Notice of Entering Into a Compact With the Government of the Republic of Nicaragua, 44422-44461 [05-15216]

Agencies

• Millennium Challenge Corporation

[Federal Register Volume 70, Number 147 (Tuesday, August 2, 2005)]
[Notices]
[Pages 44422-44461]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-15216]



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Part II





Millennium Challenge Corporation





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Notice of Entering Into a Compact With the Government of Nicaragua; 
Notice

Federal Register / Vol. 70, No. 147 / Tuesday, August 2, 2005 / 
Notices

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MILLENNIUM CHALLENGE CORPORATION

[MCC FR 05-14]


Notice of Entering Into a Compact With the Government of the 
Republic of Nicaragua

AGENCY: Millennium Challenge Corporation.

ACTION: Notice.

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SUMMARY: In accordance with Section 610(b)(2) of the Millennium 
Challenge Act of 2003 (Pub. L. 108-199, Division D), the Millennium 
Challenge Corporation is publishing a detailed summary and text of the 
Millennium Challenge Compact between the United States of America, 
acting through the Millennium Challenge Corporation, and the Government 
of the Republic of Nicaragua. Representatives of the United States 
Government and the Republic of Nicaragua executed the Compact documents 
on July 14, 2005.

    Dated: July 28, 2005.
Jon A. Dyck,
Vice President & General Counsel, Millennium Challenge Corporation.

Summary of Millennium Challenge Compact With the Republic of Nicaragua

I. Introduction

    Once one of the faster-growing countries in Latin America, 
Nicaragua fell into a state of severe economic collapse in the 1980s 
and only began a process of slow macroeconomic recovery in the last few 
years. Looking toward the future, Nicaragua now has an opportunity to 
achieve growth by taking advantage of regional economic integration and 
trade openings. The recently-approved MCC program (``Program'') will 
help the country to build the necessary capacity to take full advantage 
of these opportunities.
    The Government of Nicaragua (GON) presented MCC with a strategy to 
achieve economic growth and poverty reduction by building the 
productive capacity of the departments of Le[oacute]n and Chinandega, a 
region with proven growth potential due to its fertile land and 
connection to international markets. After extensive consultations, the 
Nicaraguans identified insecure property rights, under-developed 
infrastructure, and low-value rural business activity as the greatest 
barriers to growth, and developed a proposal to address them with MCA 
assistance. The Program will contribute to improving the lives of the 
800,000 residents of Le[oacute]n and Chinandega by raising household 
incomes in the region and also will benefit the country by transforming 
the region into an engine of economic growth. The Program has three 
objectives:
     Increase investment by strengthening property rights in 
Le[oacute]n. (Property Regularization Project).
     Reduce transportation costs between Le[oacute]n and 
Chinandega and domestic, regional and global markets (Transportation 
Objective Project.
     Increase profits and wages of farms and enterprises in 
Le[oacute]n and Chinandega (Rural Business Development Project).
    The five-year, $175 million Compact will help Nicaragua accomplish 
these objectives as outlined below.

II. Program Overview and Impact

1. Property Regularization Project ($26.5 Million)
    Insecure property rights, high land transaction costs, and 
inefficient property registration services undermine enterprise 
development, investment, and rural income growth in Nicaragua. To 
address these problems, the GON is focusing on legal, judicial, and 
institutional reforms at the national level. At the regional level, the 
Property Regularization Project will expand to Le[oacute]n an existing 
World Bank project in Chinandega, Proyecto de Ordenamiento de la 
Propiedad (``PRODEP''), thereby leveraging PRODEP's implementation 
experience and structure. Combined, these efforts will lay the 
foundation for increasing investment and income.
    The Activities of this Project include:
     Institutional Capacity Building: Provide technical support 
to government institutions to implement and sustain tenure 
regularization reforms in Le[oacute]n.
     Cadastral Mapping: Conduct area-wide cadastral mapping in 
Le[oacute]n to obtain current property descriptions to be recorded in a 
geographic information system.
     Land Tenure Regularization: Clarify land tenure, resolve 
disputes, and improve formal documentation of property rights.
     Database Installation: Link municipal and national 
registry and cadastral databases.
     Protected Area Demarcation: Demarcate and legally validate 
the boundaries of four environmentally-sensitive protected areas, 
regularize land rights within the perimeter of each, and facilitate the 
adoption of land use management plans by occupants therein.
     Analysis and Communications: Fund short-term technical 
assistance, policy analysis and outreach to promote participation in, 
use and sustainability of the improved property registration system.
    Benefits: This Project will work to eliminate the institutional and 
regulatory barriers preventing productive investment in property in 
Le[oacute]n. Eliminating these barriers will contribute to improving 
the investment climate, increasing the asset value of land, reducing 
land-related social conflict, encouraging intelligent management of 
regional natural resources, and strengthening local government land use 
planning.
2. Transportation Project ($92.8 Million)
    High transportation costs are a significant constraint to economic 
growth, particularly for agriculture and small- and medium-sized rural 
businesses. The Pacific Corridor, important for trade between Nicaragua 
and its neighbors, links producers and consumers in Le[oacute]n and 
Chinandega to markets north in neighboring Honduras and El Salvador and 
south to Nicaragua's urban center.
    Activities under this Project include:
     N-I Road (segment of Pacific Corridor): Improve a 58-
kilometer segment of the Pacific Corridor between Nejapa and Izapa.
     Secondary Roads: Pave and upgrade key secondary routes to 
link rural producers to the primary road network.
     Technical Assistance: Provide technical assistance to the 
Ministry of Transportation and Infrastructure (MTI) and the Nicaraguan 
Road Maintenance Fund (Fondo de Mantenimiento Vial or FOMAV).
    Benefits: This Project will reduce transportation costs, stimulate 
economic development, and improve access to markets and social services 
for road users. This will help Nicaragua, Honduras, and El Salvador 
fully realize the benefits of DR-CAFTA. A sustainable road maintenance 
mechanism will safeguard the funding of road improvements and lengthen 
road lifespan.
3. Rural Business Development Project ($33.7 Million)
    Despite a comparative advantage in the production, processing and 
marketing of agricultural products, over 70 percent of the rural 
population in Le[oacute]n-Chinandega is poor. Producers, suppliers, 
service providers, processors, and marketing agents frequently work in 
isolation or are absent in the region. Women are less likely to 
participate in agricultural organizations, receive technical assistance 
or credit or plant higher profit-yielding crops, despite their 
significant presence as producers. The region also suffers from 
pronounced

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deforestation and water supply constraints to farming and other 
productive activities, especially the poor communities in the northern 
highlands.
    The activities to be implemented under this Project include:
     Rural Business Development Services: Expand higher-profit 
agriculture and agribusiness by providing business development 
services, disseminating market information, developing improved 
production techniques, and managing the two Project Activities 
described below.
     Technical and Financial Assistance: To help small- and 
medium-sized farms and agribusiness transition to higher-profit 
activities, provide technical and financial assistance to these 
enterprises, including support that will directly offset certain costs 
of small farms; and
     Grants to Improve Water Supply for Farming and Forestry 
Production: Based on a watershed management action plan, provide grants 
to improve the water supply for irrigation and facilitate higher value, 
sustainable agriculture and forestry in the upper watershed areas of 
the region.
    Benefits: These activities will facilitate increases in the 
production of high-value goods and the profits and wages of farmers, 
agribusinesses and other non-farm businesses. These increases in 
profits and wages will translate into higher disposable incomes of 
families in the region, reducing the high incidence of poverty. In 
addition, these activities are expected to generate employment and 
contribute to a regional economy well-positioned to take advantage of 
national and international investment and market opportunities. Better 
water management will encourage more productive use of land and 
environmental sustainability, particularly for communities in the 
northern highlands.
4. Measuring Outcome and Impact ($3.3 Million)
    The overall objective of the Program is to increase income and 
reduce poverty in Le[oacute]n and Chinandega, and the Program's success 
will be measured by the increase in income of beneficiaries due to the 
Program. The Monitoring and Evaluation Plan will assess progress toward 
the achievement of the Compact's objectives and goal.
    By the end of the Property Regularization Project, an estimated 70 
percent of rural and 50 percent of urban properties (or ~43,000 land 
parcels) in Le[oacute]n will have more secure, registered titles. 
Thousands of disputes over property rights will be expected to have 
been successfully mediated and the costs in time and money of 
conducting property-related transactions are projected to have been 
reduced by 50 percent. Together, this more secure investment climate 
and more efficient registration system will encourage investment and 
environmental protection. Farmers who have their land titles 
regularized by the Project are expected to increase investment in land 
improvement by 32 percent over five years. All four protected areas in 
Le[oacute]n will be formally demarcated and occupant tenure will be 
regularized, allowing effective development and enforcement of land use 
management plans.
    Road upgrades will reduce transportation costs between the region 
and domestic, regional and international markets for an estimated 3,300 
current road users per day. Upgrading up to 100 kilometers of secondary 
roads is anticipated to reduce travel times and transport costs to 
markets and education and health services for rural communities. 
Improvements to the N-I road and the secondary roads are important for 
realizing the economic benefits outlined in the Rural Business 
Development Project as well as for stimulating new investments in 
Nicaragua as trade north from Managua to Honduras and El Salvador 
becomes more efficient and cost-effective.
    Thousands of farmers will directly benefit from the Rural Business 
Development Project by receiving help with transitioning into higher-
value agriculture. In addition, an estimated 7,000 jobs will be 
created. The additional profits and wages of farms generated as a 
result of the Rural Business Development Project are projected to total 
$30 million annually, beginning six years after the Project's 
initiation. To ensure that the benefits from the Project are long-term, 
the Project will facilitate linkages among different actors involved in 
rural business, such as distributors and processors, and build local 
capacity to link producers to market opportunities. In addition, 
thousands of hectares of currently arid land will have improved water 
supply and be under sustainable farm or forest production.
5. Program Management, Financial/Procurement Management, and Audit 
($18.8 Million)
    MCA-Nicaragua, a legal entity, will be established to implement the 
Compact and is the entity ultimately accountable for Program success. 
This entity will consist of an independent Board of Directors, with 
central government, local government, and civil society 
representatives, that will oversee the implementation of the Program. 
It will also include a technical secretariat staffed with full-time 
professional staff that will provide daily management of the 
implementation of the Program. In addition to having observer status on 
the MCA-Nicaragua Board, MCC will retain approval rights at a number of 
key decision points during implementation, including key steps in 
procurements, budgets for Project Activities, major re-disbursements 
and key personnel decisions.
    The Rural Business Project will be managed by competitively hired 
professional staff who will reside in an office (``Rural Office'') 
located in the region. For the Property Regularization Project, the 
Compact will fund additional staff and activities within the existing 
World Bank implementing unit (PRODEP). For the Transportation Project, 
management, construction, and supervision will be handled by 
competitively procured firms that will coordinate closely with the 
Nicaraguan Ministry of Transportation and Infrastructure.
    A competitively selected joint venture of international private-
sector accounting/consulting firms will serve as the Fiscal/Procurement 
Agent (Agent) for the Program. The Agent will provide professional 
services for (1) funds control, disbursement documentation and 
management, cash management and accounting; and (2) the planning, 
management and supervision of the procurement processes contemplated 
under the MCC Program.
    The Board of Directors will engage auditors to conduct both 
financial audits and compliance audits of all financial and procurement 
activities. For the first year of the Program, audits will be conducted 
every six months. For subsequent years, the MCC will consider whether 
audits should be conducted more or less frequently than every six 
months. An auditor will be competitively selected from a list of 
approved auditors to be provided by the MCC Inspector General.

III. Assessment

1. Economic Analysis
    The Property Regularization Project has an economic rate of return 
(ERR) of 29 percent. Clearer definition of property rights through 
improved land titles is expected to benefit the economy by increasing 
the private returns to investments on land, improving the ability to 
use land to leverage credit, reducing high costs of land-related 
transactions, and reducing the need for defensive expenditures to 
protect

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property rights. The preferred basis for estimating economic returns is 
to combine estimates of increases in land values (reflecting new 
economic benefits of having land) and savings in transactions costs.
    The ERR for the Transportation Project is estimated to be 13 
percent. This return is the weighted average of the returns for two 
activities: N-I Road (23 percent) and Secondary Roads (8 percent 
minimum). The economic benefits from the Transportation Project derive 
both from the direct benefits of reduced transportation costs and from 
the stimulus to new investment from lower transportation costs. The 
stimulation of new businesses and investments due to lower transport 
costs are more difficult to measure, but are likely to increase the 
economic benefits. Sectors whose ratio of transport costs to production 
price is relatively high, such as agriculture and agro-processing, are 
likely to receive new investments as a result of improved 
infrastructure. Additionally, improved transportation can have 
additional benefits through increased school enrollment and improved 
health outcomes. These indirect benefits have not been factored into 
the economic returns, so the ERR mentioned above is likely a 
conservative estimate of the gains from the Project.
    The ERR for the Rural Business Development Project is estimated to 
be 15 percent, calculated as a weighted average of its activities. The 
return to the Rural Business Development Office was estimated to be 18 
percent, based on projected costs, current crop profitability and 
employment generation. An estimated 7,000 new jobs will be generated as 
a result of this farm transition. The specific activities for the 
improvement of water supply for farming and forest production will be 
determined over the course of the Program. These activities, however, 
will be required to achieve at least a 10 percent economic rate of 
return.
2. Consultative Process
    The technical team charged with developing the MCA proposal held 
numerous meetings and work sessions in Managua and the country's 
regional departments with leaders in the political and private sectors, 
non-governmental organizations (NGOs), and various associations. Many 
of the consultations included Nicaragua's Local Development Council 
(LDCs)--representative bodies at the regional department level whose 
members are elected from the public and private sector and civil 
society. The technical team also spoke with local farm and women's 
cooperatives, local business associations, and NGOs about the Program's 
technical details.
    Nicaragua's consultative process for the MCA proposal resulted in 
three key outcomes: (1) A shift from a national to a regional focus, 
(2) the prioritization of proposal components, and (3) ongoing 
participation and ownership at the local level.
     As discussions at the national and regional level 
progressed about Nicaragua's constraints to economic growth and poverty 
reduction, stakeholders came to focus on the departments of Le[oacute]n 
and Chinandega, a region believed to have the greatest potential for 
economic growth as well as some of the most extreme poverty.
     The Le[oacute]n and Chinandega Development Councils--which 
collectively represent over 100 civil society, private sector, and 
local government organizations--provided crucial assistance to the GON 
technical team in developing and prioritizing the proposal components. 
The team also solicited feedback from other private sector and civil 
society organizations at the regional and national level.
     The GON technical team continues to involve the Local 
Development Councils and other local groups and expects them to play an 
important role in program oversight, including having representation on 
the Board of the MCA-Nicaragua governing entity, an organization that 
will be established specifically to implement and oversee the Program.
3. Government Commitment and Effectiveness
    The Program has received a significant level of government 
attention from the President of Nicaragua, Ministers and their staff. 
The GON has also committed to make reforms as part of the Compact. 
These reforms include passing and enacting several laws which relate to 
MCC qualification criteria and to the implementation of components of 
the Compact (e.g., road maintenance funding, new law governing tenure 
regularization, etc.).
4. Sustainability
    Sustainability of the Property Regularization Project will be 
derived from the extent to which people use the improved registration 
system and from the fiscal capacity of the registry, cadastre and 
titling services. The incentives for people to use and pay for services 
as well as the costs of services will be appropriate in the local 
context. Several recent policy reforms (e.g., new cadastre and registry 
laws) and proposed reforms (e.g., tenure regularization law) will bring 
about new institutional relationships and operational practices that 
will more effectively facilitate the process for keeping property 
records up-to-date. The GON's ability to maintain modern, computerized 
land records and maps and a well-trained staff will depend on both an 
adequate public budget and the GON's ability to set and collect fees 
for services. More accessible, reliable and efficient services will 
likely increase the willingness of users to use the system and to pay 
for services. The new registry law will provide an autonomous budget 
for the registry so that it can more rationally project its costs and 
revenues and set fees and budgets accordingly. This Project includes 
specific support for training, technical assistance and analysis of 
policy, fee structures and other measures to help ensure 
sustainability.
    The technical assistance activities in the Transportation Project 
will promote institutional sustainability as well as the policy reforms 
in the Compact. The Program will include conditions that have specific 
targets, by date, for funding escrows required for maintenance. In 
addition, the GON has agreed that if it has not satisfied its funding 
obligation by year two of the Project, certain elements of this Project 
will not be funded any further. The GON also expects municipalities to 
cover a significant portion of maintenance costs for the secondary 
roads.
    The Rural Business Development Project's primary objective is to 
increase the economic viability of farmers and agribusinesses in the 
region. Initially, a Rural Office will be established as a division or 
subsidiary of MCA-Nicaragua based on the view that the impacts must be 
sustainable. Selection criteria for activities funded under the Project 
will include their potential for self-sustainability. Expanded 
horticultural production will create economies of scale that reduce the 
unit costs of inputs and post-harvesting services. The Project is 
expected to improve rural access to finance through its financial 
literacy campaign and by promoting ``bankable'' business activities. 
The watershed management action plan will provide a basis for improving 
environmental sustainability of land uses throughout the region, and 
beneficiaries will be assisted in establishing business models that 
will pay the costs associated with maintaining investments over time.

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5. Environmental and Social Impacts
Property Regularization Project
    Overall, this Project is expected to be positive from an 
environmental and social point of view. PRODEP promotes the 
conservation of forests and other natural habitats directly through the 
strengthening of existing protected areas. A Project-specific 
environmental plan will be developed, similar to the plan in place for 
PRODEP's work in Chinandega, to monitor potential negative impacts. The 
Project also will (i) identify measures to facilitate increased access 
by poorer households to land via land markets, (ii) help advance gender 
equity in land tenure regularization to empower women property owners, 
and (iii) work to gain consensus on indigenous community land rights 
within the context of tenure regularization.
Transportation Project
    While the majority of the works under this Project will occur along 
existing rights-of-way, this Project qualifies as a significant 
rehabilitation. For some of the roads, this rehabilitation will 
fundamentally change the nature of the traffic, and therefore the 
impacts after construction. Comprehensive road-specific Environmental 
Impact Assessments (EIAs) have not yet been conducted; however, each of 
the roads to be improved under this Project will require completion of 
environmental analysis acceptable to MCC. The Project budget includes 
funds to conduct the requisite environmental analyses.
Rural Business Development Project
    Activities under this Project could potentially have adverse 
environmental impacts that are site-specific and largely mitigable. The 
Compact specifies the environmental review criteria for activities 
sponsored by the Project and describes the environmental sustainability 
principles for the agricultural and agribusiness technical assistance. 
The activity to improve watershed management, in particular, will have 
significant positive environmental impacts. Nicaragua has one of the 
highest rates of deforestation in the region, resulting in decreased 
soil productivity, significant erosion, and flooding. In addition, the 
Estero Real estuary in the region is one of the most important 
ecosystems in Central America and one of its most vulnerable. It is 
vital for shrimp production and as a sanctuary for migratory birds and 
endangered species, and serves as a natural flood control system. 
Improvement in soil conservation and reforestation in the Project area 
will positively benefit this sensitive ecosystem.
6. Donor Coordination
    The proposed Projects complement and supplement efforts by other 
donors. Nicaragua's Program calls for increasing rural incomes and 
financing infrastructure. USAID, USDA, the World Bank, the Inter-
American Development Bank (IDB), IFAD, NDF, UNDP, and other development 
agencies are all active in supporting various rural development 
activities. Work to upgrade the Nicaraguan Pacific Corridor is being 
funded by the World Bank, the Central American Bank for Economic 
Integration, and the Nordic Fund. In addition, the IDB and World Bank 
have funded projects to strengthen the capacity of MTI and the Road 
Maintenance Fund. Further coordination with the larger donor community 
will include participation by MCC in the Infrastructure and Rural 
Development Donor Coordinating committees chaired by the GON. The Rural 
Office also will assist farmers and agribusinesses in the region to 
gain information on and access to programs sponsored by other donors.

IV. Summary and Conclusion

    Nicaragua's MCC Program focuses on creating a regional engine for 
economic growth in the northwestern part of the country by transforming 
the rural business sector into a high-value, sustainable corridor that 
is primed for greater trade with regional and international markets. 
The Program complements economic growth strategies such as The 
Dominican Republic-Central America-United States Free Trade Agreement 
(DR-CAFTA) and enjoys broad support from civil society. The Property 
Regularization, Transportation, and Rural Business Development Projects 
will build the capacity of Le[oacute]n and Chinandega to accelerate the 
economic transformation from subsistence farming to a demand-driven, 
market-oriented, rural business zone. The combined effect of these 
three core Projects will have a positive impact on economic growth and 
poverty reduction in Nicaragua.

Millennium Challenge Compact Between the United States of America 
Acting Through the Millennium Challenge Corporation and the Government 
of the Republic of Nicaragua

Table of Contents

Article I. Purpose and Term
    Section 1.1 Objectives
    Section 1.2 Projects
    Section 1.3 Entry into Force; Compact Term
Article II. Funding and Resources
    Section 2.1 MCC Funding
    Section 2.2 Government Resources
    Section 2.3 Limitations on the Use or Treatment of MCC Funding
    Section 2.4 Incorporation; Notice; Clarification
    Section 2.5 Refunds; Violation
Article III. Implementation
    Section 3.1 Implementation Framework
    Section 3.2 Government Responsibilities
    Section 3.3 Government Deliveries
    Section 3.4 Government Assurances
    Section 3.5 Implementation Letters; Supplemental Agreements
    Section 3.6 Procurement; Awards of Assistance
    Section 3.7 Policy Performance; Policy Reforms
    Section 3.8 Records and Information; Access; Audits; Reviews
    Section 3.9 Insurance; Performance Guarantees; Indemnification 
Claims
    Section 3.10 Domestic Requirements
    Section 3.11 No Conflict
    Section 3.12 Reports
Article IV. Conditions Precedent; Deliveries
    Section 4.1 Conditions Prior to the Entry into Force and 
Deliveries
    Section 4.2 Conditions Precedent to MCC Disbursements or Re-
Disbursements
Article V. Final Clauses
    Section 5.1 Communications
    Section 5.2 Representatives
    Section 5.3 Amendments
    Section 5.4 Termination; Suspension
    Section 5.5 Privileges and Immunities; Bilateral Agreement
    Section 5.6 Attachments
    Section 5.7 Inconsistencies
    Section 5.8 Indemnification
    Section 5.9 Headings
    Section 5.10 Interpretation; Definitions
    Section 5.11 Signatures
    Section 5.12 Designation
    Section 5.13 Survival
    Section 5.14 Consultation
    Section 5.15 MCC Status
    Section 5.16 Language
    Section 5.17 Publicity; Information and Marking
Exhibit A: Compendium of Defined Terms
Exhibit B: List of Certain Supplemental Agreements
Annex I: Program Description
Schedule 1--Property Regularization Project
Schedule 2--Transportation Project
Schedule 3--Rural Business Competitiveness Project
Annex II: Summary of Multi-Year Financial Plan
Annex III: Description of the Monitoring and Evaluation Plan

Millennium Challenge Compact

    This Millennium Challenge Compact (the ``Compact'') is made between 
the United States of America, acting through the Millennium Challenge 
Corporation, a United States Government corporation (``MCC''), and the 
Government of the Republic of Nicaragua (the ``Government'') (referred 
to herein individually as a ``Party'' and collectively, the 
``Parties''). A compendium of capitalized terms

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defined herein is included in Exhibit A attached hereto.

Recitals

    Whereas, MCC, acting through its Board of Directors, has selected 
the Republic of Nicaragua (``Nicaragua'') as eligible to present to MCC 
a proposal for the use of 2004 and 2005 Millennium Challenge Account 
(``MCA'') assistance to help facilitate poverty reduction through 
economic growth in Nicaragua;
    Whereas, the Government has carried out a consultative process with 
the country's private sector and civil society to outline the country's 
priorities for the use of MCA assistance and developed a proposal, 
which was submitted to MCC on October 25, 2004 (the ``Proposal'');
    Whereas, the Proposal focused on, among other things, improving the 
property rights, infrastructure and competitiveness of rural businesses 
in the Nicaraguan departments of Le[oacute]n and Chinandega (the 
``Le[oacute]n-Chinandega'');
    Whereas, MCC has evaluated the Proposal and related documents to 
determine whether the Proposal is consistent with core MCA principles 
and includes proposed activities and projects that will advance the 
progress of Nicaragua towards achieving economic growth and poverty 
reduction; and
    Whereas, based on MCC's evaluation of the Proposal and related 
documents and subsequent discussions and negotiations between the 
Parties, the Government and MCC determined to enter into this Compact 
to implement a program using MCC Funding to advance Nicaragua's 
progress towards economic growth and poverty reduction (the 
``Program'');
    Now, Therefore, in consideration of the foregoing and the mutual 
covenants and agreements set forth herein, the Parties hereby agree as 
follows:

Article I. Purpose and Term

Section 1.1 Objectives

    The overall objective of this Compact (the `` Program Objective'') 
is to increase income and reduce poverty in Le[oacute]n-Chinandega, 
which is key to advancing the goal of economic growth and poverty 
reduction in Nicaragua (the ``Compact Goal''). The Parties have 
identified the following project-level objectives (each, a ``Project 
Objective'' and together the ``Project Objectives'') to advance the 
Program Objective, each of which is described in more detail in the 
Annexes attached hereto:
    (a) Increase investment by strengthening property rights in 
Le[oacute]n (the ``Property Regularization Objective'');
    (b) Reduce transportation costs between Le[oacute]n-Chinandega and 
domestic, regional and global markets (the ``Transportation 
Objective''); and
    (c) Increase the value-added of farms and businesses in 
Le[oacute]n-Chinandega (the ``Rural Business Development Objective'').
    (The Program Objective and the individual Project Objectives are 
referred to herein collectively as the ``Objectives'' and each 
individually as an ``Objective''). The Government expects to achieve, 
and shall use its best efforts to ensure the achievement of, these 
Objectives during the Compact Term.

Section 1.2 Projects

    The Annexes attached hereto describe the specific projects and the 
policy reforms and other activities related thereto (each, a 
``Project'') that the Government will carry out, or cause to be carried 
out, in furtherance of this Compact to achieve the Objectives and the 
Compact Goal.

Section 1.3 Entry Into Force; Compact Term

    This Compact shall enter into force on the date of the last letter 
in an exchange of letters between the Principal Representatives of each 
Party confirming that all conditions set forth in Section 4.1 have been 
satisfied by the Government and MCC (such date, the ``Entry into 
Force''). This Compact shall remain in force for five (5) years from 
the Entry into Force, unless earlier terminated in accordance with 
Section 5.4 (the ``Compact Term'').

Article II. Funding and Resources

Section 2.1 MCC Funding

    (a) MCC's Contribution. Subject to the terms and conditions herein, 
MCC shall grant to the Government an amount not to exceed One Hundred 
Seventy Five Million United States Dollars (USD $175,000,000) (``MCC 
Funding'') during the Compact Term to enable the Government to 
implement the Program and achieve the Objectives; provided, however, 
MCC may elect, in its sole discretion, to grant all or any portion of 
MCC Funding directly to an entity to be organized and established 
pursuant to Nicaraguan law and in accordance with Section 3(d) of Annex 
I and the Governance Agreement (``MCA-Nicaragua'') pursuant to a 
separate Supplemental Agreement (the ``Grant Agreement'') between MCC, 
the Government, and MCA-Nicaragua to enable the Government, through 
MCA-Nicaragua, to implement the Program and achieve the Objectives.
    (i) Subject to Sections 2.1(a)(ii), 2.2(b), and 5.4(b), the 
allocation of the MCC Funding within the Program and among and within 
the Projects shall be as generally described in Annex II or as 
otherwise agreed upon by the Parties from time to time.
    (ii) If at any time MCC determines that a condition precedent to an 
MCC Disbursement has not been satisfied, MCC may, upon written notice 
to the Government, reduce the total amount of MCC Funding by an amount 
equal to the amount estimated in the applicable Detailed Financial Plan 
for the Program or Project activity for which such condition precedent 
has not been met. Upon the expiration or termination of this Compact, 
(A) any amounts of MCC Funding not disbursed by MCC to the Government 
shall be automatically released from any obligation in connection with 
this Compact and (B) any amounts of MCC Funding disbursed by MCC to the 
Government as provided in Section 2.1(b)(i), but not re-disbursed as 
provided in Section 2.1(b)(ii) or otherwise incurred as permitted 
pursuant to Section 5.4(e) prior to the expiration or termination of 
this Compact, shall be returned to MCC in accordance with Section 
2.5(a)(ii).
    (b) Disbursements.
    (i) Disbursements of MCC Funding. MCC shall from time to time make 
disbursements of MCC Funding (each such disbursement, an ``MCC 
Disbursement'') to a Permitted Account or through such other mechanism 
agreed by the Parties under and in accordance with the procedures and 
requirements set forth in Annex I, the Disbursement Agreement or as 
otherwise provided in any other relevant Supplemental Agreement.
    (ii) Re-Disbursements of MCC Funding. The release of MCC Funding 
from a Permitted Account (each such release, a ``Re-Disbursement'') 
shall be made in accordance with the procedures and requirements set 
forth in Annex I, the Disbursement Agreement or as otherwise provided 
in any other relevant Supplemental Agreement.
    (c) Interest. Unless the Parties agree otherwise in writing, any 
interest or other earnings on MCC Funding that accrue or are earned 
(collectively, ``Accrued Interest'') shall be held in a Permitted 
Account and accrue or be earned in accordance with the requirements for 
the treatment of Accrued Interest as specified in Annex I or any 
relevant Supplemental Agreement. On a quarterly basis and upon the 
termination or expiration of this Compact, the Government shall return, 
or ensure the return of, all Accrued Interest to any United States

[[Page 44427]]

Government account designated by MCC.
    (d) Conversion; Exchange Rate. The Government shall ensure that all 
MCC Funding that is held in the Permitted Account(s) shall be 
denominated in the currency of the United States of America (``United 
States Dollars'') prior to Re-Disbursement; provided, that a certain 
portion of MCC Funding may be transferred to a Local Account and may be 
held in such Local Account in the currency of Nicaragua prior to Re-
Disbursement in accordance with the requirements of Annex I and any 
relevant Supplemental Agreement between the Parties. To the extent that 
any amount of MCC Funding held in United States Dollars must be 
converted into the currency of Nicaragua for any purpose, including for 
any Re-Disbursement or any transfer of MCC Funding into a Local 
Account, the Government shall ensure that such amount is converted 
consistent with Annex I, including the rate and manner set forth in 
Annex I, and the requirements of the Disbursement Agreement or any 
other Supplemental Agreement between the Parties.
    (e) Guidance. From time to time, MCC may provide guidance to the 
Government through Implementation Letters on the frequency, form and 
content of requests for MCC Disbursements and Re-Disbursements or any 
other matter relating to MCC Funding. The Government shall apply such 
guidance in implementing this Compact.

Section 2.2 Government Resources

    (a) Necessary Resources. The Government shall provide or cause to 
be provided such Government funds and other resources, and shall take 
or cause to be taken such actions, including obtaining all necessary 
approvals and consents, as are specified in this Compact or in any 
Supplemental Agreement to which the Government is a party or as are 
otherwise necessary and appropriate to effectively carry out the 
Government Responsibilities or other responsibilities or obligations of 
the Government under or in furtherance of this Compact during the 
Compact Term and through the completion of any post-Compact Term 
activities, audits or other responsibilities.
    (b) Reallocation; Allocation Reductions.
    (i) If at any time during the Compact Term, the Government 
materially reallocates or reduces the allocation in its national 
budget, or any other Nicaraguan governmental authority at a 
departmental, municipal, regional or other jurisdictional level 
materially reallocates or reduces the allocation of its respective 
budget, of the normal and expected resources that the Government or 
such other governmental authority, as applicable, would have otherwise 
received or budgeted, from external or domestic sources, for the 
activities contemplated herein, the Government shall notify MCC in 
writing within fifteen (15) days of such reallocation or reduction, 
such notification to contain information regarding the amount of the 
reallocation or reduction, the affected activities, and an explanation 
for such reallocation or reduction.
    (ii) If MCC determines, independently or otherwise, upon review of 
the executed national annual budget or budget of such other 
governmental authority, that such a material reallocation or reduction 
of resources has occurred, MCC shall notify the Government and, within 
fifteen (15) days after such notification, the Government shall 
provide, or cause to be provided, a written explanation for such 
reallocation or reduction.
    (iii) After reviewing such explanation, MCC may (A) reduce, in its 
sole discretion, the total amount of MCC Funding or any MCC 
Disbursement by an amount equal to the amount estimated in the 
applicable Detailed Financial Plan for the activity for which funds 
were reduced or reallocated or (B) otherwise suspend or terminate MCC 
Funding in accordance with Section 5.4(b).

Section 2.3 Limitations on the Use or Treatment of MCC Funding

    (a) Abortions and Involuntary Sterilizations. The Government shall 
ensure that MCC Funding shall not be used to undertake, fund or 
otherwise support any activity that is subject to prohibitions on use 
of funds contained in (i) paragraphs (1) through (3) of section 104(f) 
of the Foreign Assistance Act of 1961 (22 U.S.C. 2151b(f)(1)-(3)), a 
United States statute, which prohibitions shall apply to the same 
extent and in the same manner as such prohibitions apply to funds made 
available to carry out Part I of such Act; or (ii) any provision of law 
comparable to the eleventh and fourteenth provisos under the heading 
``Child Survival and Health Programs Fund'' of division E of Public Law 
108-7 (117 Stat. 162), a United States statute.
    (b) United States Job Loss or Displacement of Production. The 
Government shall ensure that MCC Funding shall not be used to 
undertake, fund or otherwise support any activity that is likely to 
cause a substantial loss of United States jobs or a substantial 
displacement of United States production, including:
    (i) Providing financial incentives to relocate a substantial number 
of United States jobs or cause a substantial displacement of production 
outside the United States;
    (ii) Supporting investment promotion missions or other travel to 
the United States with the intention of inducing United States firms to 
relocate a substantial number of United States jobs or a substantial 
amount of production outside the United States;
    (iii) Conducting feasibility studies, research services, studies, 
travel to or from the United States, or providing insurance or 
technical and management assistance, with the intention of inducing 
United States firms to relocate a substantial number of United States 
jobs or cause a substantial displacement of production outside the 
United States;
    (iv) Advertising in the United States to encourage United States 
firms to relocate a substantial number of United States jobs or cause a 
substantial displacement of production outside the United States;
    (v) Training workers for firms that intend to relocate a 
substantial number of United States jobs or cause a substantial 
displacement of production outside the United States;
    (vi) Supporting a United States office of an organization that 
offers incentives for United States firms to relocate a substantial 
number of United States jobs or cause a substantial displacement of 
production outside the United States; or
    (vii) Providing general budget support for an organization that 
engages in any activity prohibited above.
    (c) Military Assistance and Training. The Government shall ensure 
that MCC Funding shall not be used to undertake, fund or otherwise 
support the purchase or use of goods or services for military purposes, 
including military training, or to provide any assistance to the 
military, police, militia, national guard or other quasi-military 
organization or unit.
    (d) Prohibition of Assistance Relating to Environmental, Health or 
Safety Hazards. The Government shall ensure that MCC Funding shall not 
be used to undertake, fund or otherwise support any activity that is 
likely to cause a significant environmental, health, or safety hazard. 
Unless MCC and the Government agree otherwise in writing, the 
Government shall ensure that activities undertaken, funded, or 
otherwise supported in whole or in part (directly or indirectly) by MCC 
Funding comply with environmental guidelines delivered by MCC to the 
Government or posted by MCC on its Web site or otherwise publicly made 
available, as

[[Page 44428]]

such guidelines may be amended from time to time (the ``Environmental 
Guidelines''), including any definition of ``likely to cause a 
significant environmental, health, or safety hazard'' as may be set 
forth in such Environmental Guidelines.
    (e) Taxation.
    (i) Taxes, Budgetary Earmarking. As required by applicable United 
States law and in furtherance of the applicable requirement in the 
General Agreement for Economic, Technical and Related Assistance 
between the Government of the United States of America and the 
Government of Nicaragua, dated May 14, 1962, as amended from time to 
time (the ``Bilateral Agreement'') that assistance shall be exempt from 
taxes, the Government shall ensure that the Program, any Program 
Assets, MCC Funding and Accrued Interest shall be free from any and all 
taxes, budgetary earmarking, withholding, charges, allocations, and 
other obligations and contributions imposed under the laws currently or 
hereafter in effect in Nicaragua during the Compact Term. This 
exemption shall (A) be implemented in an administratively efficient 
manner consistent with the principles that MCC Funding will be used 
only to fund the Program and to achieve the Objectives and to avoid, 
where possible, double taxation of Providers, irrespective of their 
nationality and place of residence and (B) apply to any use of any 
Program Asset, MCC Funding and Accrued Interest, including any Exempt 
Uses, and to any work performed under or activities undertaken in 
furtherance of this Compact by any person or entity (including 
contractors and grantees) funded by MCC Funding, and shall apply to all 
taxes, tariffs, duties, and other levies (each, a ``Tax'' and 
collectively, ``Taxes''), including, except as otherwise provided 
herein:
    (1) To the extent attributable to MCC Funding, income taxes and 
other taxes on profit or businesses imposed on organizations or 
entities, other than nationals of Nicaragua, receiving MCC Funding, 
including taxes on the acquisition, ownership, rental, disposition or 
other use of real or personal property, taxes on investment or deposit 
requirements and currency controls in Nicaragua, or any other tax, 
duty, charge or fee of whatever nature, except fees for specific 
services rendered; for purposes of this Section 2.3(e)(i)(1), the term 
``national'' refers to organizations established under the laws 
currently or hereafter in effect in Nicaragua, other than MCA-Nicaragua 
or any other entity established solely for purposes of managing or 
overseeing the implementation of the Program or any wholly-owned 
subsidiaries, divisions, or Affiliates of entities not registered or 
established under the laws currently or hereafter in effect in 
Nicaragua;
    (2) Customs duties, tariffs, import and export taxes, or other 
levies on the importation, use and re-exportation of goods, services or 
the personal belongings and effects, including personally-owned 
automobiles, for Program use or the personal use of individuals who are 
neither citizens nor permanent residents of Nicaragua and who are 
present in Nicaragua for purposes of carrying out the Program or their 
family members, including all charges based on the value of such 
imported goods;
    (3) Taxes on the income or personal property of all individuals who 
are neither citizens nor permanent residents of Nicaragua, including 
income and social security taxes of all types and all taxes on the 
personal property owned by such individuals, to the extent such income 
or property are attributable to MCC Funding, and such individuals shall 
be accorded any special status required under Nicaraguan law to obtain 
the exemption to the taxes contemplated in this Section 2.3(e)(i)(3); 
and
    (4) Taxes or duties levied on the purchase of goods or services 
funded by MCC Funding, including sales taxes, tourism taxes, value-
added taxes (VAT), or other similar charges.
    (ii) This Section 2.3(e) shall apply, but is not limited to (A) any 
transaction, service, activity, contract, grant or other implementing 
agreement funded in whole or in part by MCC Funding; (B) any supplies, 
equipment, materials, property or other goods (referred to herein 
collectively as ``goods'') or funds introduced into, acquired in, used 
or disposed of in, or imported into or exported from, Nicaragua by MCC, 
or by any person or entity (including contractors and grantees) as part 
of, or in conjunction with, MCC Funding or the Program; (C) any 
contractor, grantee, or other organization carrying out activities 
funded in whole or in part by MCC Funding; and (D) any employee of such 
organizations (the uses set forth in clauses (A) through (D) are 
collectively referred to herein as ``Exempt Uses'').
    (iii) If a Tax has been levied and paid contrary to the 
requirements of this Section 2.3(e), whether inadvertently, due to the 
impracticality of implementation of this provision with respect to 
certain types or amounts of taxes, or otherwise, the Government shall 
refund promptly to MCC to an account designated by MCC the amount of 
such Tax in the currency of Nicaragua, within thirty (30) days (or such 
other period as may be agreed in writing by the Parties) after the 
Government is notified of such levy and tax payment; provided, however, 
the Government shall apply national funds to satisfy its obligations 
under this paragraph and no MCC Funding, Accrued Interest, or any 
assets, goods, or property (real, tangible, or intangible) purchased or 
financed in whole or in part by MCC Funding (``Program Assets'') may be 
applied by the Government in satisfaction of its obligations under this 
paragraph.
    (iv) The Parties shall memorialize in a mutually acceptable 
Implementation Letter or Supplemental Agreement or other suitable 
document the mechanisms for implementing this Section 2.3(e), including 
(A) a formula for determining refunds for Taxes paid, the amount of 
which is not susceptible to precise determination, (B) a mechanism for 
ensuring the tax-free importation, use, and re-exportation of goods, 
services, or the personal belongings of individuals (including all 
Providers) described in paragraph (i)(2) of this Section 2.3(e), and 
(C) any other appropriate Government action to facilitate the 
administration of this Section 2.3(e).
    (f) Alteration. The Government shall ensure that no MCC Funding, 
Accrued Interest, or Program Assets shall be subject to any 
impoundment, rescission, sequestration or any provision of law now or 
hereafter in effect in Nicaragua that would have the effect of 
requiring or allowing any impoundment, rescission or sequestration of 
any MCC Funding, Accrued Interest, or Program Asset.
    (g) Liens or Encumbrances. The Government shall ensure that no MCC 
Funding, Accrued Interest, or Program Assets shall be subject to any 
lien, attachment, enforcement of judgment, pledge, or encumbrance of 
any kind (each a ``Lien'') by any person or entity, including by any 
government entity, except with the prior approval of MCC in accordance 
with Section 3(c) of Annex I. In the event of the imposition of any 
Lien not so approved, the Government shall promptly seek the release of 
such Lien and shall pay any amounts owed to obtain such release; 
provided, however, the Government shall apply national funds to satisfy 
its obligations under this Section 2.3(g) and no MCC Funding, Accrued 
Interest, or Program Assets may be applied by the Government in 
satisfaction of its obligations under this Section 2.3(g).
    (h) Other Limitations. The Government shall ensure that the use or 
treatment of MCC Funding, Accrued Interest, and Program Assets shall be

[[Page 44429]]

subject to and in conformity with such other limitations (i) as 
required by the applicable law of the United States of America now or 
hereafter in effect during the Compact Term, (ii) as advisable under or 
required by applicable United States Government policies now or 
hereafter in effect during the Compact Term, or (iii) to which the 
Parties may otherwise agree in writing.
    (i) Utilization of Goods, Services and Works. The Government shall 
ensure that any Program Assets, services, facilities or works funded in 
whole or in part (directly or indirectly) by MCC Funding, unless 
otherwise agreed by the Parties in writing, shall be used solely in 
furtherance of this Compact.
    (j) Notification of Applicable Laws and Policies. MCC shall notify 
the Government of any applicable United States law or policy affecting 
the use or treatment of MCC Funding, whether or not specifically 
identified in this Section 2.3, and shall provide to the Government a 
copy of the text of any such applicable law and a written explanation 
of any such applicable policy.

Section 2.4 Incorporation; Notice; Clarification

    (a) The Government shall include, or ensure the inclusion of, all 
of the requirements set forth in Section 2.3 in all Supplemental 
Agreements to which MCC is not a party and shall use its best efforts 
to ensure that no such Supplemental Agreement is implemented in 
violation of the prohibitions set forth in Section 2.3.
    (b) The Government shall ensure notification of all of the 
requirements set forth in Section 2.3 to any Provider and all relevant 
officers, directors, employees, agents, representatives, Affiliates, 
contractors, sub-contractors, grantees, and sub-grantees of the 
Government or any Provider.
    (c) In the event the Government or any Provider requires 
clarification from MCC as to whether an activity contemplated to be 
undertaken in furtherance of this Compact violates or may violate any 
provision of Section 2.3, the Government shall notify, or ensure that 
such Provider notifies, MCC in writing and provide in such notification 
a detailed description of the activity in question. In such event, the 
Government shall not proceed, and shall use its best efforts to ensure 
that no relevant Provider proceeds, with such activity, and the 
Government shall ensure that no Re-Disbursements shall be made for such 
activity, until MCC advises the Government or such Provider in writing 
that the activity is permissible.

Section 2.5 Refunds; Violation

    (a) Notwithstanding the availability to MCC, or exercise by MCC of, 
any other remedies, including under international law, this Compact, or 
any Supplemental Agreement:
    (i) If any amount of MCC Funding or Accrued Interest, or any 
Program Asset, is used for any purpose prohibited under this Article II 
or otherwise in violation of any of the terms and conditions of this 
Compact, any guidance in any Implementation Letter, or any Supplemental 
Agreement between the Parties, MCC may, upon written notice, require 
the Government to repay promptly to MCC to an account designated by MCC 
or to others as MCC may direct the amount of such misused MCC Funding 
or Accrued Interest, or the cash equivalent of the value of any misused 
Program Asset, in United States Dollars, plus any interest that accrued 
or would have accrued thereon, within fifteen (15) days after the 
Government is notified (or such other period as may be agreed in 
writing by the Parties), whether by MCC or otherwise, of such 
prohibited use; provided, however, the Government shall apply national 
funds to satisfy its obligations under this Section 2.5(a)(i) and no 
MCC Funding, Accrued Interest, or Program Assets may be applied by the 
Government in satisfaction of its obligations under this Section 
2.5(a)(i); and
    (ii) If all or any portion of this Compact is terminated or 
suspended and upon the expiration of this Compact, the Government 
shall, subject to the requirements of Sections 5.4(e) and 5.4(f), 
refund, or ensure the refund, to MCC the amount of any MCC Funding, 
plus any Accrued Interest, promptly, but in no event later than thirty 
(30) days after the Government receives MCC's request for such refund 
(or such other period as may be agreed in writing by the Parties); 
provided, that if this Compact is terminated or suspended in part, MCC 
may request a refund for only the amount of MCC Funding, plus any 
Accrued Interest, then allocated to the terminated or suspended 
portion; provided, further, that any refund of MCC Funding or Accrued 
Interest shall be to such account(s) as designated by MCC.
    (b) Notwithstanding any other provision in this Compact or any 
other agreement to the contrary, MCC's right under this Section 2.5 for 
a refund shall continue during the Compact Term and for a period of (i) 
five (5) years thereafter or (ii) one (1) year after MCC receives 
actual knowledge of such violation, whichever is later.
    (c) If MCC determines that any activity or failure to act violates, 
or may violate, any Section in this Article II, MCC may refuse any 
further MCC Disbursements for or conditioned upon such activity, and 
may take any action to prevent any Re-Disbursement related to such 
activity.

Article III. Implementation

Section 3.1 Implementation Framework

    This Compact shall be implemented by the Parties in accordance with 
this Article III and as further specified in the Annexes and in 
relevant Supplemental Agreements.

Section 3.2 Government Responsibilities

    (a) The Government shall have principal responsibility for 
oversight and management of the implementation of the Program (i) in 
accordance with the terms and conditions specified in this Compact and 
relevant Supplemental Agreements, (ii) in accordance with all 
applicable laws then in effect in Nicaragua, and (iii) in a timely and 
cost-effective manner and in conformity with sound technical, financial 
and management practices (collectively, the ``Government 
Responsibilities''). Unless otherwise expressly provided, any reference 
to the Government Responsibilities or any other responsibilities or 
obligations of the Government herein shall be deemed to apply to any 
Government Affiliate and any of their respective directors, officers, 
employees, contractors, sub-contractors, grantees, sub-grantees, agents 
or representatives.
    (b) The Government shall ensure that no person or entity shall 
participate in the selection, award, administration, or oversight of a 
contract, grant or other benefit or transaction funded in whole or in 
part (directly or indirectly) by MCC Funding, in which (i) the entity, 
the person, members of the person's immediate family (defined as 
relationships within the fourth degree of consanguinity or affinity) or 
household or his or her business partners, or organizations controlled 
by or substantially involving such person or entity, has or have a 
direct or indirect financial or other interest or (ii) the person or 
entity is negotiating or has any arrangement concerning prospective 
employment, unless such person or entity has first disclosed in writing 
to the Government the conflict of interest and, following such 
disclosure, the Parties agree in writing to proceed

[[Page 44430]]

notwithstanding such conflict. The Government shall ensure that no 
person or entity involved in the selection, award, administration, 
oversight or implementation of any contract, grant or other benefit or 
transaction funded in whole or in part (directly or indirectly) by MCC 
Funding shall solicit or accept from, or offer to a third party, or 
seek or be promised directly or indirectly for itself or for another 
person or entity, any gift, gratuity, favor or benefit, other than 
items of de minimis value and otherwise consistent with such guidance 
as MCC may provide from time to time.
    (c) The Government shall not designate any person or entity, 
including any Government Affiliate, to implement, in whole or in part, 
this Compact or any Supplemental Agreement between the Parties 
(including any Government Responsibilities or any other 
responsibilities or obligations of the Government under this Compact or 
any Supplemental Agreement between the Parties), or to exercise any 
rights of the Government under this Compact or any Supplemental 
Agreement between the Parties, except as expressly provided herein or 
with the prior written consent of MCC; provided, however, the 
Government shall designate MCA-Nicaragua and may, with the prior 
written consent of MCC, designate such other mutually acceptable 
persons or entities, to implement some or all of the Government 
Responsibilities or any other responsibilities or obligations of the 
Government or to exercise any rights of the Government under this 
Compact or any Supplemental Agreement between the Parties (referred to 
herein collectively as ``Designated Rights and Responsibilities''), in 
accordance with the terms and conditions set forth in this Compact or 
such Supplemental Agreement (each, a ``Permitted Designee''). 
Notwithstanding any provision herein or any other agreement to the 
contrary, no such designation shall relieve the Government of such 
Designated Rights and Responsibilities, for which the Government shall 
retain ultimate responsibility. In the event that the Government 
designates any person or entity, including any Government Affiliate, to 
implement any portion of the Government Responsibilities or other 
responsibilities or obligations of the Government or to exercise any 
rights of the Government under this Compact or any Supplemental 
Agreement between the Parties in accordance with this Section 3.2(c), 
then the Government shall ensure that such person or entity (i) 
performs such Designated Rights and Responsibilities in the same manner 
and to the full extent to which the Government is obligated to perform 
such Designated Rights and Responsibilities, (ii) does not assign, 
delegate, or contract (or otherwise transfer) any of such Designated 
Rights and Responsibilities to any other person or entity and (iii) 
certifies to MCC in writing that it will so perform such Designated 
Rights and Responsibilities in accordance with this Compact and any 
other relevant Supplemental Agreement and will not assign, delegate, or 
contract (or otherwise transfer) any of such Designated Rights and 
Responsibilities to any person or entity without the prior written 
consent of MCC.
    (d) The Government shall, upon a request from MCC, execute, or 
ensure the execution of, an assignment to MCC of any cause of action 
which may accrue to the benefit of the Government, a Government 
Affiliate, or any Permitted Designee, including MCA-Nicaragua, in 
connection with or arising out of any activities funded in whole or in 
part (directly or indirectly) by MCC Funding.
    (e) The Government shall ensure that (i) no decision of MCA-
Nicaragua is modified, supplemented, unduly influenced or rescinded by 
any governmental authority, and (ii) the authority of MCA-Nicaragua 
shall not be expanded, restricted or otherwise modified, except in 
accordance with this Compact, applicable law, the Governance Agreement, 
the Governing Documents or any other Supplemental Agreement between the 
Parties.
    (f) The Government shall ensure that all persons and individuals 
that enter into agreements to provide goods, services or works under 
the Program or in furtherance of this Compact shall do so in accordance 
with the Procurement Guidelines and shall obtain all necessary 
immigration, business and other permits, licenses, consents, and 
approvals to enable them and their personnel to fully perform under 
such agreements.

Section 3.3 Government Deliveries

    The Government shall proceed, and cause others to proceed, in a 
timely manner to deliver to MCC all reports, documents or other 
deliveries required to be delivered by the Government under this 
Compact or any Supplemental Agreement between the Parties, in form and 
substance as set forth in this Compact or in any such Supplemental 
Agreement.

Section 3.4 Government Assurances

    The Government hereby provides the following assurances to MCC that 
as of the date this Compact is signed:
    (a) The information contained in the Proposal and any agreement, 
report, statement, communication, document or otherwise delivered or 
otherwise communicated to MCC by or on behalf of the Government on or 
after the date of the submission of the Proposal (i) are true, accurate 
and complete in all material respects and (ii) do not omit any fact 
known to the Government that if disclosed would (A) alter in any 
material respect the information delivered, (B) likely have a material 
adverse effect on the Government's ability to effectively implement, or 
ensure the effective implementation of, the Program or any Project or 
to otherwise carry out its responsibilities or obligations under or in 
furtherance of this Compact, or (C) have likely adversely affected 
MCC's determination to enter into this Compact or any Supplemental 
Agreement between the Parties.
    (b) The MCC Funding made available hereunder is not part of and is 
in addition to the normal and expected resources that the Government 
usually receives or budgets for the ac