CREDIT NUMBER 5197-MM Financing Agreement (Reengage nent and Reform Support Credit) between REPUBLIC OF THE UNION OF MYANMAR and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated January 22, 2013 FINANCING AGREEMENT AGREEMENT dated Ja nuary 22, 2013, entered into between the REPUBLIC OF THE UNION OF MYANMAR ("Recipient") and the INTERNATIONAL DEVELOPMENT ASSOCIATION ("Association") for the purpose of providing financing in support of the Progr im (as defined in the Appendix to this Agreement). The Association has dei;ided to proide this financing on the basis, inter alia: of (a) the actions which the Ricipient has Iready taken under the Program and which are described in Section I of Schedule I to thi; Agreement, and (b) the Recipient's maintenance of an appropriate macroeconomic policy framework. The Recipient and the Association therefore hereby agree as follows: ARTICLE I - GENERAL CONDITIONS; DEFINITIONS 1.01. The General Conditions (as defined in the Appendix to this Agreement) constitute an integral par: of this Agreement. 1.02. Unless the context recuires otherwise, the capitalized terms used in this Agreement have the mea.nings ascribed to them in the General Conditions or in the Appendix to this Agr :ement. AR'ICLE II- FINANCING 2.01. The Association agrees o extend to the Recipient, on the terms and conditions set forth or referred to in this Agreement, a credit in an amount equivalent to two hundred eij;hty seven million seven hundred fifty thousand Special Drawing Rights (SDR 287,750,00)) (variously, "Credit" and "Financing"). 2.02. The Recipient may wittdraw the proceeds of the Financing in support of the Program in accordance with Section II of Schedule I to this Agreement. 2.03. The Maximum Comnmilment Charge Rate payable by the Recipient on the Unwithdrawn Financing Balance shall be one-half of one percent (1/2 of 1%) per annum. 2.04. The Service Charge pay ible by the Recipient on the Withdrawn Credit Balance shall be equal to three-foirths of one percent (3/4 of 1%) per annum. 2.05. The Payment Dates are Jinuary IS and July 15 in each year. 2.06. The principal amount of the Credit shall be repaid in accordance with repayment schedule set forth in Schcdule 2 to this Agreement. -2- 2.07. The Payment Currency is United States Dollars. AR TICLE III - PROGRAM 3.01. The Recipient declares its commitment to the Program and its implementation. To this end: (a) the Recipient ai d the Association shall from time to time, at the request of oither party, cxchange views on the Recipient's macroeconomic policy framework and he progress achieved in carrying out the Program; (b) prior to each such exchange of views, the Recipient shall furnish to the As:;ociation for its review and comment a report on the progress acHieved in carrying out the Program, in such detail as the Association shall reasonably request; and (c) without limitation upon the provisions of paragraphs (a) and (b) of this Section, the Rccipient shall promptly inform the Association of any situation that would have the effect of materially reversing the objectives of the Program or any action taken under the Program including any action specified in Section I of Schedule I to this Agreement. ARTICLE IV -- REMEDIES OF THE ASSOCIATION 4.01. The Additional Event of Suspension is that a situation has arisen which shall make it improbable tha: the Program, or a significant part of it, will be carried out. 4.02. The Additional Events (if Acceleration is that the event specified in Section 4.01 of this Agreement occu s and is continuing for a period of thirty (30) days after notice of the event has been given by the Association to the Recipient. ARTICLE V -- EFFECTIVENESS; TERMINATION 5.01. The Additional Conditicns of Effectiveness consist of the following: (a) The Association is satisfied with the progress achieved by the Recipient in carrying out the Program and with the adequacy of the Recipient's macroeconomic policy framework. (b) The Recipient has fully repaid all outstanding principal, service charges or any other charges, due to the Association under any agreement between the Recipient and the Association. -3- 5.02. The Effectiveness Dealline is the date ninety days (90) days after the date of this Agreement. ARTICLE VI - REPRESENTATIVE; ADDRESSES 6.01. The Recipient's Repre;entative is its minister at the time responsible for finance and revenue. 6.02. The Recipient's Addre ;s is: Ministry of Fir ance and Revenue Building No. 26 Naypyitaw Mianinar Facsimile: 95.67-410-198 6.03. The Assoc ation's Address is: International Eevelopment Association 1818 H Street, N.W. Washington, E.C. 20433 United States cf Aierica Cable address: Telex: Facsimile: IN DEVAS 248423(MCI) 1-202-477-6391 Washington, D.C. -4- AGREED at District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF THE UNION OF MYANMAR By Authorized Representative Name: 4 CyI< Title: A 'tt INTERNATIONAL DEVELOPMENT ASSOCIATION By Authorized Representative Name: 4/)'1o. Title:.K~~'. -5- SCHEDULE I Program Actiois; Availability of Financing Proceeds Section L Actions under t ie Program A. Actions Ta ken Under the Program, The actions taken by the Recipient under the Program include the following: Macroeconomic Stability I. The Recirient has enacted the Foreign Exchange Management Law and introduced a managed float system of exchange-rate determination. 2. The Recipient has incided limits on borrowing in its Union Budget Law for Fiscal Year 2012/13. Public Financial Management 3. The Recipient has increased allocations for education and health in its Union Budget Law for Fiscal 'tear 2012/13. 4. The Recipient has publi::hed the Union Budget Law for Fiscal Year 2012/13 in a local newspaper. Investment Climate 5. The Central Bank of Vyanmar has permitted commercial banks to accept various additional forms of collateral. 6. The Recipient has enactcd the Foreign Investment Law. 7. The Recipient has abolished the export-first policy on access to foreign exchange for importe s. Section II. Avcilability of Financing Proceeds A. General. The Recipicnt may withdraw the proceeds of the Financing in accordance with the provisions of this Section and such additional instructions as the Association may specify by notice to the Recipient, B. Allocation of Financing Amounts. The Financing is allocated in a single withdrawal tranche, from which the Recipient may make withdrawals of the Financing. The allocation of the amounts of the Financing to this end is set out in the table below: -6- Allocations Amount of the Financing Allocated (expressed in SDR) Single Withdrawal Tranche 287,750,000 TOTAL AMOUNT 287,750,000 C. Withdrawal Tranche Release Conditions. No withdrawal shall be made of the Single Withdrawal Tranche ur less the Association is satisfied: (a) with the Program being carried out by the Recip ent; and (b) with the appropriateness of the Recipient's macroeconomic policy framewcrk. D. Deposits cf Financing Amounts. Except as the Association may otherwise agree, all withdrawals from the Financing Account shall be deposited by the Association into an account designated by the Recipient and acceptable to the Association and in accordance with irrevocable intructions issued by the Recipient to (he Association for this purpose. E. Excluded Expenditurts. The Recipient undertakes that the proceeds of the Financing shall not be used o finance Excluded Expenditures. If the Association determines at any time that an amount of the Financing was used to make a payment for an Excluded Expenditure, th. Recipient shall, promptly upon notice from the Association, refund an amount cqual to the amount of such payment to the Association. Amounts refunded to the Associition upon such request shall be cancelled. F. Closing Dte. The Cloing Date is October 31, 2013. -7- SCHEDULE 2 Repayment Schedule Date Payment Die Principal Amount of the Credit repayable (expressed as a percentage)* On each January 15 and July 15: commencing July I'i, 2023 to and inclding 1% January 15, 2033 commencing July 1IJ, 2033 to and including 2% January 15, 2053 * The percentages represent the percentage of the principal amount of the Credit to be repaid, except as the Associatio:i may otherwise specify pursuant to Section 3.03(b) of the General Conditions. APPENDIX Section I. Definitions 1. "Central Bank of Myan iar" means the Recipient's central bank established and operating under the Cenr:ral Bank of Myanmar Law, dated July 2, 1990, including any amendments, and ar y successor entity to the Central Bank of Myanniar. 2. "Excluded Expenditure' means any expenditure: (a) for goods or services supplied under a contract which any national or international fin ancing institution or agency other than the Association or the Bank has financed or agreed to finance, or which the Association or the Bank has fir anced or agreed to finance under another credit, grant or loa n; (b) for goods included in the following groups or sub-groups of the Standard Intornational Tride Classification, Revision 3 (SITC, Rev.3), published by the United Nations in Statistical Papers, Series M, No. 34/Rev.3 (1986) (the SITC), or any successor groups or subgroups under future revisions to the SITC, as designated by the Association by notice to the Recipient: Group Sub-group Description of Item 112 Alcoholic beverages 121 Tobacco, un- manufactured, tobacco refuse 122 Tobacco, manufactured (whether or not containing tobacco substitutes) 525 Radioactive and associated materials 667 Pearls, precious and semiprecious stones, unworked or worked 718 718.7 Nuclear reactors, and parts thereof; fuel elements (cartridges), non- irradiated, for nuclear I reactors 728 728.43 Tobacco processing machinery 897 897.3 Jewelry of gold, silver or -9- platinum group metals (except watches and watch cases) and goldsmiths' or silversmiths' wares (including set gems) 971 Gold, non-monetary (excluding gold ores and concentrates) (c) for goods intended for a military or paramilitary purpose or for Juxury consumption, (d) for envirornmetally hazardous goods, the manufacture, use or import of which is prohilited under the laws of the Recipient or international agroeients to which the Recipient is a party; (e) on account of any payment prohibited by a decision of the United Nations Security Council taken under Chapter VII of the Charter of the United Nations; and (f) witl respect to which the Association determines that corrupt, fraudulent, collusive or coercive practices were engaged in by representatives of the Recipient or other recipient of the Financing proceeds, without the Recipient (or ot:ier such recipient) having taken timely and appropriate action satisfacto -y to the Association to address such practices when they occur. 3. "Fiscal Yenr" means th, fiscal year of the Recipient beginning on April I and ending March 31 of eacl year, 4. "Foreign Exchange Management Law" means the Recipient's Foreign Exchange Management Law, dated August 10, 2012. 5. "Foreign Investment L. w" means the Recipient's Foreign Investment Law of 2012. 6. "General Conditions" means the "International Development Association General Conditions for Credits and Grants", dated July 31, 2010 with the modifications set forth iL Section 11 of this Appendix, 7. "Program" means the program of actions, objectives and policies designed to promote growth and achieve sustainable reductions in poverty and set forth or referred to in the letter dated November 26, 2012, from the Recipient to the Associotior declaring ihe Recipient's commitment to the execution of the - 10- Program, and requesti ig assistance from the Association in support of the Program during its execution, 8. "Single Withdrawal Tranche" means the amount of the Financing allocated to the category entitled "Single Withdrawal Tranche" in the table set forth in Part B of Section II of Schedule I to this Agreement. 9. "Union Budget Law f)r Fiscal Year 2012/13" means the Recipient's Union Budget Law, 2012, dated March 28, 2012. Section H. Modifications to tl:e General Conditions The modifications io the General Conditions are as follows: 1 The last sentence of paragraph (a) of Section 2.03 (relating to Applications for Withdrawal) is deleted in its entirety. 2. Sections 2.04 (DesignatedAccounts) and 2.05 (Eligible Expenditures) are deleted in their entirety, and the remaining Sections in Article II are renumbered accordingly. 3. Sections 4.01 (Project Fxecution Generally), and 4.09 (Financial Management; Financial Statements; Audits) are deleted in their entirety, and the remaining Sectiohs in Article IV are renumbered accordingly. 4. Paragraph ,a) of Sectiot 4.05 (renumbered as such pursuant to paragraph 3 above and relating to Use of Goods, Works and Services) is deleted in its entirety. 5. Paragraph (c) of Secti)n 4.06 (renumbered as such pursuant to paragraph 3 above) is modified to read as follows: "Si-ction 4.06. Plans; Documents; Records .. (c) The Recipient shall retain all records (contracts, orders, invoices, bills, receipts and -other documents) evidencing expenditures under the Finnacing until two (2) years after the Closing Date. The Recipient shall enable the Association's representatives to examine such records." 6. Section 4.07 (renumber-,d as such pursuant to paragraph 3 above) is modified to read as follows: "S,ction 4.07. Prograin Monitoring and Evaluation -ll- (c) The Recipient shall prepare, or cause to be prepared, and furnish to the Association not later than six (6) months after the Closing Date, a report cf such scope and in such detail as the Association shall reasonably request, on the execution of the Program, the performance by the Recipient aid the Association of their respective obligations under the Legal Agre.inents and the accomplishment of the purposes of the Fir ancing." 7. The following terms ard definitions set forth in the Appendix are modified or deleted as follows, and the following new terms and definitions are added in alphabetical order to th Appendix as follows, with the terms being renumbered accordingly: (a) The definition cf the term "Eligible Expenditure" is modified to read as fol,ows: "'Eligible Expeiditure' means any use to which the Financing is put in support of the Program, other than to finance expenditures excluded puisuant to the Financing Agreement." (b) The term "Financial Statements" and its definition as set foth in the Appendix are dOleted in their entirety. (c) The term "Projoct" is modified to read "Program" and its definition is modified to read as follows: "'Frogram' means the program referred to in the Financing Agreement in support of whi0h the Financing is made." All references to "Project" thr)ughout these General Conditions are deemed to be references to "Program".