On ratification of the Loan Agreement (Loan to Support Pension Reform) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development dated June 25, 1998

Home / RLA / On ratification of the Loan Agreement (Loan to Support Pension Reform) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development dated June 25, 1998

To ratify the Loan Agreement (Loan to Support Pension Reform) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development dated June 25, 1998, concluded in the District of Columbia, United States The United States of America. President of the Republic of Kazakhstan loan number 4359-kz Loan agreement (loan to support pension reform) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development

Agreement dated June 25, 1998 between the Republic of Kazakhstan (the Borrower) and the International Bank for Reconstruction and Development (the Bank). Whereas (A) the Bank has received a letter from the Borrower dated May 27, 1998, containing an action plan, objectives and strategic measures aimed at implementing the Borrower's structural pension reform (hereinafter referred to as the "Program"), a statement of the Borrower's intention to implement this Program, as well as a request for financial assistance from the Bank for implementation of this Program; and also, (C) that based, inter alia, on the above, the Bank has decided to provide financial support to this Program by providing A loan consisting of three tranches to the Borrower, as provided below: The parties hereby agree as follows:

Article I General Terms and Conditions; Definitions Section 1.01. "General Terms and Conditions Applicable to Loans and Guarantee Agreements for Monocurrency Loans" of the Bank dated May 30, 1995 (as amended on December 2, 1997), as amended below (General Terms and Conditions), form an integral part of this Agreement: (a) New version of paragraph 18 of Section 2.01: "Project" means the program mentioned in the preamble to the Loan Agreement for which this loan is provided"; (b) New version of Section 4.01: "Unless the Bank and the Borrower agree otherwise, withdrawals from the loan account shall be made in the currency of the deposit account referred to in Article 2.02 of the Loan Agreement"; (c) New version of Section 5.01: "The borrower has the right to withdraw loan funds from the loan account in accordance with the provisions of the Agreement about the Loan and the General Terms and Conditions; (d) The last sentence of section 5.03 is deleted; (e) New version of Article 9.07 (c): "No later than six months after the date of closing of the credit facility or at a later date that may be agreed for this purpose between the Borrower and the Bank, the Borrower shall prepare and send to the Bank a report, the volume and degree of detail of which correspond to a reasonable request from the Bank., on the implementation of the Program referred to in the Preamble to this Loan Agreement, as well as on the fulfillment by the Borrower and the Bank of their respective obligations under this Loan Agreement and the achievement of the objectives of this loan"; and (f) Section 9.05 Section 9.06, 9.07 is also deleted (as amended above), 9.08 and 9.09 are considered, respectively, sections 9.05, 9.06, 9.07 and 9.08. Section 1.02. Unless the context otherwise requires, several terms defined in the General Terms and Conditions and the Preamble to this According to the Agreement, the relevant meanings are fixed in this document. The additional terms listed below have the following meanings: (a) "escrow account" means the account specified in Section 2.02. (b) of this Agreement; (b) "Ministry of Labor" means the Ministry of Labor and Social Protection of the Borrower or its legal successor; (c) "National Bank" means the National Bank of the Republic of Kazakhstan, which is the central bank of the Borrower, regulates the activities of the Borrower's banks, established and operating within the framework of the Borrower's legislation, and includes its legal successor; (d) "National Pension Agency" means the National Pension Agency of the Ministry of Labor, which is an organization that licenses and regulates the activities of non-governmental pension funds of the Borrower, established in accordance with Resolution No. 1108 of the Government of the Borrower dated July 14, 1997, as well as its legal successor; (e) "National Securities Commission" means the National Commission of the Republic of Kazakhstan on Securities established in accordance with Decree of the President of Kazakhstan No. 3755 (dated November 13, 1997) "On Approval of the Charter of the National Commission of the Republic of Kazakhstan on Securities" and includes its successor; (f) "Solidary System" means a pension system that ensures the payment of pensions from current mandatory pension contributions and is mentioned in Part 2 of the Concept of Reform of the Pension System of the Republic of Kazakhstan, approved by Resolution No. 819 of the Government of the Borrower dated May 12, 1997; (g) "GNPF" means the State Accumulative Pension Fund of the Borrower, which is an accumulative pension fund the Borrower's Fund, established in accordance with the Resolution of the Government of Kazakhstan No. 819 dated September 24, 1997, and its legal successor; and (h) "GTSVP" means the State Pension Payment Center under the jurisdiction of The Ministry of Labor, which is an organization established in accordance with the Resolution The Government of Kazakhstan issued No. 926 dated June 4, 1997, for the purposes of (i) collecting mandatory pension contributions, as well as (ii) making payments to pensioners in accordance with the state pension system, and includes its successor.

Article II Loan Section 2.01. The Bank agrees to provide the Borrower with a loan on the terms set forth or specified in the Loan Agreement for an amount equal to three hundred million dollars (300,000,000 US dollars). Section 2.02. (a) In accordance with the provisions of paragraphs (B), (c) and (d) of this section, the Borrower has the right to withdraw Loan funds from the Loan Account to finance the Program. (B) Before sending the first request for withdrawal of funds from the Loan Account to the Bank, the Borrower opens and then maintains a dollar deposit account with his National Bank for a period and conditions satisfactory to the Bank. Any funds withdrawn from the Loan Account are deposited by the Bank into this deposit account. (c) The Borrower undertakes not to use the Loan funds to finance expenses that are not subject to financing in accordance with the provisions of Annex 1 to this Agreement. If the Bank determines at any time that the Loan funds have been used to finance expenses that are not eligible for financing in accordance with the provisions of Annex 1, the Borrower shall, immediately upon receipt of notification from the Bank, (1) deposit into the Deposit Account an amount equal to the amount of the said payment; or (ii) upon request of the Bank, such amount to the Bank. The amounts reimbursed in accordance with such a request are credited to the Loan Account for subsequent cancellation. (d) No further withdrawal of funds from the Loan Account is permitted: (i) after the total amount of Loan funds withdrawn from the Loan Account reaches the equivalent of USD 100,000,000, except in cases where the Bank is satisfied, after the exchange of views described in Section 3.01 of this Agreement, and based on the facts acceptable to the Bank are that: (A) The Borrower has made progress in implementing the Program; (B) the measures set out in Section 1 of Annex 3 to this Agreement have been taken; and (C) the Borrower's macroeconomic policy framework is consistent with the objectives of the Program; (ii) after the total amount of Loan funds withdrawn from the Loan Account reaches the equivalent of USD 200,000,000, except in cases where the Bank is satisfied, after the exchange of views described in Section 3.01. of this Agreement, and based on the facts acceptable to the Bank, that: (A) The Borrower has made progress in implementing the Program; (B) the measures set out in Section II of Annex 3 to this Agreement have been taken; and (C) the Borrower's macroeconomic policy framework is consistent with the objectives of the Program. (f) If, after the aforementioned exchange of views, the Bank notifies If the Borrower believes that the progress made and the actions taken are unsatisfactory, and within 90 days of receiving such notification, the Borrower is not making progress and is not taking actions that satisfy the Bank, the Bank may, by notifying the Borrower accordingly, cancel the outstanding portion of the Loan funds or any portion of such funds. Section 2.03. The closing date of the credit facility is July 31, 2000 or a later date, which may be set by the Bank. The Bank shall immediately notify the Borrower of such a later date. Section 2.04. The Borrower pays the Bank a commitment fee at an annual rate (3/4 of 1%) for the principal amount of the Loan remaining after periodic withdrawals. Section 2.05. (a) The Borrower pays interest on the principal periodically withdrawn and outstanding Loan amount for each Interest Accrual Period at a rate for each interest accumulation period equal to the base LIBOR rate plus the total LIBOR spread. (B) For the purposes of this Section: (i) "Interest accrual period" means the initial period beginning on the date of this Agreement and including that date, but not including the date of the first interest payment, and after the expiration of the initial period, all periods beginning on the date of interest payment and including that date, but not including the next interest payment date. (ii) "Interest Payment Date" means any date specified in Section 2.06 of this Agreement. (iii) "LIBOR Base Rate" means, for each Interest Accrual Period, as reasonably determined by the Bank in annual percentage terms, the rate of supply on the London Interbank Deposit Market for six-month deposits at cost on the first day of such Interest Accrual Period (or in the case of the first Interest Accrual Period at cost on the Interest Payment Date, due on the first day of such Interest Accrual Period or on the day immediately preceding it). (iv) "Total LIBOR Spread" means, for each Interest Accrual Period, as reasonably defined by the Bank in annual percentage terms: (A) half of one percent (1/2 of 1%); (C) minus (or plus) the weighted average margin for such Interest Accrual Period above (or below) The offer rates on the London interbank market or other benchmark rates for six-month deposits in respect of the Bank's outstanding borrowings or parts allocated by the Bank to finance monocurrency loans provided by the Bank, or parts thereof, including this Loan. (c) The Bank shall notify the Borrower of the LIBOR base rate and the total LIBOR spread for each interest accrual period shortly after their determination. (d) If at any time, in the light of changes in market practices affecting the determination of the discount rates referred to in Section 2.05, the Bank determines that, in the interests of borrowers in general and the Bank, other discount rates not mentioned in this section should be applied to loans, the Bank may change the basis for determining the discount rates. for this Loan, by notifying the Borrower no later than six (6) months prior to the introduction of the new settlement base. Such a framework shall enter into force upon the expiration of the notification period if the Borrower has not notified during this period of objections to such an introduction; if the Bank is notified in a timely manner of the Borrower's objections, such changes will not apply to this Loan. Section 2.06. Interest and other fees are payable on June 15th and December 15th of each year. Section 2.07. The Borrower shall repay the principal amount of the Loan in accordance with the repayment schedule set out in Appendix 2 to this Agreement.

Article III Special Conditions Section 3.01. (a) The Borrower and the Bank periodically, at the request of either party, exchange views on progress in implementation The program and the measures listed in Annex 3 to this The agreement. (b) Before each such exchange of views, the Borrower submits to the Bank, for review and comment, a report on the results achieved in the implementation of the Program, with such a degree of detail as corresponds to a reasonable request from the Bank. (c) Without limiting the provisions of paragraph (a) of this section The Borrower exchanges opinions with the Bank on any actions that are expected to be performed after the transfer of funds under the Loan, if such actions significantly change the nature of the objectives of the Program, and on any actions taken under the Program, including any actions specified in Appendix 3 to this Agreement. Section 3.02. At the request of the Bank, the Borrower undertakes: (a) ensure that the Escrow Account is audited by independent auditors who meet the Bank's requirements in accordance with consistently applied good auditing principles; (b) to send to the Bank immediately after the preparation, but under no circumstances later than six months after the date of the Bank's request for such an audit, a certified copy of the report on such an audit conducted by the aforementioned auditors, on the range of issues and the details of the relevant reasonable requirements of the Bank; and (c) to submit to the Bank additional information regarding the Deposit Account and its audits, corresponding to a reasonable request from the Bank.

Article IV Additional condition for termination of the Agreement Section 4.01. According to section 6.02 (p) of the General Terms and Conditions, the following additional event is stipulated, namely: the occurrence of a situation as a result of which the implementation of the Program or a significant part of it becomes practically impossible.

Article V

Termination of the Agreement Section 5.01. For the purposes of Section 12.04 of the General Terms and Conditions, a date is set ninety (90) days after the date of conclusion of this Agreement. Agreements.

Article VI

Representatives of the Borrower; addresses

Section 6.01. The Borrower's Minister of Finance or Deputy Minister of Finance is designated by the Borrower's representative for the purposes of Section 11.03 of the General Terms and Conditions. Section 6.02. For the purposes of Section 11.01 of the General Terms and Conditions, the following addresses are defined: For the Borrower: Ministry of Finance Republic Avenue, 60 Astana, Republic of Kazakhstan For the Bank: International Bank for Reconstruction and Development 1818 H St. N.W. Washington D.C. 20433 United States of America Telegraph: Telex: INTBAFRAD 248423 (MCI) or Washington D.C. 64145 (MCI) In witness whereof, the parties, acting through their duly authorized representatives, have signed this Agreement in the District Colombia, United States of America, on the day and year indicated above. For the Republic of Kazakhstan Authorized Representative For the International Bank for Reconstruction and Development Vice President of the Europe and Central Asia Region

Appendix 1 Expenses that are not subject to financing For the purposes of section 2.02 (c) of this Agreement, the Loan funds may not be used to finance the following types of expenses: 2. expenses for goods and services supplied under contracts that will be financed, or for which approval has been obtained for financing by any national or international financial organization or agency, or for which the Bank or Association wilAppendix 1 Expenses that are not subject to financing For the purposes of section 2.02 (c) of this Agreement, the Loan funds may not be used to finance the following types of expenses: 2. expenses for goods and services supplied under contracts that will be financed, or for which approval has been obtained for financing by any national or international financial organization or agency, or for which the Bank or Association will finance or have agreed to finance another loan or loan; 3. expenses for goods included in the following groups or subgroups

International Standard Trade Classification (ISTC), Third Edition (CITES, Rev. 3), published by the United NatInternational Standard Trade Classification (ISTC), Third Edition (CITES, Rev. 3), published bythe United Nations in the publication "Statistical Regions. Series M, No. 34\ Rev. 3 (1996) (CITES)", or, according to the decision of the Bank, which is notified to the Borrower, members of any groups and subgroups that will be included in subsequent editio3 (1996) (CITES)", or, according to the decision of the Bank, which is notified to the Borrower, members of any groups and subgroups that will be included in subsequent editions of the MSTC: Group The subgroup Description 112 ___ Alcoholic beverages 121 ___ Tobacco, unprocessed, tobacco waste 122 ___ Tobacco, unprocessed, (including or not including tobacco substitutes) 525 ___ Radioactive and related materials 667 ___ Pearls, precious and semiprecious stones, processed or untreated 718 718.7 Nuclear reactors and their parts, non-radiated fuel cells (cathodes) for nuclear reactors 828 728.43 Tobacco processing equipment 897 897. 3 Jewelry made of metals of the gold and silver and platinum group (excluding watches and watch cases) and jewelry products (including embedded precious stones) 971 __ Gold, non-monetary (except for gold ore and concentrates) 4. Expenses on goods intended for military or paramilitary purposes, or on luxury goods;

5. expenses for goods dangerous to the environment (for the purposes of this paragraph, the term "goods dangerous to the environment" is defined as goods whose production, use or import is prohibited by the laws of the Borrower or international agreements signed by the Borrower); 6. expenses (a 5. expenses for goods dangerous to the environment (for the purposes of this paragraph, the term "goods dangerous to the environment" is defined as goods whose production, use or import is prohibited by the laws of the Borrower or international agreements signed by the Borrower); 6. expenses (a) on the territory of any country that is not a member of the Bank, or for goods purchased in such territories, or services provided from such territories; or (B) related to any payments to persons or entities or to the import of goods, if such payments or imports are prohibited by a decision of the United Nations Security Council taken under Chapter VII of the Charter of the United Nations; and 7. expenses under contracts in respect of which the Bank

Decides that corruption and fraud on the part of representatives took place during the conclusion of such contracts or their execution. The Borrower or the recipient of the Loan funds, and the Bo corruption and fraud on the part of representatives took place during the conclusion of such contracts or their execution. The Borrower or the recipient of the Loan funds, and the Borrower has not taken timely and necessary measures to satisfy the Bank to remedy the situation. Appendix 2 Loan repayment schedule Loan repayment dates Repayment of the main part of the loan (expressed in dollars) December 15, 2003 6 350 000 June 15, 2004 6,540,000 December 15, 2004 6,735,000 June 15, 2005 6,930,000 December 15, 2005 7,135,000 June 15, 2006 7,345,000 December 15, 2006 7,565,000 June 15, 2007 7,790,000 December 15, 2007 8,020,000 June 15, 2008 8,255,000 15 December 2008 8,500,000 June 15 , 2009 8,750,000 December 15, 2009 9,010,000 June 15, 2010 9,275,000 December 15, 2010 9,550,000 June 15, 2011 9,830,000 Dece 9,550,000 June 15, 2011 9,830,000 mber 15, 2011 10,120,000 June 15, 2012 10,420,000 December 15, 2012 10,730,000 June 15, 2013 11 045 000 December 15, 2013 11,370,000 June 15, 2014 11,410,000 December 15, 2014 12,055,000 June 15, 2015 12,410,000 December 15, 2015 12,755,000 June 15, 2016 13,155,000 December 15, 2016 13,545,000 June 15, 2017 13,945,000 December 15, 945,000 December 15, 2017 14,355,000 June 15, 2018. 14,785,000 The figures in this column are the dollar amount payable to repay the loan, except as provided in section 4.04 (d) of the General Terms and Conditions. Appendix 3 Actions mentioned in Section 2.02 (d) of this Agreement Actions referred to in Section 2.02 (d) (i) (C) of this Agreement 1. The Borrower has no pension arrears.

2. The Borrower's body that satisfies the Bank, which highlights the issue of long-term fiscal costs for the system of joint pension provision and social benefits.

3. The Borrower has issued a report to the satisfaction of the Bank outlining the Borrower's strategic actions to strengthen the insurance sector in the Republic of Kazakhstan in such areas as annuities, life insurance and disability insurance.

4. The Borrower has issued domestic government bonds with a maturity of two years or more in an amount that meets the reasonable investment requirements of the Borrower's accumulative pension funds.

5. The Government of the Borrower has adopted a resolution providing that the annual republican budgets submitted to Parliament for consideration.

6. The National Bank, the National Pension Agency and the National Securities Commission have implemented an adequate reporting system that ensures the provision of accurate and timely in6. The National Bank, the National Pension Agency and the National Securities Commission have implemented an adequate reporting system that ensures the provision of accurate and timely information on the operation and development of the pension system based on key monitoring indicators that satisfy the Bank.

7. The GTSP has prepared and approved an information technology plan that satisfies the Bank, which outlines the actions of the GTSP to fully computerize and automate pension accrual within the framework of the solidary pension system.

8. GTSVP and GNPF: (a) implemented a financial management system that ensures the provision of accurate and timely information about the work of these institutions, and also received a six-month audit report, which does not contain reservations, performed in accordance with auditing practice standards acceptable to the Bank and applied on an ongoing basis by independent auditors who satisfy Th

2. The Borrower's body that satisfies the Bank has issued a second annual report that satisfies the Bank, which highlights the issue of long-term fiscal costs for the system of joint pension provision and social benefits.

3. The borrower has issued a report satisfying the Bank, which outlines a strategy for providing insurance in case of forced disability and loss of a breadwinner.

4. The Borrower has issued domestic government bonds indexed in accordance with inflation, with a maturity of three years or more, to the extent that meets the reasonable investment requirements of the Borrower's accumulative pension funds.

5. The Ministry of Labor has issued a report to the satisfaction of the Bank, which highlights the issues of (a) the adequacy of pension provision for various groups of workers; and (B) recommendations on necessary actions to eliminate the identified deficiencies in the pension system for the population.

6. The National Bank, the National Pension Agency for Pension Provision and the National Securities Commission shall issue timely current working reports, which cover, to the satisfaction of the Bank, the issues of the pension system and its development, based on monitoring indicators.

7. The GTSP has installed and is using a computerized and automated system in accordance with the information technology plan referred to in paragraph 7 of Section 1 of this Annex.

8. In order to transfer pension contributions, the State Pension Fund assigned a social individual code (SIK) to employed persons of age and notified these persons of their code.

9. GTSVP and GNPF: (a) maintain a financial management system that ensures the provision of accurate and timely information about the work of these institutions, and (b) have received an annual audit report, without reservations, performed in accordance with auditing standards acceptable to the Bank and applied on an ongoing basis by independent auditors, satisfying the Bank.

This Law establishes the rules for registering the pledge of movable property in order to realize and protect the rights of individuals and legal entities who have legitimate rights to this property.

The Law of the Republic of Kazakhstan dated June 30, 1998 No. 254.

President

Republic of Kazakhstan

Constitution Law Code Standard Decree Order Decision Resolution Lawyer Almaty Lawyer Legal service Legal advice Civil Criminal Administrative cases Disputes Defense Arbitration Law Company Kazakhstan Law Firm Court Cases