’s budget, pursuant to the Budget Law of the Republic of Serbia valid from the year in which the Agreement is signed until the Operation Completion Date;
(b) the Operation has not given rise to any Prohibited Practices;
(c) it has not committed or participated in any act contrary to any anti- Money Laundering and counter-Terrorist Financing applicable law.
10.12 No Material Adverse Effect
The Borrower represents and warrants that no event or circumstance which is likely to have a Material Adverse Effect has occurred or is likely to occur.
10.13 No Immunity
If and to the extent that the Borrower may now or in future in any jurisdiction claim immunity for itself or its assets and to the extent that a jurisdiction grants immunity to the Borrower, the Borrower will not be entitled to claim for itself or any of its assets immunity from suit, execution, attachment or other legal process in connection with this Agreement to the fullest extent permitted by the laws of such jurisdiction.
The Borrower does not waive any immunity in respect of any present or future
(i) “premises of the mission” as defined in the Vienna Convention on Diplomatic Relations signed in 1961, (ii) “consular premises” as defined in the Vienna Convention on Consular Relations signed in 1963, (iii) assets that cannot be in commerce, (iv) military property or military assets and buildings, weapons and equipment designated for defence, state and public security, (v) receivables the assignment of which is restricted by law, (vi) natural resources, common use items, grids in public ownership, river basin land and water facilities in public ownership, protected natural heritage in public ownership and cultural heritage in public ownership, (vii) real estate in public ownership which is, partly or entirely, used by the authorities of the Republic of Serbia, autonomous provinces or local self-government for the purpose of exercising their rights and duties; (viii) the state's, autonomous province’s or local government’s stocks and shares in companies and public enterprises, unless the relevant entity consented to the establishment of a pledge over such stocks or shares, (ix) movable or immovable assets of health institutions, unless a mortgage was established based on the government's decision, (x) monetary assets and financial instruments determined as financial collateral in accordance with the law regulating financial collateral including monetary assets and financial instruments which are pledged in accordance with such law or (xi) other assets exempt from enforcement by international law or international treaties.
10.14 List of activities excluded from the Expenditure Framework
The Borrower represents and warrants that no project or budget items listed in the Expenditure Framework attached in Schedule 3C:
- relates in any way to activities part of AFD Exclusions List as presented in Schedule 9 (List of Exclusions);
- requires the acquisition of new land or resettlement of occupants.
10.15 Procurement
The Borrower hereby declares that it (i) has received a copy of the Applicable Procurement Regulations and (ii) understands the provisions of the Applicable Procurement Regulations.
The Beneficiary or Borrower is contractually bound by the Applicable Procurement Regulations as if such Procurement Regulations were incorporated by reference into this Agreement.
The Beneficiary or Borrower confirms that the procurement, award and performance of all contracts entered into for the purposes of implementing the Technical Assistance Tranche or any part thereof, comply with the provisions of the Applicable Procurement Regulations, including such contracts entered into, and/or for which the procurement process has started, prior to the Signing Date and that are retroactively financed by the Lender.
11. UNDERTAKINGS
The undertakings in this Clause 11 (Undertakings) take effect on the Signing Date and remain in full force and effect for as long as any amount is outstanding under this Agreement.
11.1 Compliance with Laws, Regulations and Obligations The Borrower shall comply
(b) with all of its obligations under this Agreement.
11.2 Authorisations
The Borrower shall promptly obtain, comply with and do all that is necessary to maintain in full force and effect any Authorisation required under any applicable law or regulation to enable it to perform its obligations under this Agreement and to ensure their legality, validity, enforceability and admissibility in evidence.
11.3 Operation Documents
The Borrower shall provide the Lender with a copy of any amendment to any Operation documents that are linked to the Financing Plan described in Schedule 3A (Financing Plan), the Expenditure Framework described in Schedule 3B (Expenditure Framework) and the Result Framework described in Schedule 3C (Result Framework).
The Borrower shall not make any material amendment to any Operation documents without obtaining the Co-Financiers prior consent.
11.4 Implementation and Preservation of the Operation The Borrower shall:
(a) implement the Operation in accordance with the generally accepted safety principles and in accordance with technical standards in force; and
(b) maintain the Operation assets in accordance with all applicable laws and regulations and in good operating and maintenance conditions, and use such assets in compliance with their purpose and all applicable laws and regulations.
11.5 Environmental and Social Responsibility
11.5.1 Implementation of environmental and social measures
In order to promote sustainable development, the Parties agree that it is necessary to promote compliance with internationally recognised environmental and labour standards, including fundamental conventions of the International Labour Organization (“ILO”) and the international environmental laws and regulations applicable in the Borrower’s jurisdiction.
For such purpose, the Borrower shall, with respect to its business activities in the context of the Operation:
- Comply with international standards for the protection of the environment and labour laws, particularly the fundamental conventions of the ILO and the international environmental conventions, in accordance with the applicable laws and regulations of the Republic of Serbia ;
- Put in place appropriate mitigation measures specific to the Operation as defined within the context of the environmental and social risk management policy of the Operation as described in the ESCP attached as Schedule 3D (Environmental and Social Commitment Plan).
The Lender reserves its right to exclude projects and budget items that do not comply with its own applicable regulations, in particular its Exclusion List as attached in Schedule 9 (List of Exclusions), from the Expenditure Framework at any point during Operation implementation.
11.5.2 Environmental and social grievance management
(ii) acknowledges that the ES Grievance Management Procedures have, as between the Borrower and the Lender, the same contractually binding effect as this Agreement.
(b) The Borrower expressly authorises the Lender to disclose to the Experts (as defined in the ES Grievance Management Procedures) and to parties involved in the compliance audit and/or dispute resolution procedure, the Operation documents concerning environmental and social matters necessary for processing the environmental and social Grievance (as defined in the ES Grievance Management Procedures), including, without limitation, those listed in Schedule 7 (Non-exhaustive list of environmental and social documents which the Borrower permits to be disclosed in connection with ES Grievance management procedures).
11.6 Additional Financing
The Borrower shall not amend or alter the Financing Plan without obtaining the Lender’s prior written consent and shall finance any additional costs not anticipated in the Financing Plan on terms which ensure that the Facility will be repaid.
11.7 Pari Passu Ranking
The Borrower undertakes (i) to ensure that its payment obligations under this Agreement rank at all times at least pari passu with its other present and future unsecured and unsubordinated payment obligations; (ii) not to grant
prior ranking or guarantees to any other lenders except if the same ranking or guarantees are granted by the Borrower in favour of the Lender, if so requested by the Lender.
11.8 Inspections
The Borrower hereby authorizes the Lender and its representatives to carry out inspections on a yearly basis, the purpose of which will be to assess the implementation of the Operation and the Result Framework described in Schedule 3C (Result Framework) on technical, financial and institutional aspects.
The Borrower shall co-operate and provide all reasonable assistance and information to the Lender and its representatives when carrying out such inspections, the timing and format of which shall be determined by the Lender following consultation with the Borrower.
The Borrower shall retain and make for inspection by the Lender, all documents relating to the expenses of the Operation for a period of ten (10) years from the date of the last Drawdown under the Facility.
11.9 Operation Evaluation
The Borrower acknowledges that the Lender may carry out, or procure that a third party carries out on its behalf, an evaluation of the Operation. Feedback from this evaluation will be used to produce a summary containing information on the Operation, such as: total amount and duration of the funding, objectives of the Operation, expected and achieved quantified outputs of the Operation, assessment of the relevance, effectiveness, impact and viability/sustainability of the Operation, main conclusions and recommendations.
The main objective of the evaluation will be the articulation of credible and independent judgement on the key issues of relevance, implementation (efficiency) and effects (effectiveness, impact and sustainability).
Evaluators will need to take into account in a balanced way the different legitimate points of view that may be expressed and conduct the evaluation impartially.
The Borrower will be involved as closely as possible in the evaluation, from the drafting of the Terms of Reference to the delivery of the final report.
The Borrower agrees to the publication of this summary, in particular on the Lender's website.
11.10 Financial Sanctions Lists and Embargo
The Borrower shall:
(a) ensure that no funds or economic resources of the Operation are made available, directly or indirectly, to or for the benefit of persons, groups or entities listed on any Financial Sanctions List;
(b) not finance, acquire or provide any supplies or intervene in sectors which are subject to an Embargo by the United Nations, the European Union or France.
11.11 Licit Origin, absence of Prohibited Practices
The Borrower undertakes:
(a) to use the funds of the Facility in accordance with the AFD Group’s policy to prevent and combat Prohibited practices as available on its Website;
(b) to ensure that funds, other than those of State origin, invested for the implementation of the Operation are not of Illicit Origin;
(c) to ensure that the Operation shall not give rise to any Prohibited Practice;
(d) as soon as it becomes aware of, or suspects, any Prohibited Practices, to inform the Lender without any delay;
(e) in the event referred to in paragraph above, or at the Lender’s request if the Lender suspects any Prohibited Practices have occurred, take all necessary actions to remedy the situation in a manner satisfactory to the Lender and within the time period determined by the Lender; and
(f) to notify the Lender without delay if it has knowledge of any information which leads it to suspect any Illicit Origin of any funds used for the implementation of the Operation.
11.12 Investigation
The Borrower shall allow the Lender or any third party mandated by the Lender, to carry out an investigation in the event of an allegation of Prohibited Practice. To this end, the Lender or any third party mandated by it is authorized to:
(a) communicate to interview anyone who may have information about an alleged Prohibited Practice;
(c) carry out visits of to the sites, facilities and works involved in related to the Operation; and
(d) achieve all the steps and actions necessary for these investigations.
The Borrower shall ensure that the tender documents, contracts and sub- contracts financed through the Facility allow for the provision implementation of this Clause 11.12.
Non-compliance with this Clause 11.12 by the Borrower could, at the discretion of the Lender, constitute a Non-Cooperative Practice.
11.13 Visibility and Communication
The Borrower shall implement visibility and communication actions related to the implementation of the Operation in accordance with the terms of the Visibility and Communication Guide, and acknowledges having fully read and understood the aforementioned guide.
According to the Visibility and Communication Guide, the Operation is subject to communication and visibility obligations of level 1.
11.14 Designated Account
The Borrower shall open, maintain and fund the Designated Account in accordance with the terms and conditions of this Agreement.
11.15 Procurement
In relation to the procurement, award and performance of contracts entered into for the purposes of implementing the Technical Assistance Tranche or any part thereof, the Borrower shall comply with, and implement, the provisions of the Applicable Procurement Regulations.
The Borrower shall take all actions and steps necessary for the effective implementation of the Applicable Procurement Regulations.
On behalf of the Lender, the Co-Financier shall issue the no-objection letters in accordance with the Applicable Procurement Regulations.
In case of contracts subject to international competition, the Borrower shall publish the request for expressions of interest, the invitation for prequalification or the invitation for bids as appropriate, on the website xxxx://xxx.xxxxxxxx.xxx.
The bidding documents and requests for proposals prepared by the Borrower for a specific procurement will include references to the Lender in the procurement notices (general procurement notice, specific procurement notices, and requests for expression of interest) and all other documentation relating to the contracts co-financed by the Lender.
Due to its specific legal and regulatory obligations, the Lender will not finance its respective part of a contract to a Provider who is on any of the Financial Sanctions List.
A duly signed AFD’s Covenant of Integrity set out in Schedule 8 shall be required from any applicant, bidder, proposer, or consultant and shall be deemed to form a part of the contract. In cases of non-competitive procurement processes, the signed AFD’s Covenant of Integrity shall be annexed to the signed contract.
In the case of prior review contracts, the Borrower is required to provide the Lender with a copy of the evaluation report (including prequalification report and short listing report, as applicable) at the same time it is submitted to the
Co-Financier. If a candidate, bidder or consultant does not meet the Lender’s financing eligibility requirements, the Lender will promptly inform the Co- Financier and the Borrower. The co-financiers shall then consult with the Borrower to determine the appropriate course of action.
In the case of post review contracts, the Borrower is required to submit to the Lender for its no-objection the terms of reference of the audits according to Clause “Control – audit” of this Agreement. These terms of reference shall include a review of the Borrower’s controls and operating procedures for complying with Applicable Procurement Regulations and the Lender’s financing eligibility requirements.
11.16 Implementation arrangements The Borrower undertakes:
(c) To maintain – through the Ministry of Finance – an Operation Coordination Unit (“OCU”) within the Department for International Cooperation and European Integration (“DICEI”), and contract consultants for the Operation, as may be required, under terms acceptable to the Lender. The Borrower, through the Ministry of Finance, shall be responsible, with regards to the Operation, for inter alia (i) overall management and coordination of the Operation implementation, acting as the technical secretariat for the Steering Committee and any potential sub-committees and technical level sub- working groups; (ii) monitoring Operation activities; (iii) monitoring compliance with environmental and social safeguards; (iv) regularly collecting and reporting data pertaining to DLR achievement and indicators contained in the OIM; (v) preparing Operation progress reports; (vi) coordinating the scope and implementation of work plans for the Project; and (vii) hiring the Verification Agent for DLI 1;
(d) To maintain – through the Ministry of Finance – a Central Fiduciary Unit (“CFU”) with terms of reference and resources acceptable to the Lender to be responsible for inter alia , (i) Technical Assistance Tranche financial management; (ii) Technical Assistance Tranche procurement; (iii) Technical Assistance Tranche financial reporting;
(iv) monitoring the programmatic budget items included in the Expenditure Framework ; and (v) data collection and analysis on Technical Assistance Eligible Expenditures;
(ii) institutional arrangements; (iii) financial management, governance and procurement systems; (iv) Steering Committee arrangements and responsibilities; (v) environmental and social management systems and an operational grievance redress mechanism; (vi) anti-corruption, including implementation of the Anti-Corruption Guidelines; (vii) monitoring and evaluation, reporting and communication, including Program indicators; (viii) detailed arrangements for verification of achievement of the DLRs (including the Verification Protocol); and (ix) such other administrative, financial, technical and organizational arrangements and procedures as shall be required for the Operation;
(h) To ensure the Public Policy Secretariat (“PPS”) serves as the Verification Agent in accordance with the Verification Protocol, throughout the implementation of the Operation, to (i) verify the data and other evidence supporting the achievement of DLIs 2 through 8, as set forth in the Result Framework of Schedule 3C (Result Framework) and (ii) submit to the Lender the corresponding verification reports in a timely manner and in form and substance satisfactory to the Lender.
12. INFORMATION UNDERTAKINGS
The undertakings in this Clause 12 (Information Undertakings) take effect on the Signing Date and remain in full force and effect for as long as any amount is outstanding under this Agreement.
12.1 Financial Information
The Borrower shall supply to the Lender any information that the Lender may reasonably require in relation to the Borrower’s foreign and domestic debt as well as the status of any guaranteed loans.
12.2 Operation Implementation
The Borrower shall supply to the Lender, promptly upon the Lender’s request, any information or supporting document regarding the Operation and the Result Framework implementation.
12.3 Progress Report
12.4 Co-Financing
The Borrower shall promptly inform the Lender of any cancellation (in whole or in part) or any prepayment under a Co-Financing.
12.5 Additional Information
The Borrower shall supply to the Lender:
13. EVENTS OF DEFAULTS
13.1 Events of Default
Each of the events or circumstances set out in this Clause 13.1 (Events of Default) is an Event of Default.
The Borrower does not pay on the due date any amount payable by it under this Agreement in the manner required under this Agreement. However, without prejudice to Clause 4.3 (Late payment and default interest), no Event of Default will occur under this paragraph (a) if such payment is made in full by the Borrower within five (5) Business Days of the due date.
(b) Undertakings and Obligations
The Borrower does not comply with any term of the Agreement, including, without limitation, any of the undertakings it has given pursuant to Clause 11 (Undertakings) and Clause 12 (Information Undertakings).
Save for the undertakings given pursuant to Clause 11.15 (Environmental and Social Liability), Clauses 11.10 (Financial Sanctions Lists and Embargo) and 11.11 (Licit Origin, absence of Prohibited Practices) in respect of which no grace period is permitted, no Event of Default will occur under this paragraph if the non-compliance is capable of remedy and is remedied within five (5) Business Days of the earlier of
(A) the date of the Lender’ notice of failure to the Borrower; and (B) the Borrower becoming aware of the breach, or within the time limit
determined by the Lender in the case referred to in subparagraph (f) of Clause 11.11 (Licit Origin, absence of Prohibited Practices).
A representation or warranty made by the Borrower in the Agreement, including under Clause 10 (Representations and warranties), or in any document delivered by or on behalf of the Borrower under or in relation to the Agreement, is incorrect or misleading when made or deemed to be made.
(i) Subject to paragraph (iii) any Financial Indebtedness of the Borrower is not paid on its due date or, if applicable, within any grace period granted pursuant to the relevant documentation.
(ii) Subject to paragraph (iii), a creditor has cancelled or suspended its commitment towards the Borrower pursuant to any Financial Indebtedness, or has declared the Financial Indebtedness due and payable prior to its specified maturity, or requested prepayment in full of the Financial Indebtedness, in each case, as a result of an event of default or any provision having a similar effect (howsoever described) pursuant to the relevant documentation.
(iii) No Event of Default will occur under this Clause 13.1 (d) if the relevant amount of Financial Indebtedness or the commitment for Financial Indebtedness falling within paragraphs (i) and (ii) above is less than thirty million euros (EUR 30,000,000) or its equivalent in any other currency(ies).
It is or becomes unlawful for the Borrower to perform any of its obligations under this Agreement.
(g) Withdrawal or suspension of the Operation Any of the following occurs:
(i) the Borrower withdraws from the Operation;
(ii) the implementation of the Operation is suspended by the Borrower for a period exceeding six (6) months; or
(i) Judgments, rulings or decisions having a Material Adverse Effect
(j) Suspension of free convertibility and free transfer
13.2 Acceleration
On and at any time after the occurrence of an Event of Default, the Lender may, without providing any formal demand or commencing any judicial or extra-judicial proceedings, by written notice to the Borrower:
(a) cancel the Available Facility; and/or
Without prejudice to the above, in the event that an Event of Default occurs as set out in Clause 13.1 (Events of Default), the Lender reserves the right to, upon written notice to the Borrower, (i) suspend or postpone any Drawdowns under the Facility; and/or (ii) suspend the finalisation of any agreements relating to other possible financial offers which have been notified by the Lender to the Borrower; and/or (iii) suspend or postpone any drawdown under any loan agreement entered into between the Borrower and the Lender.
If any drawdowns are postponed or suspended by a Co-Financier under an agreement between such Co-Financier and the Borrower, the Lender reserves the right to postpone or suspend any Drawdowns under the Facility.
13.3 Notification of an Event of Default
In accordance with Clause 12.5 (Additional Information), the Borrower shall promptly notify the Lender upon becoming aware of any event which is or is likely to be an Event of Default and inform the Lender of all the measures contemplated by the Borrower to remedy it.
14. ADMINISTRATION OF THE FACILITY
14.1 Payments
All payments received by the Lender under this Agreement shall be applied towards the payment of expenses, fees, interest, principal amounts or any other sum due under this Agreement in the following order:
(a) incidental costs and expenses;
(c) late-payment interest and default interest;
14.2 Set-off
Without prior approval of the Borrower, the Lender may, at any time, set-off due and payable obligations owed by the Borrower against any amounts held by the Lender on behalf of the Borrower or any due and payable obligations owed by the Lender to the Borrower. If the obligations are in different currencies, the Lender may convert either obligation at the prevailing currency exchange rate for the purpose of the set-off.
All payments made by the Borrower under the Agreement shall be calculated and made without set-off. The Borrower is prohibited from making any set-off.
14.3 Business Days
Without prejudice to the calculation of the Interest Period which remains unchanged, if a payment is due on a day which is not a Business Day, the due date for that payment shall be the next Business Day if the next Business Day is in the same calendar month, or the preceding Business Day if the next Business Day is not in the same calendar month.
14.4 Currency of payment
The currency of each amount payable under this Agreement is Euros, except as provided in Clause 14.6 (Place of payment).
14.5 Day count convention
Any interest, fee or expense accruing under this Agreement will be calculated on the basis of the actual number of days elapsed and a year of three hundred and sixty (360) days in accordance with European interbank market practice.
14.6 Place of payment
RIB Code: 00000 00000 00000040235 03
IBAN Code: XX00 0000 0000 0000 0000 0000 000
Banque de France SWIFT code (BIC): XXXXXXXXXXX
opened by the Lender at the Banque de France (head office/main branch) in Paris or any other account notified by the Lender to the Borrower.
− Principal: name, address, bank account number (field 50)
− Principal’s bank: name and address (field 52)
− Reference: name of the Borrower, name of the Operation, reference number of the Agreement (field 70)
(d) All payments made by the Borrower shall comply with this Clause 14.6 (Place of payment) in order for the relevant payment obligation to be deemed discharged in full.
14.7 Payment Systems Disruption
If the Lender determines (in its discretion) that a Payment Systems Disruption Event has occurred or the Borrower notifies the Lender that a Payment Systems Disruption Event has occurred, the Lender:
(c) shall not be liable for any cost, loss or liability arising as a result of its taking, or failing to take, any actions pursuant to this Clause 14.7 (Payment Systems Disruption).
15. MISCELLANEOUS
15.1 Language
The language of this Agreement is English. If this Agreement is translated into another language, the English version shall prevail in the event of any conflicting interpretation or in the event of a dispute between the Parties.
All notices given or documents provided under, or in connection with, this Agreement shall be in English.
The Lender may request that a notice or document provided under, or in connection with, this Agreement which is not in English is accompanied by a certified English translation, in which case, the English translation shall prevail unless the document is a statutory document of an company, legal text or other official document.
15.2 Certifications and determinations
In any litigation or arbitration arising out of or in connection with this Agreement, entries made in the accounts maintained by the Lender are prima facie evidence of the matters to which they relate.
Any certification or determination by the Lender of a rate or amount under this Agreement will be, in the absence of manifest error, conclusive evidence of the matters to which it relates.
15.3 Partial invalidity
If, at any time, a term of this Agreement is or becomes illegal, invalid or unenforceable, neither the validity, legality or enforceability of the remaining provisions of this Agreement will in any way be affected or impaired.
15.4 No Waiver
Failure to exercise, or a delay in exercising, on the part of the Lender of any right under the Agreement shall not operate as a waiver of that right.
Partial exercise of any right shall not prevent any further exercise of such right or the exercise of any other right or remedy under the applicable law.
The rights and remedies of the Lender under this Agreement are cumulative and not exclusive of any rights and remedies under the applicable law.
15.5 Assignment
The Borrower may not assign or transfer, in any manner whatsoever, all or any of its rights and obligations under this Agreement without the prior written consent of the Lender.
The Lender may assign or transfer any of its rights or obligations under this Agreement to any other third party and may enter into any sub-participation agreement relating thereto. The Lender shall promptly inform the Borrower if such assignment or transfer occurs.
15.6 Legal effect
The Schedules annexed hereto and the recitals hereof form part of this Agreement and have the same legal effect.
15.7 Entire agreement
As of the Signing Date, this Agreement represents the entire agreement between the Parties in relation to the matters set out herein, and supersedes and replaces all previous documents, agreements or understandings which may have been exchanged or communicated as part of the negotiations in connection with this Agreement.
15.8 Amendments
No amendment may be made to this Agreement unless expressly agreed in writing between the Parties.
15.9 Confidentiality – Disclosure of information
(c) Furthermore, the Borrower hereby expressly authorizes the Lender:
(ii) to publish on the Lender’s Website;
information relating to the Operation and its financing as listed in Schedule 6 (Information that may be published on the French Government Website and the Lender’s Website).
15.10 Limitation
The statute of limitations of any claims under this Agreement shall be ten (10) years, except for any claim of interest due under this Agreement.
15.11 Hardship
Each Party hereby acknowledges that the provisions of article 1195 of the French Code civil shall not apply to it with respect to its obligations under the
Agreement and it shall be not entitled to make any claim under article 1195 of the French Code civil.
16. NOTICES
16.1 In writing and addresses
Any notice, request or other communication to be given or made under or in connection with this Agreement shall be given or made in writing and, unless otherwise stated, may be given or made by fax or by letter sent by the post office to the address and number of the relevant Party set out below:
For the Borrower:
MINISTRY OF FINANCE
Address: 00 Xxxxx Xxxxxx Xx. 11000 Belgrade Telephone: (000-00) 000 0000
Facsimile: (000-00) 0000-000 E-mail: xxxxxxx@xxxx.xxx.xx
Attention: Xxxxxx Xxxx, Minister of Finance For the Lender:
AFD –WESTERN BALKANS REGIONAL OFFICE
Address: Xxxx Xxxxxx 00, 00000 Xxxxxxxx, Xxxxxxxx xx Xxxxxx Telephone: x(000) 00.00.00.000
Attention: Head of Western Balkans Regional Office With a copy to:
AFD – XXXXX XXXX OFFICE
Address: 0, xxx Xxxxxx Xxxxxxx – 00000 Xxxxx Xxxxx 00, Xxxxxx Telephone: + 00 0 00 00 00 00
Attention: Head of Europe, Middle East and Asia Department
or such other address, fax number, department or officer as one Party notifies to the other Party.
16.2 Delivery
Any notice, request or communication made or any document sent by a Party to the other Party in connection with this Agreement will only be effective:
(a) if by fax, when received in a legible form; and
(b) if by letter sent though the post office, when delivered to the correct address,and, where a particular person or a department is specified as part of the address details provided under Clause 16.1 (In writing and addresses), if such notice, request or communication has been addressed to that person or department.
16.3 Electronic communications
(a) Any communication made by one person to another under or in connection with this Agreement may be made by electronic mail or other electronic means if the Parties:
(ii) agree that, unless and until notified to the contrary, this is to be an accepted form of communication;
(iii) notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and
(iv) notify each other of any change to their address or any other such information supplied by them.
(b) Any electronic communication made between the Parties will be effective only when actually received in a readable form.
17. GOVERNING LAW, ENFORCEMENT AND CHOICE OF DOMICILE
17.1 Governing Law
This Agreement is governed by French law.
17.2 Arbitration
Any dispute arising out of or in connection with this Agreement shall be referred to and finally settled by arbitration under the Rules of Conciliation and Arbitration of the International Chamber of Commerce applicable on the date of commencement of arbitration proceedings, by one or more arbitrators to be appointed in accordance with such Rules.
The seat of arbitration shall be Paris and the language of arbitration shall be English.
This arbitration clause shall remain in full force and effect if this Agreement is declared void or is terminated or cancelled and following expiry of this Agreement. The Parties’ contractual obligations under this Agreement are not suspended if a Party initiates legal proceedings against the other Party.
The Parties expressly agree that, by signing this Agreement, the Borrower irrevocably waives all rights of immunity in respect of jurisdiction or execution on which it could otherwise rely.
For the avoidance of doubt, this waiver includes a waiver of immunity from:
(i) Any suit or legal, judicial or arbitral process arising out of, in relation to or in connection with this Agreement;
(ii) Giving of any relief by way of injunction or order for specific performance or for the recovery of assets or revenues;
(iii) Any effort to confirm, recognize, enforce or execute any decision, settlement, award judgment, execution order or, in an action in rem, any effort for the arrest, for the arrest, detention or sale of any of its assets and revenues that result from any arbitration, or any legal, judicial or administrative proceedings.
The Borrower does not waive any immunity in respect of any present or future
(i) “premises of the mission” as defined in the Vienna Convention on Diplomatic Relations signed in 1961, (ii) “consular premises” as defined in the Vienna Convention on Consular Relations signed in 1963, (iii) assets that cannot be in commerce, (iv) military property or military assets and buildings, weapons and equipment designated for defence, state and public security, (v) receivables the assignment of which is restricted by law, (vi) natural resources, common use items, grids in public ownership, river basin land and water facilities in public ownership, protected natural heritage in public ownership and cultural heritage in public ownership, (vii) real estate in public ownership which is, partly or entirely, used by the authorities of the Republic of Serbia, autonomous provinces or local self-government for the purpose of exercising their rights and duties; (viii) the state's, autonomous province’s or local government’s stocks and shares in companies and public enterprises, unless the relevant entity consented to the establishment of a pledge over such stocks or shares, (ix) movable or immovable assets of health institutions, unless a mortgage was established based on the government's decision, (x) monetary assets and financial instruments determined as financial collateral in accordance with the law regulating financial collateral including monetary assets and financial instruments which are pledged in accordance with such law or (xi) other assets exempt from enforcement by international law or international treaties.
17.3 Service of process
Without prejudice to any applicable law, for the purposes of serving judicial and extrajudicial documents in connection with any action or proceedings referred to above, the Borrower irrevocably chooses its registered office as at the date of this Agreement at the address set out in Clause 16 (Notices) for service of process, and the Lender chooses the address “AFD SIEGE” set out in Clause 16 (Notices) for service of process.
18. DURATION
This Agreement comes into force on the Effective Date and remains in full force and effect for as long as any amount is outstanding under this Agreement.
Notwithstanding the above, the obligations under Clause 15.9 (Confidentiality
– Disclosure of information) shall survive and remain in full force and effect for a period of [five] years after the last Payment Date; the provisions of Clause
11.5.2 (Environmental and social grievance management) shall continue to have effect whilst any grievance lodged under the ES Grievance Management Procedures is still being processed or monitored.
Made in three (3) originals, one (1) for the Lender and two (2) for the Borrower in Belgrade, Republic of Serbia, on 26 June 2023.
BORROWER REPUBLIC OF SERBIA
Represented by:
Name: Xxxxxx Xxxx
Capacity: Deputy Prime Minister and Minister of Finance
LENDER
AGENCE FRANÇAISE DE DÉVELOPPEMENT
Represented by:
Name: Xxxxxxxxx Xxxxxxxxxx
Capacity: Head of Western Balkans regional office
Xxxxxxxx, His Excellency Xx. Xxxxxx Xxxxxxx, Ambassador of France
SCHEDULE 1A – DEFINITIONS
Act of Corruption | means any of the following: (a) the act of promising, offering or giving, directly or indirectly, to a Public Official or to any person who directs or works, in any capacity, for a private sector entity, an undue advantage of any nature, for the relevant person himself or herself or for another person or entity, in order that this person acts or refrains from acting in breach of his or her legal, contractual or professional obligations and, having for effect to influence his or her own actions or those of another person or entity; or (b) the act of a Public Official or any person who directs or works, in any capacity, for a private sector entity, soliciting or accepting, directly or indirectly, an undue advantage of any nature, for the relevant person himself or herself or for another person or entity, in order that this person acts or refrains from acting in breach of his or her legal, contractual or professional obligations and, having for effect to influence his or her own actions or those of another person or entity. |
Act(s) of Terrorism | means: (i) Any act prohibited by the United Nations Conventions and Protocols related to the fight against terrorism (which may be consulted on the following website: xxxxx://xxxxx.xx.xxx/xxx/Xxxxxxx.xxxx); (ii) any of the offences referred to in articles 3 to 10 of Directive (EU) 2017/541 of the European Parliament of 15 March 2017 on combating terrorism; or (iii) any other act intended to cause death or serious bodily injury to a civilian, or to any other person not taking an active part in the hostilities in a situation of armed conflict, when the purpose of such act, by its nature or context, is to intimidate a population, or to compel a government or an international organisation to do or abstain from doing any act. |
Advance(s) | has the meaning given to it in Clause 3.4 (Payment mechanics). |
AFD’s Covenant of Integrity | means the statement, to be signed by each of the Contractors, as provided in Schedule 8 |
(AFD’s Covenant of Integrity), and the content of which can be updated from time to time by the Lender. | |
Agreement | means this credit facility agreement, including its recitals, Schedules and, if applicable, any amendments made in writing thereto. |
AJARB | means the Administration for Joint Affairs of Republican Bodies or any potential successor organization(s). |
Anti-Competitive Practices | means: (a) any concerted or implicit action having as its object and/or as its effects to impede, restrict or distort fair competition in a market, including without limitation when it tends to: (i) limit market access or the free exercise of competition by other companies; (ii) prevent price setting by the free play of markets by artificially favouring the increase or decrease of such prices; (iii) limit or control any production, markets, investment or technical progress; or (iv) share out markets or sources of supply; (b) any abuse by a company or group of companies of a dominant position within a domestic market or in a substantial part thereof; or (c) any bid or predatory pricing having as its object and/or its effect to eliminate from a market, or to prevent a company or one of its products from accessing the market. |
Applicable Procurement Regulations | means the contractual provisions in the regulations relating to procurement financed by the Co-Financier (in particular “Regulations for Investment Projects Financing Borrowers”) in full force and effect on the date of this Agreement, a copy of which is available on the Co-Financier’s website. |
Authorisation(s) | means any authorisation, consent, approval, resolution, permit, licence, exemption, filing, notarisation or registration, or any exemptions in respect thereof, obtained from or provided by an Authority, whether granted by means of an act, or deemed granted if no answer is received within a defined time limit, as well as any approval and consent given by the Borrower’s creditors. |
Authority(ies) | means any government or statutory entity, department or commission exercising a public prerogative, or any administration, court, agency or State or any governmental, administrative, tax or judicial entity. |
Availability Period | means the period from and including the Signing Date up to the Deadline for Drawdown of Funds. |
Available Facility | means, at any given time, the maximum principal amount specified in Clause 2.1 (Facility) less: (i) the aggregate amount of any Drawdowns drawn by the Borrower; (ii) the amount of any Drawdown to be made pursuant to any pending Drawdown Request; and (iii) any portion of the Facility which has been cancelled pursuant to Clauses 8.3 (Cancellation by the Borrower) and/or 8.4 (Cancellation by the Lender). |
AWPB | Annual Work Plan and Budget |
Brown Expenditures | means expenditures that are environmentally harmful, such as those associated with higher emissions or greater pollution. |
Budget Law | means the law enacted by the Borrower on an annual basis setting forth the Government’s budget. |
Budget Support Tranche | means the part of the Facility financing the Expenditure Framework and disbursed to the Treasury Account. |
Business Day | means a day (other than Saturday or Sunday) on which banks are open for general business in Paris, and which is a TARGET Day in the event that a Drawdown has to be made on such day. |
Calculator | means a cost calculator software for the preparation of Public Policy Documents. |
Capital Projects | means (i) a project for the construction or major maintenance of buildings or infrastructure facilities of interest for the Borrower or a local authority, including project planning services that are integral parts of such project and procurement of land for construction; (ii) a project that involves investment in equipment, machinery, and other non-financial assets that serve the public interest; [and/or] (iii) public investments in non-financial assets with a service or useful life of more than one year funded from the Borrower’s budget, budget of a local authority, loan, and/or grant received on behalf of the Borrower or guaranteed by the Borrower. |
Central Fiduciary Unit or CFU | means the MOF unit referred to in Clause 11.16 (c) of this Agreement. |
Certified | means for any copy, photocopy or other duplicate of an original document, the certification by any duly authorised person, as to the conformity of the copy, photocopy or duplicate with the original document. |
Citizen Budget | means the Guide through the Budget of the Republic of Serbia, a document published by the MOF accompanying the annual Budget Law, which aims to elaborate the annual budget allocations and goals to citizens in a non- technical and simplified manner. |
Co-Financier | means the following co-financier(s) of the Operation: The International Bank for Reconstruction and Development (IBRD), for a maximum amount of sixty-nine million three hundred thousand euros (EUR 69,300,000). |
Co-Financing | means jointly the Facility and financing committed by the Co-Financier as set out in the Financing Plan |
Co-Financing Agreement | means the agreement to be entered into between the Lender and the Co-Financier, providing terms and conditions under which, among others, the Lender and the Co-Financier shall jointly co-finance the activities under the Technical Assistance Tranche. |
Climate Change Law | means the law duly published in the Borrower’s Official Gazette No. 26/2021, dated March 23, 2021. |
Deadline for Drawdown of Funds | means September 30, 2027, date after which no further Drawdown may occur. |
Deadline for the First Drawdown | means May 15, 2024. |
Designated Account | has the meaning given to that term in Clause 3.4. |
Deadline for Use of Funds | means September 30, 2027. |
Decree on Capital Projects Management | means the Decree duly published in the Borrower’s Official Gazette No. 51/2019, dated July 19, 2019, and No. 139/2022, dated December 16, 2022. |
DICEI | Means the Department for International Cooperation and European Integration of the Ministry of Finance and any potential successor organization(s). |
Direct Budget Beneficiaries | means the different Borrower agencies and bodies identified under Article 2 of the BSL, or any successor legislation. |
Disbursement and Financial Information Letter or DFIL | means the Disbursement and Financial Information Letter to be issued by the Co- Financier to the Borrower (after prior consultation with the Lender) providing instructions with respect to drawdowns (disbursements) under the Facility (Technical Assistance Tranche) and the Co-Financier Loan Agreement between the Borrower and the Co- Financier, in accordance with the Co-Financing Agreement, as such DFIL may be amended from time to time. |
Disbursement-Linked Result or DLR | means the result as set forth in Schedule 3C (Result framework) on the basis of the achievement of which the Facility allocated to said result may be withdrawn. |
Disbursement Notice | means the notice sent by the Co-Financier to the Lender advising the Lender to make available to the Borrower the requested Drawdown, in accordance with the Co- Financing Agreement. |
Drawdown | means a drawdown of all or part of the Facility made available by the Lender to the Borrower pursuant to the terms and conditions set out in Clause 3 (Drawdown of Funds) or the principal amount outstanding of such Drawdown which remains due and payable at a given time. |
Drawdown Date | means the date on which a Drawdown is made available by the Lender. |
Drawdown Period | means the period starting on the first Drawdown Date up to and including the first of the following date: (a) the date on which the Available Facility is equal to zero; (b) the Deadline for Drawdown of Funds. |
Drawdown Request | means a request substantially in the form set out in Schedule 5A (Form of Drawdown Request). |
Effective Date | means the date on which the conditions set out in Part II of Schedule 4 (Conditions Precedent) have been fulfilled and shall occur at the latest 180 calendar days after the Signing Date. |
Embargo | means any sanction of a commercial nature aiming at prohibiting any import and/or export (supply, sale or transfer) of one or several goods, products or services going to and/or coming from a country for a given period as published and amended from time to time by the United Nations, the European Union or France. |
ES Grievance Management Procedures | means the contractual terms contained in the Environmental and Social Grievance Management Procedures, which is available on the Website, as amended from time to time. |
EURIBOR | means the inter-bank rate applicable to Euro for any deposits denominated in Euro for a period comparable to the relevant period, as determined by the European Money Markets Institute (EMMI), or any successor administrator, at 11:00 am Brussels time, two (2) Business Days before the first day of the Interest Period. |
Euro(s) or EUR | means the single currency of the member states of the European Economic and Monetary Union, including France, and having legal tender in such Member States. |
Event of Default | means any event or circumstance set out in Clause 13.1 (Events of Default). |
Expenditure Framework | means the set of expenditures from the Borrower’s budget which (i) can be financed from the Budget Support proceeds subject to the Borrower achieving DLRs; and (ii) are described in Schedule 3B. |
Facility | means the credit facility made available by the Lender to the Borrower in accordance with this Agreement up to the maximum principal amount set out in Clause 2.1 (Facility). |
Financial Indebtedness | means any financial indebtedness for and in respect of: (b) any monies borrowed on a short, medium or long-term basis; (c) any amounts raised pursuant to the issue of bonds, notes, debentures, loan stock or any similar instruments; (d) any funds raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing; (e) any potential payment obligation that results from a guarantee, bond, or any other instrument. |
Financial Sanctions List | means the list(s) of persons, groups or entities which are subject to financial sanctions by the United Nations, the European Union and/or France. For information purposes only and for the convenience of the Borrower, who may rely on, the following references or website addresses: For the lists maintained by the United Nations, the European Union and France, the following website may be consulted: xxxxx://xxxx-xxxxxx.xxxxxxxx.xxxx.xx/Xxxx |
Financing Plan | means the financing plan of the Operation attached as Schedule 3A (Financing Plan). |
Fiscal Strategy | means a Borrower document that, pursuant to the Budget System Law, states the fiscal policy goals and is submitted annually by the Borrower’s Government to the Parliament. |
Fixed Reference Rate | Means three point seventy per cent (3.70%) per annum. |
Fraud | means any unfair practice (acts or omissions) deliberately intended to mislead others, to intentionally conceal elements there from, or to betray or vitiate his/her consent, to circumvent any legal or regulatory requirements and/or to violate internal rules and procedures of the Borrower or a third party in order to obtain an illegitimate benefit. |
Fraud against the Financial Interests of the European Union | means any intentional act or omission intended to damage the European Union budget and involving (i) the use or presentation of false, inaccurate or incomplete statements or documents, which has as effect the misappropriation or wrongful retention of funds or any illegal reduction in resources of the general budget of the European Union; (ii) the non-disclosure of information with the same effect; and (iii) misappropriation of such funds for purposes other than those for which such funds were originally granted. |
GHG | means greenhouse gas. |
GHG emission permit | means, pursuant to Article 25 of the Climate Change Law, a permit issued by MoEP to an operator of an Installation in which an activity is expected to be carried out that would produce GHG emissions; “Emission Permits” means more than one Emission Permit. |
Grace Period | means the period from the Signing Date up to and including the date falling seventy-two (72) months after such date, during which no principal repayment under the Facility is due and payable. |
Green Agenda | means the Borrower’s commitments resulting from the adoption of the 2020 Sofia Declaration on the Green Agenda for the Western Balkans, the 2021 Action Plan, as well as the potential adoption of the 2023 national green agenda strategy, with regards to: (i) climate, energy and mobility; (ii) circular economy; (iii) depollution; (iv) sustainable agriculture and food production; and (v) biodiversity |
GoS | means “Government of Serbia”. |
Guidelines on Green Procurement | means the guidelines published on the PPO's website, as may be revised, that public bodies should follow when procuring goods, services and works to ensure (i) minimal impact on the environment; and (ii) energy efficiency (i.e., an adequate reduction in energy consumption) |
Guidelines on Inclusion of Green Aspects into Public Policy Documents | means a set of guidance to be developed by the PPS for PPDs proponents to consider how green aspects can be included into Public Policy Documents. |
IBRD | means International Bank for Reconstruction and Development. |
IBRD Loan Agreement | means the agreement and all the related financing documentations to be entered into between IBRD (the Co-Financier) and the Borrower providing terms and conditions under which the IBRD loan will be made available to the Borrower. |
Illicit Origin | means funds obtained through: (a) the commission of any predicate offence |
as designated in the FATF 40 recommendations Glossary under “Designated categories of offences” (xxxxx://xxx.xxxx- xxxx.xxx/xxxxx/xxxx/xxxxxxxxx/xxxxxxxxxxx ions/pdfs/FATF%20Recommendations%20 2012.pdf) ; (b) any Act of Corruption; or (c) any Fraud against the Financial Interests of the European Community, if or when applicable. | |
Index Rate | means the TEC 10 daily index, the ten-year constant maturity rate displayed on a daily basis on the relevant quotation page of the Reference Financial Institution or any other index which may replace the TEC 10 daily index. On the Signing Rate Setting Date, the Index Rate is two point ninety-five per cent (2.95%) per annum. |
Installations | means, pursuant to Article 11 of the Climate Change Law, a stationary technical unit where one or more activities that produce GHG emissions are carried out |
Institutions | means the seven (7) contracting entities that will be involved in broadening the use of green public procurement as part of DLI5: PPO, MoEP, MoE, MoCTI, MoH, MoAFWM, and AJARB. |
Interest Period(s) | means each period from a Payment Date (inclusive) up to the next Payment Date (exclusive). For each Drawdown under the Facility, the first interest period shall start on the Drawdown Date (inclusive) and end on the next successive Payment Date (exclusive). |
Interest Rate | means the interest rate expressed as a percentage and determined in accordance with Clause 4.1 (Interest Rate). |
Interministerial Working Group | means the Interministerial working group for the PFM and achievement of the Green Agenda goals (Međuresorna radna grupa za reform javnih finansija radi ostvarivanja ciljeva Zelene agende) established pursuant to Government Decision No. 02-4955/2022-1 dated June 23, 2022. |
Line Ministries | means the Borrower ministries, other than the MOF, with delegated budget execution authority, as identified under the Borrower’s Law on Ministries, duly published in the Borrower’s Official Gazette No. 128/2020 dated October 26, 2020, and No. 116/2022 dated October 22, 2022 |
List of Priority Projects | means the list identified under Article 3 of the Decree on Capital Projects Management. |
Xxxxxx | means sixty-five (65) basis points per annum. |
Market Disruption Event | means the occurrence of one of the following events: (a) EURIBOR is not determined by the European Money Markets Institute (EMMI), or any successor administrator, at 11:00am Brussels time, two (2) Business Days before the first day of the relevant Interest Period or on the Rate Setting Date; or (b) before close of business of the European interbank market, two (2) Business Days prior to the first day of the relevant Interest Period or on the Rate Setting Date, the Borrower receives notification from the Lender that (i) the cost to the Lender of obtaining matching resources in the relevant interbank market would be in excess of EURIBOR for the relevant Interest Period; or (ii) it cannot or will not be able to obtain matching resources on the relevant interbank market in the ordinary course of business to fund the relevant Drawdown for the relevant time period. |
Material Adverse Effect | means a material and adverse effect on: (a) the Operation, insofar as it would jeopardise the implementation and operation of the Operation in accordance with this Agreement; (b) the business, assets, financial condition of the Borrower or its ability to perform its obligations under this Agreement; (c) the validity or enforceability of this Agreement; or (d) any right or remedy of the Lender under this Agreement. |
MoAFWM | means the Ministry of Agriculture, Forestry and Water Management and any potential successor organization(s). |
MoCTI | means the Ministry of Construction, Transport and Infrastructure and any potential successor organization(s). |
MoE | means the Ministry of Economy and any potential successor organization(s). |
MoEP | means the Ministry of Environmental Protection and any potential successor organization(s). |
MoF | means the Ministry of Finance and any potential successor organization(s). |
MoH | means the Ministry of Health and any potential successor organization(s). |
MoME | means the Ministry of Mining and Energy and any potential successor organization(s). |
Misuse of AFD's Funds or Assets | means the non-compliant, inappropriate and/or abusive use of the resources, property or assets belonging to the Lender, made knowingly, recklessly or negligently. |
Money Laundering | means: (i) the act of facilitating by any means, the false justification of the origin of the assets or proceeds of the perpetrator of a felony or a misdemeanour which has brought him a direct or indirect benefit; or (ii) the act of assisting in investing, concealing or converting the direct or indirect proceeds of a felony or a misdemeanour. |
MRV | means Monitoring, Reporting and Verification – a system set up to track GHG emissions and the implementation of climate-related policies. |
NDC | means nationally determined contributions, pursuant to the United Nations Framework Convention on Climate Change |
Non-Cooperative Practices | means: (i) The act of destroying, falsifying, altering, concealing or unreasonably withholding evidence or any other information, documents or records sought to be disclosed in connection with an investigation by the Lender of an allegation of Prohibited Practices to materially obstruct the investigation; or the act of making false statements to materially obstruct the investigation of an allegation of Prohibited Practices; or (ii) The act of threatening, harassing or intimidating any party in order to prevent it from disclosing information relating to an investigation conducted by the Lender, or the continuation of the investigation; or (iii) Any act carried out in order to materially obstruct the Lender in exercising its’s contractual rights to audit, inspect or access to information in the context of an investigation based on an allegation of Prohibited Practices. |
Operation | means the operation consisting of the Program and the Technical Assistance as described in Schedule 2 (Operation Description). |
Operation Completion Date | means the date for the technical completion of the Operation which is expected to be December 31, 2026. |
Operation Coordination Unit or OCU | means the MOF unit referred to in Clause 11.16 (b) of this Agreement. |
Operation Implementation Manual or OIM | means the document outlining the Program’s DLR verification protocol, the process for their verification, the technical and financial reporting requirements and any other technical, social, environmental, fiduciary and other Operation- related duties necessary for the proper implementation of the Operation. |
Outstanding Principal | means, in respect of any Drawdown, the outstanding principal amount due in respect of such Drawdown, corresponding to the amount of the Drawdown paid by the Lender to the Borrower less the aggregate of instalments of principal repaid by the Borrower to the Lender in respect of such Drawdown. |
Payment Dates | means April 15 and October 15 of each year. |
Payment Systems Disruption Event | means either or both of: (a) a material disruption to the payment or communication systems or to the financial markets which are, in each case, required to operate in order for payments to be made in connection with the Facility (or otherwise in order for the transactions contemplated by this Agreement to be carried out), provided that the disruption is not caused by, and is beyond the control of, any of the Parties; or (b) the occurrence of any other event which results in a disruption (of a technical or system-related nature) to the treasury or payment operations of a Party preventing that, or any other Party: (i) from performing its payment obligations under this Agreement; or (ii) from communicating with the other Parties in accordance with the terms of this Agreement; and which (in either case) is not caused by, and is beyond the control of, either Party. |
PIMIS | means the Borrower’s public investment management information systems. |
PPD | means strategies, programmes, action plans and policy concept, pursuant to Article 10 of the Borrower’s Law on the Planning System, duly published in the Borrower’s Official Gazette No. 30/2018 dated April 20, 2018. |
PPO | means the Public Procurement Office and any potential successor organization(s). |
PPS | means the Public Policy Secretariat and any potential successor organization(s). |
Prepayment Compensatory Indemnity | means the indemnity calculated by applying the following percentage to the amount of the Facility which is repaid in advance: - if the repayment occurs prior to the third |
anniversary (exclusive) of the Signing Date: two point five per cent (2.50%); - if the repayment occurs between the third anniversary (inclusive) and the fourth anniversary (exclusive) of the Signing Date: two per cent (2.00%); - if the repayment occurs between the fourth anniversary (inclusive) and the fifth anniversary (exclusive) of the Signing Date: one point five per cent (1.50%); - if the repayment occurs between the fifth anniversary (inclusive) and the sixth anniversary (exclusive) of the Signing Date: one per cent (1.00%); - if the repayment occurs after the sixth anniversary (inclusive) of the Signing Date: zero point five per cent (0.50%). | |
Program | means the program as described in Schedule 2 (Operation Description) |
Prohibited Practice(s) | Means Anti-Competitive Practices, Acts of Corruption, Fraud, Fraud against the Financial Interests of the European Union, Non- Cooperative Practices, Misuse of AFD's Funds or Assets, as well as any breach of any applicable anti-Money Laundering and counter- Terrorist Financing laws. |
Public Official | means (i) any holder of legislative, executive, administrative or judicial office whether appointed or elected, serving on permanent basis or otherwise, paid or unpaid, regardless of rank, or (ii) any other person defined as a public official under the domestic law of the Borrower’s jurisdiction, and (iii) any other person exercising a public function, including for a public agency or organisation, or providing a public service. |
Rate Conversion | means the conversion of the floating rate applicable to all or part of the Facility into a fixed rate pursuant to Clause 4.1 (Interest Rate). |
Rate Conversion Request | means a request from the Borrower substantially in the form attached as Schedule 5C (Form of Rate Conversion Request). |
Rate Setting Date | means , for each fixed rate Drawdown or Change to the calculation of interest: (i) the first Wednesday (or, if that date is not a Business Day, the immediately following Business Day) following the date of receipt by the Lender of the Drawdown Request [or of the Change to the calculation of interest Request], provided that the Request is received by the Lender at least two (2) full Business Days prior to said Wednesday; (ii) in other cases, the second Wednesday (or, if that date is not a Business Day, |
the immediately following Business Day) following the date of receipt by the Lender of the Drawdown Request [or of the Change to the calculation of interest Request]1. | |
Reference Financial Institution | means a financial institution chosen as a suitable reference financial institution by the Lender and which regularly publishes quotations of financial instruments on one of the international financial information networks according to the practices recognised by the banking industry. |
Result Framework | means the chart attached as Schedule 3C listing the disbursement-linked indicators (DLIs) and intermediate result indicators (IRI) agreed upon between the Parties to monitor the implementation of the Program and authorizes Drawdowns on the Facility. |
RPD | means the Republic Property Directorate and any potential successor organization(s). |
Schedule(s) | means any schedule or schedules to this Agreement. |
SEPA | means the Borrower’s Environmental Protection Agency, or any legal successor hereto. |
Signing Date | means the date of execution of this Agreement by all the Parties. |
Signing Rate Setting Date | means June 21, 2023. |
Steering Committee | means the body referred to in Clause 11.16 of this Agreement to be set up for the duration of the Operation. |
TARGET Day | means a day on which the Trans European Automated Real Time Gross Settlement Express Transfer 2 (TARGET2) system, or any successor thereto, is open for payment settlement in Euros. |
Tax(es) | means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with a failure to pay or any delay in the payment of any such amounts). |
Technical Assistance | means the technical assistance described in Schedule 2 (Operation Description). |
Technical Assistance Tranche | means the part of the Facility financing the Technical Assistance activities jointly co- financed by the Facility and IBRD loan. |
Technical Assistance Eligible Expenditure(s) | means any expenditures made for the acquisition of goods, non-consulting services, |
consulting services, training as well as operating costs incurred in relation to the implementation of the Technical Assistance Tranche. | |
Terrorist Financing | means providing or collecting, directly or indirectly, funds or managing funds with the intention that they should be used, or in the knowledge that they are to be used, for the purpose of committing an Act of Terrorism. |
Treasury Account | means any account part of the consolidated Treasury account opened under the name of the Treasury administration at the National Bank of Serbia which will receive the drawdowns under the Budget Support Tranche. |
Verification Agent | means one or more individuals or entities appointed and/or hired, as applicable, by the Borrower pursuant to Clause 11.16 of this Agreement, in charge of preparing the verification reports certifying the achievement of the DLRs. |
Verification Protocol | means the protocol agreed by the Lender and the Borrower to verify the data and other evidence supporting the achievement of one or more DLIs and DLRs as specified in the OIM. Such protocols may be modified from time to time with the agreement of the Lender. |
Visibility and Communication Guide | means all contractual provisions binding on the Borrower relating to the communication and visibility of projects financed by AFD and contained in the document entitled" Visibility guide for projects supported by AFD - Level 1" or " Communication guide for projects supported by AFD - Level 2 "as the case may be, a copy of which has been given to the Borrower before the signing” |
Website | means the website of AFD (xxxx://xxx.xxx.xx/) or any other such replacement website. |
Withholding Tax | means any deduction or retention in respect of a Tax on any payment made under or in connection with this Agreement. |
Withdrawal Application | has the meaning given to it under the IBRD Loan Agreement. |
SCHEDULE 1B - CONSTRUCTION
(a) “assets” includes present and future properties, revenues and rights of every description;
(b) any reference to the “Borrower”, a “Party” or a “Lender” includes its successors in title, permitted assigns and permitted transferees;
(c) any reference to the Agreement or other document is a reference to this Agreement or to such other document as amended, restated or supplemented and includes, if applicable, any document which replaces it through novation, in accordance with the Agreement;
(d) a “guarantee” includes any cautionnement, aval and any garantie which is independent from the debt to which it relates;
(e) “indebtedness” means any obligation of any person whatsoever (whether incurred as principal or as surety) for the payment or repayment of money, whether present, future, actual or contingent;
(f) a “person” includes any person, company, corporation, partnership, trust, government, state or state agency or any association, or group of two or more of the foregoing (whether or not having separate legal personality);
(g) a “regulation” includes any legislation, regulation, rule, decree, official directive, instruction, request, advice, recommendation, decision or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, supervisory authority, regulatory authority, independent administrative authority, agency, department or any division of any other authority or organisation (including any regulation issued by an industrial or commercial public entity) having an effect on this Agreement or on the rights and obligations of a Party;
(h) a provision of law is a reference to that provision as amended;
(i) unless otherwise provided, a time of day is a reference to Paris time;
(j) The Section, Clause and Schedule headings are for ease of reference only and do not affect the interpretation of this Agreement;
(k) unless otherwise provided, words and expressions used in any other document relating to this Agreement or in any notice given in connection with this Agreement have the same meaning in that document or notice as in this Agreement;
(l) an Event of Default is “continuing” if it has not been remedied or if the Lender has not waived any of its rights relating thereto;
(m) a reference to a Clause or Schedule shall be a reference to a Clause or Schedule of this Agreement; and
(n) words importing the plural shall include the singular and vice-versa.
SCHEDULE 2 - OPERATION DESCRIPTION
A - The green transition in Serbia
1. Serbia is a middle-income country engaged in a process of accession to the European Union. With a per capita income of US$9215 (current US dollars), Serbia is an upper middle-income country (UMIC). After a period of fiscal consolidation in the mid 2010s, the Serbian economy recovered and enjoyed an average growth rate of 3.4%. Thanks to strong macroeconomic fundamentals, the country has weathered the COVID19 crisis well and is rebounding rapidly. This period was conducive to progress on the country’s accession to the European Union, launched in 2012, with the opening of negotiations on the transposition of the acquis communautaire in 22 chapters – including Chapter 27 on the environment and climate change and Chapter 15 on energy.
2. Serbia faces significant environmental challenges that weigh on the quality of life of its people and its ability to attract foreign direct investment. The country is particularly affected by problems related to (i) water management, (ii) solid waste management and (iii) air pollution. Access to sanitation and drinking water services is still lacking for 80% and 25% of the population respectively (vs. EU average: 13% and 2.5%). The absence of mechanisms related to the circular economy leads 95% of solid waste to be landfilled (vs. EU average: 33%). The predominance of coal in the energy mix, the obsolescence of the motor vehicle fleet and costs associated with depollution in the industry leads 98% of the population to be exposed to levels of fine particles matter (PM) above the threshold recommended by the WHO (vs. EU average: 55%). Air pollution is one of the most important public health issues for the population, causing nearly 62 deaths per 100,000 people each year – with a significant impact on human capital productivity2.
3. Climate change creates both a physical and a transition risk for the country. Serbia is highly exposed to the variability that climate change has on hydrometry. In 2014, the country experienced historic floods that directly or indirectly affected more than 300,000 households and caused $1.5 billion in physical damage (3.2% of GDP). Increasing drought events also pose a risk to agriculture (10% of GDP, 20% of exports) and require adaptation measures. In terms of greenhouse gas (GHG) emissions, Serbia is a modest contributor to the global carbon budget (0.1% of emissions). Its level of emissions per capita is comparable to that of other middle- income countries (8.9 vs 8.4 tCO2 per capita)3. However, the carbon intensity of its economy is very high. Coal accounts for 49% of the energy mix, mainly in the form of lignite – a category of coal that is both highly carbonated (65-75%) and energy inefficient. As a result, Serbia emits much more CO2 than its peers to produce an equal amount of energy, which pushes the carbon intensity of its economy upwards. In order to converge towards the European average, Serbia would have to divide this carbon intensity by a factor of six. This can only be achieved gradually and will require significant investments and policy measures in the energy sector – both on the production and the demand-sides. However, Serbia faces a short-term imperative with the entry into force of the EU’s Carbon Border Adjustment Mechanism (CBAM). Within three years, a significant share of Serbian exports ($1.3 billion) will see its competitiveness degraded with impacts on production, employment and wages that could affect up to 4% of GDP4. Yet, it is forecasted that – with relevant policies, investments and market adjustments – the final impact could be as low as 0.2% of
2 All data is taken from the World Development Indicators database, 2022
3 GHG emissions and population data is taken from the World Resource Institute and World Development Indicators respectively, for the year 2019
4 G. Xxxxxxxx, X. Xxxxx, « Impacts of CBAM on EU trading partners : consequences for developing countries », AFD research paper, March 2022
GDP. Serbia must therefore define as soon as possible a credible trajectory, not only to mitigate the impacts of climate change but also to decarbonize its industry.
4. The Government of Serbia (GoS) is committed to improving its environmental and climate performance at the international and European level. Through its new Nationally Determined Contribution (NDC) submitted in August 2022, Serbia has committed under the Paris Agreement to reduce its greenhouse gas (GHG) emissions by 33.3% by 2030. In parallel, as part of its accession process to the EU, Serbia adopted in 2020 the Green Agenda for the Western Balkans. The Green Agenda is a set of objectives defined by the EU and the Balkan States to converge towards the European 2050 carbon neutrality target and the Fit for 55 package. The Green Agenda takes the form of a five-pillar action plan and sets out the strategic framework for the ecological transition in Serbia
5. The GoS has started to align the Green Agenda with its national strategies but encounters difficulties in articulating it with its investments and policy measures. Since 2020, the GoS has adopted, revised or launched the elaboration of twenty public policy documents (strategy, programmes and action plans) to align its action with the objectives of the Green Agenda. On the climate front, the authorities have articulated a vision for achieving the objectives of the CDN through a framework law on climate change (LCC), adopted in March 2021 following support from AFD and the World Bank (CRS1020 – Cities and Climate Change). This law establishes the basis for planning and implementing public policies on climate change and mandates the adoption of a low-carbon development strategy and a national adaptation plan. In addition, GoS has also undertaken the development of an energy-climate strategy (NEPC) and the revision of its sustainable urban development strategy. The continuation of the legislative and institutional reforms needed to implement the climate-energy-mobility pillar of the Green Agenda is the subject of multi-donor support (World Bank, AFD, KfW) through the “Green Agenda” public policy budget financing (CRS1025), adopted by AFD’s board in December 2022.
B – Problem analysis
6. Turning the Green Agenda into concrete projects and actions requires strengthening green planning in Serbia. The current planning, programming, budgeting and monitoring (PPBE) systems are adequate. However, they lack certain key features necessary to plan the green transition. In particular, the Serbian authorities find it difficult to (i) articulate their strategies and selection of public investment projects, (ii) define a fiscal strategy consistent with these goals, (iii) align budget allocations and procurement criteria with the Green Agenda and (iv) monitor results achieved to adjust policies over time. The objective of this operation is to address this “institutional gap” while providing targeted funding to investment projects contributing to the ecological transition.
7. Problem 1 – Public policy planning and programming do not translate the Green Agenda into concrete actions and projects. The development of strategies and programmes at sector level is coordinated by an umbrella structure (the Public Policy Secretariat) whose mission is to ensure coherence and quality standards. However, the preparation of policy documents critical to the Green Agenda does not lead today to specific analyses (e.g. strategic environmental assessment, calculation of marginal abatement curves, cost-benefit analysis) that could inform authorities on specific risks, opportunities and entry points for the Green Agenda in each sector. Only the strategies and programmes of the Ministry of Environmental Protection (MoEP) establish explicit links with the Green Agenda. In addition, only 60% of PPDs clearly identify costing actions needed to deliver on their
objectives. These weaknesses at the planning stage limit consideration of climate and environment at the programming stage. The budget programs defined in the Budget law do not include indicators related to environmental performance or climate action. Similarly, investment projects included in the public investment pipeline are not rated for their climate/environment coherence – which does not lead to Green Agenda projects being prioritized.
8. Problem 2 – The current economic conditions are putting pressure on the fiscal space needed to deliver on the Green Agenda. The Serbian Public Finance Council estimates the cost of implementing the Green Agenda at €1.5 billion per year. The GoS - in response to risks linked to the energy crisis in Europe and the conflict in Ukraine – has recently adjusted its fiscal forecasts for the next three years. Nevertheless, the GoS seeks to maintain a high level of public investment (between
€3.8 billion and €4.4 billion per year), particularly in sectors at the heart of the Green Agenda such as energy, water and transport. Though the IMF and authorities validated a stand-by agreement in December 2022, strengthening macroeconomic buffers, significant fiscal risks persist. To compensate for the rise in energy prices, the authorities granted substantial subsidies and guarantees to public energy companies (EPS and Srbijagas), amounting to 2.2% of GDP. In addition, the country remains exposed to climate disasters such as the 2014 floods which cost 3.4% of GDP. If these risks were to materialize, they could reduce the budget space allocated to green investments. The implementation of the Green Agenda will therefore require both safeguarding the funds allocated to it and ensuring a thorough monitoring of the risks to Serbian public finances.
9. Problem 3 - The expenditure chain could better support the rapid increase in resources allocated to the Green Agenda. Serbian public finance management is robust but not yet aligned on climate and environmental considerations. The budget process does not track and measure the degree of alignment of public spending with the Green Agenda. The current budget nomenclature does not make it possible to identify the expenditures that actually contribute to the ecological transition (e.g. investments for the thermal renovation of buildings, development of the railway network), nor those that affect them (e.g. fossil fuel subsidy, maintenance of coal mining infrastructure). To implement the Green Agenda at the best cost, the authorities need this insight to define the best policy combination between increasing green spending and reducing brown spending. Moreover, the current practice of public procurement does not lead contracting entities to systematically include environmental performance criteria in their calls for tender (e.g. vehicle fuel efficiency, presence of eco-labels) – which affects the environmental quality of public investments.
10. Problem 4 - The system for monitoring GHG emissions and environmental performance does not allow for effective management of public policies. Despite its commitment when it signed the Paris Agreement, Serbia does not conduct an annual inventory of its GHG emissions. The latest published data dates back to 2014. The CCA provides a renewed framework for conducting inventories – including requiring certain industries (including those affected by CBAM) to document their own emissions – but the device is not yet operational. The absence of emissions data does not allow for an assessment of the effectiveness of efforts to support the low-carbon transition, nor does it allow for an examination of the efficiency of public spending on this objective.
C – Specific aims and objectives of the Operation
11. The purpose of this operation is to decouple Serbian growth from the pressure it exerts on climate and the environment. To do this, the specific objective of the operation will be to strengthen the planning and management of
Serbian public finances in order to accelerate the implementation of the Green Agenda. At the end of the Operation, it is expected that:
❖ Outcome 1 Authorities' investment strategies, programmes and projects reflect the transformations and costs needed to implement the Green Agenda
❖ Outcome 2 The budgetary space allocated to the Green Agenda has been maintained and the budgetary risks related to the ecological transition adequately monitored
❖ Outcome 3 Budget allocations and public procurement better aligned with Green Agenda objectives
❖ Outcome 4 Public policies and investments can be assessed against GHG emissions and associated environmental performance
D – Implementation arrangements
12. This operation is a program budget finance (PBF) which will contribute to part of Serbia’s green investment pipeline. The operation is structured around a triptych between a results framework (cf. Schedule 3C), an expenditure framework (cf. Schedule 3B) and a technical assistance program (described below in part F and in Schedule 3C). These elements will act together – over the period 2023-2026 – to support the implementation of the Green Agenda, green planning and the redirection of flows towards green investments in Serbia.
i. The Result Framework. The Result Framework defines eight disbursement- linked indicators (DLIs) – a series of steps needed to deliver the Operation’s outcomes. Each DLIs contains up to four disbursement-linked indicators (DLRs), targets to be attained to lift the condition precedent to each drawdown. Certain DLIs also include intermediate result indicators (IRIs), indicators that are not related to drawdowns but allow the GoS and the Co- Financiers to follow the progress towards the next DLRs. The completion of DLRs will be subject to an annual verification operated independent agents. The Result Framework is available in full in Schedule 3C.
ii. The Expenditure Framework. The Expenditure Framework lists all the expenditures deemed critical to the completion of the Program DLIs and delivery of its intended outcomes. The expenditure framework covers years 2023-26 and will be adjusted during the Operation to adequately reflect the budget law adopted each year. The GoS will have to report quarterly on its implementation. The GoS commits to actually spends an amount at least equivalent to the AFD’s financing in the Expenditure Framework. The Expenditure Framework is available in full in Schedule 3B.
iii. Technical Assistance. The loan will finance – to the tune of €3.0 million through the Technical Assistance Tranche – a joint technical assistance program with the IBRD. The Ministry of Finance will steer and coordinate this Technical Assistance, with all participating institutions benefiting from its support to reach their agreed DLRs/IRIs. In parallel, AFD declared that it has mobilized a technical assistance grant of €300,000 to support the launch of the Program, through selected technical assistance activities. The technical assistance actions envisaged are described below in part G.
13. Several Serbian institutions will be involved in the implementation of the Operation under the supervision of the Ministry of Finance. The Ministry of Finance, in its capacity as head of public finance, is the institution responsible for coordinating the Operation. It will coordinate government action to achieve DLRs, monitor progress, implement the Expenditure Framework and interface with the Co- Financiers. In addition to the Ministry of Finance, the Operation will involve:
i. Sectoral ministries at the heart of the Green Agenda. Ministry of Environmental Protection (MoEP), Ministry of Construction, Transport and Infrastructure (MoCTI), Ministry of Mining and Energy (MoME), Ministry of Agriculture, Forestry and Water Management (MoAFWM), Ministry for Public Investment (MPI);
ii. Authorities and control bodies involved in planning, programming, budgeting and monitoring of public policies. Public Policy Secretariat (PPS); Republic Property Directorate (RPD); Public Procurement Office (PPO), Administration for Joint Affairs of Republican Bodies (AJARB).
The Operation Steering Committee (OSC) will be established for strategic guidelines for the implementation of the Operation and will intensify inter-ministerial coordination on the achievements of the Green Agenda goals. The OSC will be chaired by the Minister of Finance and will include all relevant stakeholders of the Operation on a high level. The OSC will liaise with government working groups dedicated to PFM reforms and implementation mechanisms for the Green Agenda. The OSC will be assisted by a permanent secretariat provided by the DICEI of the Ministry of Finance. It will coordinate and circulate information between each institution throughout the Operation lifespan.
14. A Operation Implementation Manual (OIM) will be established to set out the principles and rules governing its implementation. This manual will establish inter alia (i) the methods for calculating the DLRs of the Results Framework, (ii) the procedure for independent verification of the DLRs, (iii) the methods for justifying the Expenditure Framework, (iv) the provisions for monitoring environmental and social risks related to the Operation and (v) the monitoring and evaluation system.
E – Program DLIs
15. The Program targets eight DLIs to improve the planning, programming, budgeting and monitoring of green investments. These DLIs cover the various links in the chain of public action – from planning to evaluation through project preparation, asset registration, procurement or greenhouse gas monitoring. For each DLI, DLRs mark the necessary transformations. The exact wording of the DLRs and IRIs making up each DLI is available in the Result Framework in Schedule 3C.
❖ DLI 1 Planning. Improved consideration of climate-environment issues in public policy documents. Inclusion of cost estimates in public policy documents.
❖DLI 2 Green Budget. Deployment of a methodology to assess the impact – both positive and negative – of budget items on climate and the environment.
❖DLI 3 Preparation and monitoring of investment projects. Application of common quality standards for the feasibility, prioritisation and monitoring of public investment projects.
❖ DLI 4 Increased share of green investments. Application of a methodology for classifying projects according to their environmental relevance and climate co-benefit. Increase the share of green projects in public investment to 25%.
❖ DLI 5 Increase the share of green public procurement. Increase the share of green tenders and contracts in public procurement from 3% to 12%.
❖ DLI 6 Program budgeting and budget transparency. Align programmes’s key performance indicators (KPIs) performance indicators with the Green Agenda, measure their effectiveness and report on their technical and financial implementation.
❖ DLI 7 Analysis and monitoring of budgetary risks. Publication of reports on fiscal risks, includes a dedicated subsection on natural disasters - including climate-induced naturel disasters (such as floods).” Preparation of contingency measures in the budget and fiscal strategy.
❖ DLI 8 Monitoring, reporting and verification (MRV) of greenhouse gas emissions. Implementation of an annual GHG inventory. Implementation of a monitoring system for regulated industries. Publication of biannual transparency reports under the Paris Agreement.
The indicators for each outcome area are designed with an incremental logic in mind: each one marks a new stage to further strengthen green planning in Serbia. As such, some focus on the «classic» foundations (i.e. not specific to the ecological transition) of public finances.
16. The Program is based on an Expenditure Framework of €163M. This Expenditure Framework seek to safeguard the major investments needed to implement the Green Agenda. It mainly supports the “Climate, Energy and Mobility” pillar of the Green Agenda (63% of expenditure) and is mainly composed of investments such as construction/renovation (62%), acquisition of equipment (11%) or professional software (10%). The Ministry of Construction, Transport and Infrastructure (MCTI) main institution reflected in the Expenditure Framework. This Expenditure Framework is specific to AFD’s Facility. It acts in parallel to the expenditure framework used by the IBRD – which only covers operating and transfer expenses related to the Green Agenda. Taken together, these two expenditure frameworks covers a total amount of €491M, of which 27% is supported by the Co- Financiers.
17. The technical assistance will be financed under the Technical Assistance Tranche, with a specific grant from AFD in parallel to initiate selected technical assistance activities. It will accompany the development of the methodologies, models, training and standards necessary to align the expenditure chain with the imperatives of the green transition.
F – Program DLIs
18. The Results Framework forms the basis of the monitoring and evaluation system. By mapping a critical path for each outcome area, it will document the progress of the Operation and guide its implementation. The calculation procedures for each indicator (formula, data source, responsibility) have been detailed in Verification Protocol that will be integrated into the OIM.
19. Verification of indicator achievement will be conducted by the Public Policy Secretariat (PPS) and an independent auditor for DLI #1. The PPS will verify and report on the implementation of DLIs 2 to 8. It will be assisted in this task by the Technical Assistance. An independent verification agent will perform the verification of DLI 1– where the PPS is the pilot institution – to avoid any conflict of interest.
G – Technical Assistance
The Technical Assistance to be financed jointly by AFD (through the Technical Assistance Tranche) and IBRD loans consists of, inter alia, the following activities to assist with the implementation of the Program:
(a) provision of technical assistance, training and operating Costs to the MOF, PPS, MoEP, RPD, and PPO for the Operation’s management, implementation, monitoring and evaluation, including the costs for the Verification Agent;
(b) preparation of training manuals and materials;
(c) targeted capacity building activities to enable the implementation of activities;
(d) procurement of two (2) software: software to enhance the GHG MRV IT solution, and the cost calculator software for the preparation of PPDs;
(e) change management and behavioral change interventions;
(f) communication, outreach, and awareness-raising activities; and
(g) identification of lessons learned and best practices in other countries that may be relevant for the Borrower.
These actions could be adjusted when necessary and in consultation with the Lender, IBRD and the Borrower.
The following Technical Assistance contemplated activities will be financed under AFD’s parallel grant (CRS1033 02) to assist with the implementation of the Program:
(a) in connection with DLI 2 - Development, piloting and scaling-up of the green budgeting methodology: (i) participation in training course designed by France, (ii) initial support and policy advice on the design of the methodology.
(b) In connection with DLI 3 - Public investment preparation, review and monitoring: technical support to the MoCTI on project preparation and monitoring: engineering, legal, E&S and economic analysis.
(c) In connection with DLI 8 - Support to improvement of the MRV system: (i) support to MoEP and SEPA on implementation of the 2023 MRV roadmap, (ii) support to MoEP and SEPA on extending the roadmap to 2024-26: identification of priority actions and investments – notably IT investments.
These actions could be adjusted when necessary and in consultation with AFD and the relevant Institutions.
The following Technical Assistance contemplated activities will receive additional support through AFD’s parallel project “Support to gender equality in the Western Balkans” (CZZ2922) with UN Women:
(a) in connection with DLI 1 - Integrating gender dimensions into public policy documents: provide on a demand-basis (i) analytical studies and gender impact assessment of draft public policy documents, (ii) integration of gender issues in the Guidelines for the inclusion of green and climate aspects, (iii) formulate gender-responsive indicators in line with the public policy document’s objectives, (iv) capacity-building on the elaboration of gender-sensitive planning to ministries drafting public policy documents and (v) any other specific tools that might be of use to the PPS and Ministry responsible for gender equality or policy proponents to mainstream gender issues into policy documents.
SCHEDULE 3A - FINANCING PLAN
Operation costs | EUR million | % | |
Capital expenditures linked to the Program5 | 163.6 | 32.92% | |
DLI 1 – Integrate green and climate aspects into PPDs | 0.2 | 0.04% | |
DLI 2 – Implement green-budget tagging | 7.4 | 1.49% | |
DLI 3 – Improve management of public investments and assets | 62.4 | 12.56% | |
DLI 4 – Increase the share of green and climate-responsive investments | 62.4 | 12.56% | |
DLI 5 – Broaden the use of green public procurement | 2.6 | 0.53% | |
DLI 6 – Improve fiscal transparency and program-based budgeting | 23.5 | 4.73% | |
DLI 7 – Make fiscal risk monitoring more effective | - | 0.00% | |
DLI 8 – Operationalize the MRV system for greenhouse gas emissions | 5.1 | 1.02% | |
Operating expenditures and transfers linked to the Program6 | 327.4 | 65.87% | |
Technical Assistance (under joint co-financing)7 | 6.0 | 1.21% | |
Total | 497.0 | 100% | |
Financing Plan | EUR million | % |
AFD | 69.3 | 13.9% |
IBRD | 69.3 | 13.9% |
Government of Serbia | 358.4 | 72.1% |
Total | 497.0 | 100% |
5 Included in AFD’s Expenditure Framework, cf. Schedule 3B
6 Included in the Co-financier’s Expenditure Framework
7 Financed jointly pari passu by the Co-financiers
SCHEDULE 3B – EXPENDITURE FRAMEWORK
1. The Expenditure Framework consolidates the budget items that are deemed critical to the success of the Program. The total for the Expenditure Framework (163,6M€) is meant to be bigger than the Facility provided by AFD (69,3M€). During the implementation of the Operation, the Ministry of Finance will report quarterly on the implementation of the budget items that are part of the Expenditure Framework. In doing so, the national authorities and Co-Financiers will be able to monitor together that all institutions involved in the implementation of the DLIs have the mean necessary to their success. The only contractual obligation linked to the Expenditure Framework is that the Republic of Serbia has to spend every year at least as much as what is draws on AFD’s Facility.
2. The Expenditure Framework can be modified to reflect adjustments made to the annual budget. The revision process requires AFD and the Ministry of Finance to come to an agreement on the new Expenditure Framework, based upon the draft or adopted budget law. Once agreement is reached, a simple exchange of letter is needed to make it official. In revising the Expenditure Framework, the Borrower will have to include/exclude expenditures based on the following criteria:
(i) Relevance of the expenditure to the Program DLIs
(ii) Relevance of the expenditure to the Green Agenda
(iii) Exclusion of projects already funded by other donors
(iv) Exclusion of projects much larger than AFD financing
(v) Exclusion of projects that are deemed to pose environmental and social risks that the Operation cannot mitigate
Figure 2 – Breakdown of the Expenditure Framework by Green Agenda Pillar
Figure 1 – Breakdown of the Expenditure Framework by economic classification
Figure 3 – Breakdown of the Expenditure Framework by budget user and program
Total (2023-26)
140
120
100
80
60
40
20
0
Institution name
Institution |
Budget Program |
Action / Project |
Economic classification |
2023 credits |
2024 credits |
2025 credits |
2026 credits |
Total (in EUR) |
Millions
MoCTI
Program name
Insfrastructure implementation
Transport sector regulation & supervision
Green Agenda
MoEP
Integrated management of waste, wastewater & chemicals
Management of environmental protection
74
Nature protection and climate change
MoF
Regulation, management and supervision of the financial and fiscal system
MoME
Energy efficiency
SEPA
Management of environmental protection
PPD
Records, management and disposal of public property
PPS
Development of the public policy system
PPO
Development of the public procurement system
Ministry of Finance | Regulation, management and supervision of the financial and fiscal system (MoF) | Information system - PIMIS | Intangible assets | 047 923 | 1 | - | - | - | 1 047 923 | |
Ministry of Finance | Regulation, management and supervision of the financial and fiscal system (MoF) | System of public finance - JAFIN | Intangible assets | 999 360 | 4 | - | - | - | 4 999 360 | |
Ministry of Finance | Regulation, management and supervision of the financial and fiscal system (MoF) | Unified information system for budget fund users - ORIS | Intangible assets | 613 418 | - | - | - | 613 418 | ||
Ministry of Finance | Regulation, management and supervision of the financial and fiscal system (MoF) | Treasury operations | Machinery and equipment | 745 261 | 1 | - | - | - | 1 745 261 | |
Ministry of Finance | Regulation, management and supervision of the financial and fiscal system (MoF) | Budget preparation and analysis | Machinery and equipment | 21 299 | - | - | - | 21 299 | ||
Ministry of Finance | Regulation, management and supervision of the financial and fiscal system (MoF) | A platform for monitoring the implementation of public procurement contracts | Intangible assets | 628 327 | 2 | - | - | - | 2 628 327 | |
Ministry of Finance | Regulation, management and supervision of the financial and fiscal system (MoF) | Unique information system for budget accounting | Intangible assets | 723 109 | 3 | 723 109 | 3 | - | - | 7 446 218 |
Ministry of Construction, Transport and Infrastructure | Regulation and supervision in the field of traffic | Railway and intermodal traffic | Subsidies to private companies | 851 970 | - | - | - | 851 970 | ||
Ministry of Construction, Transport and Infrastructure | Regulation and supervision in the field of traffic | Railway and intermodal traffic | Machinery and equipment | 425 985 | - | - | - | 425 985 | ||
Ministry of Construction, Transport and Infrastructure | Regulation and supervision in the field of traffic | Maintenance of waterways | Building and construction objects | 339 093 | - | - | - | 339 093 | ||
Ministry of Construction, Transport and Infrastructure | Regulation and supervision in the field of traffic | Maintenance of waterways | Machinery and equipment | 62 628 | - | - | - | 62 628 | ||
Ministry of Construction, Transport and Infrastructure | Realization of infrastructure projects of importance for the Republic of Serbia | Development and installation of a system for navigational monitoring and electronic marking of the Sava waterway | Building and construction objects | 281 491 | - | - | - | 281 491 | ||
Ministry of Construction, Transport and Infrastructure | Realization of infrastructure projects of importance for the Republic of Serbia | Development and installation of a system for navigational monitoring and electronic marking of the Sava waterway | Machinery and equipment | 723 834 | - | - | - | 723 834 | ||
Ministry of Construction, Transport and Infrastructure | Realization of infrastructure projects of importance for the Republic of Serbia | Water supply and wastewater treatment program in medium-sized municipalities in Serbia V and Green cities | Acquisition of domestic financial assets | 4 089 456 | - | - | - | 4 089 456 |
Ministry of Construction, Transport and Infrastructure | Realization of infrastructure projects of importance for the Republic of Serbia | Implementation of the hydro-meteo station system and clearance control system | Building and construction objects | 301 597 | 676 809 | 447 342 | - | 1 425 748 |
Ministry of Construction, Transport and Infrastructure | Realization of infrastructure projects of importance for the Republic of Serbia | Implementation of the hydro-meteo station system and clearance control system | Machinery and equipment | 451 024 | 1 012 136 | 668 978 | - | 2 132 138 |
Ministry of Construction, Transport and Infrastructure | Realization of infrastructure projects of importance for the Republic of Serbia | Hydrotechnical and dredging works on critical sectors for navigation on the Sava River | Building and construction objects | 2 496 221 | 3 704 621 | 1 479 838 | - | 7 680 680 |
Ministry of Construction, Transport and Infrastructure | Realization of infrastructure projects of importance for the Republic of Serbia | Expansion of the capacity of the Port of Sremska Mitrovica | Building and construction objects | 10 726 796 | - | - | - | 10 726 796 |
Ministry of Construction, Transport and Infrastructure | Realization of infrastructure projects of importance for the Republic of Serbia | Expansion of the capacity of the port of Bogojevo | Building and construction objects | 16 587 856 | - | - | - | 16 587 856 |
Ministry of Construction, Transport and Infrastructure | Realization of infrastructure projects of importance for the Republic of Serbia | Expansion of the capacity of the port of Prahovo | Building and construction objects | 12 817 889 | 12 817 889 | - | - | 25 635 777 |
Ministry of Construction, Transport and Infrastructure | Realization of infrastructure projects of importance for the Republic of Serbia | Adaptation of the ship lock as part of HEPS "Yerdap 2" | Building and construction objects | 16 949 994 | 8 924 565 | 174 381 | - | 26 048 940 |
Ministry of Construction, Transport and Infrastructure | Realization of infrastructure projects of importance for the Republic of Serbia | Wastewater collection and purification project of the Central Sewerage System of Belgrade | Building and construction objects | 59 220 | 14 466 | 70 569 | - | 144 256 |
Ministry of Environmental Protection | Management of environmental protection | Reducing air pollution in Serbia from individual sources | Transfers to other levels of government | 1 448 349 | - | - | - | 1 448 349 |
Ministry of Environmental Protection | Management of environmental protection | Protection and conservation of water as a natural resource | Transfers to other levels of government | 255 591 | - | - | - | 255 591 |
Ministry of Environmental Protection | Management of environmental protection | Procurement, replacement, reconstruction and repair of boiler rooms for heating | Transfers to other levels of government | 1 874 334 | - | - | - | 1 874 334 |
Ministry of Environmental Protection | Nature protection and climate change | Arrangement and improvement of the system of nature protection and preservation of biodiversity | Subsidies to public non- financial companies and organizations | 85 197 | - | - | - | 85 197 |
Ministry of Environmental Protection | Nature protection and climate change | Arrangement and improvement of the system of nature protection and preservation of biodiversity | Transfers to other levels of government | 383 387 | - | - | - | 383 387 |
Ministry of Environmental Protection | Nature protection and climate change | Afforestation in order to protect and preserve the natural diversity | Transfers to other levels of government | 851 970 | - | - | - | 851 970 |
Ministry of Environmental Protection | Integrated management of waste, wastewater, chemicals and biocidal products | Rehabilitation and closure of unsanitary landfills | Transfers to other levels of government | 5 231 096 | - | - | - | 5 231 096 |
Ministry of Environmental Protection | Integrated management of waste, wastewater, chemicals and biocidal products | Implementation of waste management system | Transfers to other levels of government | 2 743 343 | - | - | - | 2 743 343 |
Ministry of Environmental Protection | Integrated management of waste, wastewater, chemicals and biocidal products | Prevention of illegal waste dumping and removal | Transfers to other levels of government | 681 576 | - | - | - | 681 576 |
Ministry of Environmental Protection | Integrated management of waste, wastewater, chemicals and biocidal products | Prevention of illegal waste dumping and removal | Machinery and equipment | 511 182 | - | - | - | 511 182 |
Ministry of Environmental Protection | Integrated management of waste, wastewater, chemicals and biocidal products | Procurement of collection and recycling equipment | Machinery and equipment | 4 259 850 | 4 259 850 | 4 259 850 | - | 12 779 550 |
Ministry of Environmental Protection | Green Agenda | Support for civil society projects in the field of environmental protection | Grants to non- governmental organizations | 425 985 | - | - | - | 425 985 |
Ministry of Environmental Protection | Green Agenda | Improvement of infrastructure for environmental protection | Building and construction objects | 8 860 488 | - | - | - | 8 860 488 |
Ministry of Environmental Protection | Green Agenda | Construction of regional centers for waste management | Building and construction objects | 2 555 910 | - | - | - | 2 555 910 |
Environmental Protection Agency | Management of environmental protection | Air, water and sediment quality monitoring | Machinery and equipment | 434 505 | - | - | - | 434 505 |
Environmental Protection Agency | Management of environmental protection | Air, water and sediment quality monitoring | Intangible assets | 8 520 | - | - | - | 8 520 |
Environmental Protection Agency | Management of environmental protection | National reference laboratory for environmental quality control | Machinery and equipment | 42 599 | - | - | - | 42 599 |
Environmental Protection Agency | Management of environmental protection | Information system for environmental protection | Building and construction objects | 159 003 | - | - | - | 159 003 |
Environmental Protection Agency | Management of environmental protection | Information system for environmental protection | Machinery and equipment | 83 493 | - | - | - | 83 493 |
Environmental Protection Agency | Management of environmental protection | Information system for environmental protection | Intangible assets | 212 993 | - | - | - | 212 993 |
Ministry of Mining and Energy | Energy efficiency | Measures to improve energy efficiency | Transfers to other levels of government | 4 115 433 | - | - | - | 4 115 433 |
Ministry of Mining and Energy | Energy efficiency | Energy efficiency and energy management in municipalities in Serbia | Transfers to other levels of government | 851 970 | - | - | - | 851 970 |
Ministry of Mining and Energy | Energy efficiency | Rehabilitation of the district heating system in the Republic of Serbia - Phase V | Acquisition of domestic financial assets | 1 277 955 | - | - | - | 1 277 955 |
Ministry of Mining and Energy | Energy efficiency | Energy efficiency in central government building | Building and construction objects | 937 167 | - | - | - | 937 167 |
Ministry of Mining and Energy | Energy efficiency | Energy efficiency in public building and renewable energy sources in the district heating sector | Building and construction objects | 937 167 | - | - | - | 937 167 |
Public Policy Secretariat | Development of the public policy system | Analysis of the effects of regulations | Machinery and equipment | 34 079 | - | - | - | 34 079 |
Public Policy Secretariat | Development of the public policy system | Analysis of the effects of regulations | Intangible assets | 34 079 | - | - | - | 34 079 |
Republic Property Directorate | Records, management and disposal of public property | Registration of property rights and other real rights on immovable property | Intangible assets | 141 427 | - | - | - | 141 427 |
Public Procurement Office | System development and protection of rights in public procurement | Development and monitoring of the public procurement system | Machinery and equipment | 8 520 | - | - | - | 8 520 |
Public Procurement Office | System development and protection of rights in public procurement | Development and monitoring of the public procurement system | Intangible assets | 4 260 | - | - | - | 4 260 |
Total | 121 395 178 | 35 133 445 | 7 100 957 | 0 | 163 629 580 |
AFD Funding | 12 800 000 | 16 000 000 | 17 500 000 | 20 000 000 | 68 430 000 |
41%
SCHEDULE 3C – RESULT FRAMEWORK
DLI 1 – Integrate green and climate aspects into Public Policy Documents and strengthen the links between plans and budgets | |||
Period | Value | Amount allocated by AFD | Allocation formula |
Baseline situation | Only 60% of PADs adopted by the government include rough cost estimates. Only the DPP of the Ministry of Environmental Protection refer directly to the objectives of the Green Agenda. | ||
2023 | DLR 1.1. The PPS (i) develops and approves Guidelines on Inclusion of Green Aspects into Public Policy Documents; and (ii) publishes said the Guidelines on the PPS’s website. | 3.8 M€ | When achieved |
2024 | IRI 1.1. The Manual on Costing has been amended by including green and climate aspects and a calculator/Tool (software solution or upgrading and digitalization of current costing table) for the cost calculation has been developed | - | Monitoring only |
2025 | DLR 1.2. At least 50% of the newly adopted Public Policy Documents (during the course of 2025) were prepared with the application of the green Guidelines (as per DLR 1.1) and applying the planning system cost calculation methodology. | 2.5 M€ | 0.5 M€ per 10pp8. tranche |
2026 | IRI 1.2. Ex-post analysis to be done of at least 2 PPDs of Ministries central for the Green Agenda and their impacts, to review how to be further improve green planning forward | - | Monitoring only |
8 pp = percentage point.
DLI 2 – Implement green budget tagging | |||
Period | Value | Amount allocated by AFD | Allocation formula |
Baseline situation | The green marking of budget lines is not implemented according to a coherent methodology and only concerns expenditure with a positive impact on the environment. | ||
2023 | DLR 2.1. (i) The Ministry of Finance introduces, by the end of 2023, a mandatory GBT methodology and implementation plan (“Roadmap”), (ii) the Interministerial Working Group endorses the Roadmap and (iii) the MOF publishes the GBT methodology on the MoF website and includes it in the budget instructions for the preparation of the 2025 budget | 2.5 M€ | When achieved |
2024 | DLR 2.2. The adopted GBT methodology is (i) used to prepare the 2025 annual budget (adopted by December 2024) and (ii) reflected by green tags in the 2025 Budget Law. | 2.5 M€ | When achieved |
2025 | IRI 2.1. At least 75% of green tagged expenditures (recurrent and capital) are executed by the end of 2025 | - | Monitoring only |
2026 | DLR 2.3. : (i) The Ministry of Finance upgrades the GBT methodology to (a) include Brown Expenditures. (ii) The Ministry of Finance publishes the upgraded GBT methodology on the Ministry of Finance website (and the instructions for the 2028 budget preparation) | 3.0 M€ | When achieved |
DLI 3 – Improve the management of public investments and assets | |||
Period | Value | Amount allocated by AFD | Allocation formula |
Baseline situation | The provisions common to all projects defined in the decree on the management of public investment are unevenly applied. Proposed public investment projects are not systematically reviewed in terms of readiness and financial realism. Government real estate assets are not consolidated in a single register. | ||
2023 | IRI 3.1. At least 30 % of ongoing national level capital investment projects under the PIM Decree have submitted project implementation plans and all progress reports for Year 1 through PIMIS | - | Monitoring only |
2024 | DLR 3.1. (i) RPD proposes an amendment to the Decree on the registration of immovable property in public ownership with an amended methodology for valuing public assets, (ii) the Borrower (a) adopts the amended Decree containing the revised methodology and (b) publishes the amended Decree in the Official Gazette, (iii) the RPD (a) publishes the amended Decree on its website; and (b) develops a roadmap for the amended methodology’s implementation (with specific timelines and costing). | 3.0 M€ | When achieved |
2025 | IRI 3.2. At least 40% of feasibility studies (for non-construction projects) submitted during year 2 and 3 have been reviewed by the Ministry of Finance. | - | Monitoring only |
2026 | DLR 3.2. (i) The Ministry of Finance (a) issues opinion on financial and implementation aspects of all capital projects submitted for selection during 2026; and (b) recommends a List of Priority Projects based on criteria prescribed by the Borrower. (ii) The Borrower, selects at 80% or more of the projects to be funded based on the Ministry of Finance’s recommendations | 4.0 M€ | 1.333 M€ for every 5pp. above a 65% threshold for adherence to the priority list |
DLI 4 – Increase the share of green and climate-responsive public investments | |||
Period | Value | Amount allocated by AFD | Allocation formula |
Baseline situation | Articles 13 to 15 of the Decree on the Management of Public Investment were revised in 2022 to pave the way for an assessment of the climate co-benefits of projects and a prioritization based on these results. The system is not yet implemented. The share of green public investments is not systematically monitored and reported on, and cannot be adequately assessed in the absence of a methodology and criteria (e.g. for considering capital projects partially or completely green or as enhancing climate resilience). | ||
2023 | IRI 4.1. Criteria for pre-screening, appraisal, review of appraisal and selection of projects according to environmental/climate relevance are adopted – as required by the amended Decree on capital projects. | - | Monitoring only |
2024 | IRI 4.2. At least 70% of line ministries are trained for the implementation of criteria as per IRI 4.1 | - | Monitoring only |
2025 | DLR 4.1. The Borrower selects for financing in the 2026 Budget Law – among capital projects subject to the Decree on Capital Project Management – 40% or more projects that comply with the new methodologies for the selection of projects at pre-implementation stage according to environmental/climate relevance under said Decree. | 4.0 M€ | Scalable – 1 M€ per 10pp. of compliance |
2026 | DLR 4.2. Green and climate responsive allocations to capital projects as a percentage of budget allocations to all capital projects subject to the Decree on Capital Project Management - as determined by (i) an annual review of the entire public investment portfolio (subject to said Decree) for the 2027 Budget Law and (ii) an assessment of the share based on the criteria developed and approved - reaches 25% or more. | 6.0 M€ | Scalable - 1.2 M€ for every 5pp. of total capital expenditures |
DLI 5 – Increase the share of green procurement | |||
Period | Value | Amount allocated by AFD | Allocation formula |
Baseline situation | The regulatory framework for public procurement allows contracting entities to use selection criteria and technical specifications relating to environmental performance. A methodological guide has been developed to guide contracting entities in this process. However, in 2021, only 2.7% of public procurement conducted in seven contracting entities critical to the Green Agenda (i.e. the Institutions) included environmental provisions. | ||
2023 | DLR 5.1. By the end of 2023, the Institutions (i) publish 6% or more of their procurement tenders in a way consistent with the Guidelines on Green Public Procurement; and (ii) report, through the PPO and MoF, to the Lender on the share of green to total procurement values. | 4.0 M€ | Scalable – 1.33 M€ for every 1.1pp. increase above the baseline |
2024 | IRI 5.1. By the end of 2024, the Institutions (i) publish 8% or more of their procurement tenders in a way consistent with the Guidelines on Green Public Procurement; and (ii) report, through the PPO and MoF, to the Lender on the share of green to total procurement values. | - | Monitoring only |
2025 | DLR 5.2. By the end of 2025, the Institutions (i) publish 12% or more of their procurement tenders in a way consistent with the Guidelines on Green Public Procurement; and (ii) report, through the PPO and MoF, to the Lender on the share of green to total procurement values. | 4.0 M€ | Scalable – 1 M€ for every 1.5pp. increase above 6% |
2026 | IRI 5.2. By the end of 2026, the Institutions (i) publish 15% or more of their procurement tenders in a way consistent with the Guidelines on Green Public Procurement; and (ii) report, through the PPO and MoF, to the Lender on the share of green to total procurement values. | - | Monitoring only |
DLI 6 – Improve fiscal transparency and program-based budgeting, including gender disaggregation | |||
Period | Value | Amount allocated by AFD | Allocation formula |
Baseline situation | The level of technical and financial implementation of programmes is only published with long deadlines and does not provide sufficient guidance for the preparation of the annual budget, limiting (i) budget transparency and (ii) the links between policy objectives and budgeting. Serbia received a D in 2021 for the PEFA evaluation on PI-9 (Public access to budget information), two key missing documents: (i) in-year budget implementation reports and (ii) annual budget implementation reports. In addition, gender disaggregation in the analysis of program budget information is currently not being used effectively. | ||
2023 | DLR 6.1. At least three Line Ministries include KPIs on expenditure efficiency, and environmental and/or gender specific aspects of performance in their program budgets (as per the adopted 2024 Law on Budget). | 2.5 M€ | When achieved |
2024 | DLR 6.2. MoF has submitted to National Assembly a budget proposal for 2025 which includes (i) the outturn data on budget execution for the current and previous year (in the same format/classifications as the annual budget); and (ii) includes relevant information targeting gender equity. | 2.5 M€ | When achieved |
2025 | DLR 6.3. The MoF (i) issues a performance outturn report which includes Green Agenda projects and subsidies, (ii) publishes the annual performance outturn report on its website and (iii) includes in the Citizen Budget a summary of the report’s Green Agenda projects and subsidies. | 2.0 M€ | When achieved |
2026 | DLR 6.4. Two or more Line Ministries relevant for the Green Agenda that have (i) produced, consulted on with stakeholders, and published program budget performance reports; and (ii) included in such reports an analysis of their environmental and climate performance (green tagged expenditures and KPIs). | 2.0 M€ | 1 M€ per Line Ministry |
DLI 7 – Make fiscal risk monitoring more effective | |||
Period | Value | Amount allocated by AFD | Allocation formula |
Baseline situation | Methodologies for monitoring fiscal risks have been adopted but are not yet fully used. The current methodology does not prescribe the publication of the report on fiscal risks. Contingency measures are not documented in the fiscal strategy or the budget. | ||
2023 | IRI 7.1. In-year and annual fiscal risk reports are being produced in line with the adopted methodologies. | - | Monitoring only |
2024 | DLR 7.1. The Borrower adopts and publishes in the Official Gazette the Fiscal Strategy for 2025-2027 with a fiscal risk section that includes quantified and forward-looking key fiscal risks for the period covered. | 4.0 M€ | When achieved |
2025 | DLR 7.2. The Borrower includes in the fiscal risk section of the 2026-2028 Fiscal Strategy a dedicated subsection on natural disasters - including climate-induced natural disasters (such as floods). | 2.0 M€ | When achieved |
2026 | DLR 7.3. The Borrower publishes the 2027-2029 Fiscal Strategy and the adopted annual budget for 2027 (i) setting out quantified forward looking fiscal risks; and (ii) with the narrative part of the annual budget specifying fiscal adjustments to be made in case that said fiscal risks materialize (such as the use of contingency funds, budget re-allocations). | 2.0 M€ | When achieved |
DLI.8 – Operationalize the MRV system for greenhouse gas emissions | |||
Period | Value | Amount allocated by AFD | Allocation formula |
Baseline situation | The law on climate change adopted in 2020 lays down the global architecture for Serbia’s MRV system. However, the MRV system is not yet operational. MRV of industrial installations has not started and Serbia has not published greenhouse gas data beyond 2014. | ||
2023 | IRI. The by-laws on the MRV of national emissions and installation-level emissions are adopted and MoEP and SEPA are staffed adequately to implement them. | - | Monitoring only |
2024 | DLR 8.1. The SEPA publishes an annual report, including a national GHG inventory, covering at least five of the seven gases included in the NDC, according to the Climate Change Law and relevant by-laws. | 4.0 M€ | When achieved |
2025 | DLR 8.2. The MoEP issues GHG emission permits for 50% or more of the applicants who submitted their application in 2025. | 3.0 M€ | 0.6 M€ per 10pp. increase |
2026 | DLR 8.3. The MoEP and SEPA receives verified emissions reports from at least 75% of permit holders in 2026. | 3.0 M€ | 1.0 M€ per 25pp. increase |
88
SCHEDULE 3D – ENVIRONMENTAL AND SOCIAL COMMITMENT PLAN
1. The Republic of Serbia will implement the Operation entitled Improving Public Financial Management for the Green Transition (“The Operation”) with the involvement of the Ministry of Finance (MOF) and other budget users. The Operation owner and final beneficiary designated is the Government of the Republic of Serbia. The Agence Française de Développement (AFD) has agreed to provide financing for the Operation.
2. The MOF will implement the concrete measures and actions necessary to ensure that the Program is carried out in compliance with its applicable regulations and the core/fundamental conventions of the ILO ratified by Serbia.
3. Without prejudice to the applicable laws and regulations of the Republic of Serbia, the different direct budget users listed in the Expenditure Framework shall implement material measures and actions so that the Program is implemented in accordance with the World Bank Environmental and Social Standards (ESSs). Hence, this Environmental and Social Commitment Plan (ESCP) sets out material measures and actions, any specific document or plans, as well as the timing for each of these.
4. The different direct budget users listed in the Expenditure Framework shall also comply with the provisions of any other E&S available documents that could be developed as part of the Program and referred to in this ESCP.
5. The different direct budget users listed in the Expenditure Framework are responsible for compliance with all requirements of the ESCP even when implementation of specific measures and actions is conducted by the or another entity.
6. Implementation of the material measures and actions set out in this ESCP shall be monitored and reported to AFD by the Operation Coordination Unit (OCU) within the Department for International Cooperation and European Integration DICEI – Ministry of Finance (MOF), as required by the ESCP and the conditions of the legal agreement, and AFD will monitor and assess progress and completion of the material measures and actions throughout implementation of the Program.
7. As agreed by the Borrower and AFD, this ESCP may be revised from time to time during Program implementation, to reflect adaptive management of Program changes and unforeseen circumstances or in response to assessment of Program performance conducted under the ESCP itself. In such circumstances, the Borrower will agree to the changes with AFD and will update the ESCP to reflect such changes. Agreement on changes to the ESCP will be documented through the exchange of letters signed between the Ministry of Finance and AFD through such authorized delegates as it may designate. The Ministry of Finance, through such authorized delegates as it may designate, shall promptly disclose the updated ESCP.
8. Where Program changes, unforeseen circumstances, or Program performance result in changes to the risks and impacts during Program implementation, the Borrower shall provide additional funds, if needed, to implement actions and measures to address such risks and impacts, which may include, for example, environmental, health, and safety impacts, labor influx, gender-based violence.
Theme | Environmental and Social (E&S) Expected Action | Resources & Responsibilitie s | Funding sources | Calendar: Conception & Implementation | Indicators of achievement |
Preamble | |||||
ESCP Monitoring | The E&S monitoring report template which will be used throughout the Program lifetime with AFD, is validated | Ministry of Finance and AFD | / | No later than one (1) month after the Effective Date | Ministry of Finance and AFD approve the E&S monitoring report template |
Based on the validated template, the E&S monitoring report is submitted to AFD every 6 months | Ministry of Finance | Program Budget | Every 6 months | AFD receives and approves the 6-months E&S monitoring report | |
Notification of incidents and accidents | Any severe accident related to the Program which has, or is likely to have, a significant adverse effect on the environment and/or on the affected communities, the public or Program workers, should be notify to AFD within 48 hours by the responsible budget users through OCU. In parallel, the responsible budget user has 5 days to provide – through the Ministry of Finance - sufficient details regarding the accident, indicating immediate measures taken or that are planned to be taken to address it, and any information provided by any contractor and supervising entity, as appropriate. All the other incidents and accidents at Program sites that may have significant negative effects on the environment, local populations and workers are notified internally and reported in the E&S monitoring report transmitted to AFD | Responsible budget users Ministry of Finance | Program Budget | Throughout the whole Program process | In the event of a severe accident, AFD is alerted by email / telephone within 48 hours and a specific report is sent within 5 days The other incidents / accidents are reported in the E&S monitoring report transmitted to AFD |
1. Assessment and Management of Environmental and Social Risks and Impacts | |||||
1.1 E&S risks management | The E&S provisions will be consolidated in the Operation Implementation Manual (OIM) to provide a common and easily understandable framework for the Government of Serbia to undertake the E&S risks management program. | Ministry of Finance | Program Budget | No later than the Effective Date | AFD approves the Operation Implementation Manual |
Theme | Environmental and Social (E&S) Expected Action | Resources & Responsibilitie s | Funding sources | Calendar: Conception & Implementation | Indicators of achievement |
On the basis of the first available technical studies, the environmental and social specialists recruited through the Operation (cf. theme 1.2 below) screen the potential level of E&S risk of each construction/renovation investment included in the Expenditure Framework, in accordance with applicable regulations. | Responsible budget user E&S specialists | Technical Assistance AFD technical assistance grant (CRS1033 02) | As soon as the first technical studies are available and before the start of the construction work | AFD receives and approves the E&S screening results of each construction/renovation investments included in the Expenditure Framework. | |
Construction/renovation investments included in the Expenditure Framework that induce low to moderate E&S risks will be subject, if necessary, to an E&S assessment (including Environmental and Social Impact Assessments and their associated Environmental and Social Action Plan) as required by the Serbian legal framework | Responsible budget user E&S specialists | Program Budget | Before the start of the construction work | Competent national authorities approve the E&S assessment as required by the Serbian legal framework | |
Construction/renovation investments included in the Expenditure Framework that induce substantial to high E&S risks will be subject to a complete E&S assessment (including Environmental and Social Impact Assessments and their associated Environmental and Social Action Plan) that is, to the extent possible within the framework of applicable regulations, compliant with World Bank standards and validated by the competent national authorities | Responsible budget user E&S specialists | Program Budget | Before the start of the construction work | Competent national authorities and AFD approve the E&S assessment compliant with the World Bank’s standards | |
On the basis of the monitoring report submitted every 6 months (cf. Preamble), responsible budget users communicate – through the Ministry of Finance – the relevant E&S documentation of high-risk projects (e.g. Environmental and Social Impact Assessment, Environmental and Social Action Plan, validation decisions by the competent national authority) if requested by AFD. | Responsible budget users Ministry of Finance (OCU) | Program Budget | Throughout the whole Program process | Competent national authorities share, for information and discussion purposes, the relevant E&S documentation of high-risk project with AFD. |
Theme | Environmental and Social (E&S) Expected Action | Resources & Responsibilitie s | Funding sources | Calendar: Conception & Implementation | Indicators of achievement |
1.2 E&S technical assistance | A part-time environmental specialist and a part-time social and citizen engagement specialist are recruited by the Ministry of Finance to strengthen the capacities of all institutions involved in the Program. These specialists will have as main mission to follow the correct application of the Operational Implementation Manual of the Program on E&S issues and to support the counterparty in the E&S reporting that will be done on a regular basis | Ministry of Finance | Technical Assistance | No later than one (1) month after the Effective Date | The specialists contracts are signed |
A part-time E&S specialist is recruited by the Ministry of Construction, Transport and Infrastructure within the framework of the FAPS grant made available by AFD, in order to support the Ministry of Construction, Transport and Infrastructure, in the preparation, review and monitoring of E&S studies relative to the construction/renovation investments included in the Expenditure Framework that induce substantial to high E&S risks | Ministry of Construction, Transport and Infrastructure | AFD technical assistance grant (CRS1033 02) | No later than one (1) month after the Effective Date | The specialist contract is signed | |
1.3 E&S requirements for work construction | Appropriate E&S diligences in line with national legislation (in particular Environmental and Social Action Plans) are incorporated in tendering documentation for enterprises and sub-contractors mobilized on Construction/renovation investments included in the Expenditure Framework. | Responsible budget user | Program Budget | During the work construction tendering elaboration | The E&S diligences are incorporated in every work construction tendering documentation |
2. Labor and Working Conditions | |||||
2.1 Employment and labor conditions | All work contracts signed as part of Construction/renovation investments included in the Expenditure Framework.should be compliant and refer to national regulations, core ILO conventions and those ratified by the Republic of Serbia | Responsible budget user | Program Budget | Throughout the whole Program process | Lead Contractors and subcontractors involved in the Construction/renovation investments included in the Expenditure Framework, sign the Declaration of compliance in their contract |
Theme | Environmental and Social (E&S) Expected Action | Resources & Responsibilitie s | Funding sources | Calendar: Conception & Implementation | Indicators of achievement |
3. Land Acquisition, Restrictions on Land Use and Involuntary Resettlement | |||||
3.1 Exclusion of investments requiring land acquisition and resettlement | Throughout Program implementation, responsible budget users will identify and report to AFD – through the Ministry of Finance – those construction investments included in the Expenditure Framework that require the acquisition of new land or resettlement of occupants. Those investments will be excluded from the Expenditure Framework. | Responsible budget user | Program Budget | Throughout the whole Program process | No construction investments part of the Expenditure Framework require the acquisition of new land or resettlement of occupants. |
SCHEDULE 4 - CONDITIONS PRECEDENT
The following applies to all documents delivered by the Borrower as a condition precedent:
- if the document which is delivered is not an original but a photocopy, the original Certified photocopy shall be delivered to the Lender;
- the final version of a document which draft was previously sent to, and agreed upon by the Lender, shall not materially differ from the agreed draft;
- documents not previously sent and agreed upon, shall be satisfactory to the Lender.
Part I – Conditions Precedent to be satisfied on the Signing Date
(a) Delivery by the Borrower to the Lender of a Certified copy of a conclusion of the Government of the Republic of Serbia approving the report from the negotiations with regard to conclusion of this Agreement, approving the borrowing by the Borrower under this Agreement and expressly authorizing Minister of Finance of the Republic of Serbia to execute this Agreement;
(b) A certificate of the Borrower (signed by authorized signatory) confirming that
(i) borrowing the total Facility commitments would not cause any borrowing, guaranteeing or similar limit binding on the Borrower to be exceeded, and (ii) that the public debt loan under this Agreement is within the limits set by the law governing the budget of the Republic of Serbia.
Part II - Conditions Precedent to the Effectiveness of the Agreement
(a) This Agreement has been duly signed by the Lender and the Borrower;
(b) Delivery by the Borrower to the Lender of the following documents:
(i) An original of the legal opinion from the Minister of Justice customary for this type of transaction in form and content satisfactory to the Lender with certified copies (each with an official translation into the language of this Agreement) of all relevant documents to which such legal opinion refers, demonstrating that the Agreement is legally effective and enforceable and, in particular: (i) that the Borrower has met all requirements under its constitutional law and other applicable legal provisions for the valid assumption of all its obligations under this Agreement, (ii) that no official authorisations, consents, licenses, registrations and/or approvals of any governmental authority or agency (including theNational Bank of Republic of Serbia) are required or advisable in connection with the execution and performance of this Agreement by the Borrower (including without limitation that all amounts due by the Borrower to the Lender under this Agreement whether as principal or interest, late payment interest, Prepayment Indemnity, incidental costs and expenses or any other sum are freely convertible and transferable), (iii) that choice of French law to govern this Agreement and the submission to arbitration are valid and binding, as well as that arbitration awards against the Borrower will be recognized and enforceable in the Republic of Serbia, and (iv) that neither
the Borrower nor any of its property has any right of immunity from arbitration, suit, execution or other legal process other than those defined in this Agreement;
(ii) Evidence of the enactment by the National Assembly of the Republic of Serbia of the law ratifying this Agreement (together with evidence of such law being promulgated
by the President of the Republic of Serbia) and published in the Official Gazette of the Republic of Serbia.
(iii) Confirmation of the Ministry of Finance of the Republic of Serbia that this Agreement has been duly evidenced therewith.
Part III - Conditions Precedent for the first Drawdown under the Budget Support Tranche
(a) Delivery by the Borrower to the Lender of a copy of the government conclusion appointing and authorising persons to sign the Drawdown Requests for the Budget Support Tranche and a certificate of specimen of the signature of each person listed in this conclusion.
Part IV - Conditions Precedent for all Subsequent Drawdowns under the
Budget Support Tranche
(a) Delivery by the Borrower to the Lender of evidence that the Disbursement- Linked Results related to the Drawdown request have been achieved in a manner satisfactory to the Lender and according to the arrangements and procedures set out in the OIM;
(b) Delivery by the Borrower to the Lender of evidence – presented in the manner set out in the OIM - that the Expenditure Framework has been implemented in an amount at least equivalent to the requested Drawdown.
Part V - Conditions Precedent for the first Drawdown under the Technical Assistance Tranche
(a) Confirmation by the Co-Financier or the Borrower that the IBRD Loan Agreement has become effective and that the conditions precedent to the first disbursement in respect of such loan have been fulfilled;
(b) The Co-Financing Agreement between the Lender and the Co-Financier has been signed;
(c) Delivery by the Borrower to the Lender of a copy of the government conclusion appointing and authorising persons to sign the Drawdown Requests for the Technical Assistance Tranche and a certificate of specimen of the signature of each person listed in this conclusion;
(d) Delivery by the Borrower to the Lender of a certificate of the National Bank of Serbia certifying that the Designated Account has been opened in the name of the Operation and providing account details for such Designated Account.
SCHEDULE 5A - FORM OF DRAWDOWN REQUEST
[on the Borrower’s letterhead]
To: AGENCE FRANÇAISE DE DÉVELOPPEMENT
On: [date]
Borrower’s Name – Credit Facility Agreement n° [●] dated [●] Drawdown Request n°[●]
Dear Sirs,
1. We refer to the Credit Facility Agreement n° [●] entered into between the Borrower and the Lender dated [●] (the “Agreement”). Capitalised words and expressions used but not defined herein have the meanings given to them in the Agreement.
2. This letter is a Drawdown Request.
3. We irrevocably request that the Lender makes a Drawdown available on the following terms:
Amount: [Budget Support Tranche: EUR [●] or, if less, the remaining balance.]
[Technical Assistance Tranche: [●] or, if less, the remaining
balance.]
Interest Rate: [fixed / floating]
[For Technical Assistance Tranche only:]
Disbursement method(s): [Reimbursement and/or Direct Payment and/or Advance]
4. The Interest Rate will be determined in accordance with the provisions of Clause 4 (Interest) and Clause 5 (Change to the calculation of interest) of the Agreement. The Interest Rate applicable to the requested Drawdown will be provided to us in writing and we accept this Interest Rate [(subject to the paragraph below, if applicable)], including when the Interest Rate is determined by reference to a Replacement Benchmark plus any Replacement Benchmark Adjustment Margin as notified by the Lender following the occurrence of a Screen Rate Replacement Event.
[For fixed Interest Rate only:] If the Interest Rate applicable to the requested Drawdown is greater than [●] ([●]%), we request that you cancel this Drawdown Request.
5. We confirm that each condition specified in Clause 2.4 (Conditions precedent) is satisfied on the date of this Drawdown Request and that no Event of Default is continuing or is likely to occur. We agree to notify the Lender immediately if any of the conditions referred to above is not satisfied on or before the Drawdown Date.
6. The proceeds of this Drawdown should be credited to the following bank account9:
(a) Name [of the Borrower]: [●]
(b) Address [of the Borrower]: [●]
(c) IBAN Account Number: [●]
(d) SWIFT Number: [●]
(e) Bank and bank’s address [of the Borrower]:
(f) correspondent bank and account number of the Borrower’s bank:
7. This Drawdown Request is irrevocable.
[●]
[●]
8. We have attached to this Drawdown Request all relevant supporting documents specified in Clause 2.4 (Conditions precedent) of the Agreement:
[List of supporting documents]
Yours sincerely,
.........................................................
Authorised signatory of Borrower
9 In case the Drawdown request concerns both the Budget Support and Technical Assistance Tranches, please indicate the relevant bank account below.
SCHEDULE 5B - FORM OF CONFIRMATION OF DRAWDOWN AND RATE
[on Agence Française de Développement letterhead]
To: [the Borrower] Date: [●]
Ref: Drawdown Request n° [●] dated [●]
Borrower’s Name – Credit Facility Agreement n°[●] dated [●] Drawdown Confirmation n°[●]
Dear Sirs,
1. We refer to the Credit Facility Agreement n°[●] entered into between the Borrower and the Lender dated [●] (the “Agreement”). Capitalised words and expressions used but not defined herein have the meanings given to them in the Agreement.
2. By a Drawdown Request Letter dated [●], the Borrower has requested that the Lender makes available a Drawdown in the amount of EUR [●], pursuant to the terms and conditions of the Agreement.
3. The Drawdown which has been made available according to your Drawdown Request is as follows:
Amount: Budget Support Tranche: EUR [●] or, if less, the remaining balance. Technical Assistance Tranche: [●] or, if less, the remaining balance.
[Option: floating Interest Rate Drawdowns :
● Applicable interest rate: [●percentage in words] ([●]%) per annum [equal to the aggregate of the six-month EURIBOR (equal to [●]% per annum) and the Margin]
[Option: fixed Interest Rate Drawdowns:
● Applicable interest rate: [●percentage in words] For information purposes only:
● Rate Setting Date: [●]
● Fixed Reference Rate: [●percentage in words] ([●]%) per annum
● Index Rate: [●percentage in words] ([●]%) per annum
● Index Rate on Rate Setting Date: [●percentage in words] ([●]%) per annum
● Effective global rate (for a 6 month period): [●percentage in words] ([●]%)
● Effective global rate (per annum): [●percentage in words] ([●]%)]
[It being specified that the above Interest Rate may vary in accordance with the provisions of Clauses 4.1.1(a) (Floating Interest Rate) and 5.2 (Replacement of a Screen Rate) of the Agreement.]
Yours sincerely,
.........................................................
Authorised signatory of Agence Française de Développement
SCHEDULE 5C - FORM OF RATE CONVERSION REQUEST
[on the Borrower’s letterhead]
To: AGENCE FRANÇAISE DE DÉVELOPPEMENT
On: [date]
Borrower’s Name – Credit Facility Agreement n°[●] dated [●] Rate Conversion Request n°[●]
Dear Sirs,
1. We refer to the Credit Facility Agreement n°[●] entered into between the Borrower and the Lender dated [●] (the “Agreement”). Capitalised words and expressions used but not defined herein have the meanings given to them in the Agreement.
2. Pursuant to Clause 4.1.3 (Conversion from a floating Interest Rate to a fixed Interest Rate) of the Agreement, we hereby request that you convert the floating Interest Rate of the following Drawdowns:
● [list the relevant Drawdowns],
into a fixed Interest Rate in accordance with the terms of the Agreement.
3. This rate conversion request will be deemed null and void if the applicable fixed Interest Rate exceeds [percentage in letters] [●%].
Yours sincerely,
.........................................................
Authorised signatory of Borrower