20-Apr-2023 ___________________ Dr. Kazim Niaz Secretary Ministry of Economic Affairs Government of Pakistan Islamabad Dear Dr. Niaz: Re: Pakistan: Strengthening Markets for Agriculture and Rural Transformation in Punjab Program Loan Agreement (Loan Number: 8809-PK) Cancellation; Extension of Closing Date; and Amendments to Loan Agreement We refer to the Loan Agreement dated February 2, 2018 (“Loan Agreement”) between the Islamic Republic of Pakistan (“Borrower”) and the International Bank for Reconstruction and Development (“Bank”) for the above-mentioned Program (“Program”). We also refer to your letter dated October 18, 2022 and November 23, 2022, requesting cancellation of Loan proceeds, extension of Closing Date, and amendments to the Loan Agreement. Pursuant to your request of cancellation dated October 18, 2022 and pursuant to Section 7.01 of the General Conditions, the Bank hereby cancels, as of October 19, 2022, the date that the Bank received the letter request, the amount of seventy million two hundred fifty thousand United States Dollars ($ 70,250,000) from the Loan Account and the commitment charges on such amount cease to accrue from October 19, 2022. Consequently: (a) Schedule 4 to the Loan Agreement (Amortization Schedule), has been revised and the revised figures will be delivered to you shortly; (b) the amounts allocated to each category set forth in the table in Section IV.A.2 of Schedule 2 to the Loan Agreement have been revised to reflect the cancellation and reallocation of Loan proceeds requested in your letters and the revised table is attached as Annex 1 to this letter; and (c) the DLI table set forth in Schedule 3 has been amended and attached as Annex 2 to this letter. Additionally, pursuant to your letter dated November 23, 2022, the Bank concurs with your request to extend the Closing Date. Accordingly, the Bank has established June 30, 2024 as the later date for purposes of Section IV.B.4 of Schedule 2 to the Loan Agreement. Except as specifically amended in this letter, all other terms and conditions of the Loan Agreement shall remain in full force and effect. The Bank will disclose this letter and related information on the Loan Agreement in accordance with the World Bank’s Policy and Access to Information. By entering into this letter, the Borrower consents to such disclosure of this letter and related information. 20-A, Shahrah-e-Jamhuriat, G-5/1, Islamabad, Pakistan / Phone: (92-51) 9090000 / Fax: (92-51) 2279648 Dr. Kazim Niaz -2- Please confirm your agreement to the amendment referred to in point (c) of the third paragraph 3 above on behalf of the Borrower by countersigning and dating the form of confirmation set forth below and returning one fully countersigned original of this letter to us and retaining one original for your records. Upon receipt by the Bank of the countersigned original of this letter, this letter shall become effective as of the date of the countersignature of this letter. Yours sincerely, INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT _________________________ Najy Benhassine Country Director, Pakistan CONFIRMED AND AGREED: ISLAMIC REPUBLIC OF PAKISTAN: By: ________________________________ Authorized Representative Kazim Niaz Name: ________________________________ Secretary Ministry of Economic Affairs Title: ________________________________ 26-Apr-2023 Date: ________________________________ Cc: Government of Pakistan: Mr. Humair Karim, Additional Secretary, Ministry of Economic Affairs Mr. Adil Akbar, Senior Joint Secretary, Ministry of Economic Affairs Mr. Muhammad Azam Khan, Deputy Secretary, Ministry of Economic Affairs Government of Punjab: Dr. Muhammad Sohail Anwar Choudhary, Chairman, Planning and Development Board Mr. Mujahid Sherdil, Secretary, Finance Department Mr. Syed Muhammad Masood Nouman, Additional Secretary (Budget), Finance Department Mr. Ali Jalal, Program Director, PIU, Planning and Development Department, and Program Director The World Bank: Mr. Naveed Kamran Baloch, Executive Director, Pakistan Mr. Abdelhak Bedjaoui, Alternate Executive Director, Pakistan 20-A, Shahrah-e-Jamhuriat, G-5/1, Islamabad, Pakistan / Phone: (92-51) 9090000 / Fax: (92-51) 2279648 Dr. Kazim Niaz -3- Annex 1 Revised Withdrawal Table under Section IV.A.2 of Schedule 2 to the Loan Agreement Amount of the Category Financing (including Disbursement Linked Indicator as applicable) Allocated (expressed in USD) (1) DLI #1: Improving access to quality farm inputs 35,500,000 (2) DLI #2: Revitalizing provincial crop and livestock research 3,000,000 and extension systems (3) DLI #3(a): Improving livestock health 11,000,000 (4) DLI #3(b): Improving livestock breeding 30,000,000 (5) DLI #4(a): Modernizing the wheat marketing system 0 (6) DLI #4(b): Transitioning to High-Value Agriculture 36,000,000 (“HVA”) (7) DLI #5: Providing incentives to agribusiness for 1,000,000 investments in value addition and agricultural technology (8) DLI #6: Improving market conditions for meat and raw milk 0 (9) DLI #7: Modernizing agriculture markets 22,000,000 (10) DLI #8: Improving food safety 10,000,000 (11) DLI #9: Improving sustainability and efficiency of 29,000,000 irrigation (12) DLI #10: Rolling-out an agricultural insurance system 15,500,000 (13) DLI #11: Increasing public investment in Climate-Smart 26,000,000 Agriculture (14) DLI #12: Communications, beneficiary feedback, capacity 10,000,000 building, and monitoring and evaluation (15) Front-end Fee to be paid pursuant to Section 2.03 of this Agreement in accordance with Section 3.08 (b) of the General 750,000 Conditions Amount Cancelled as of October 19, 2022 70,250,000 TOTAL AMOUNT 300,000,000 20-A, Shahrah-e-Jamhuriat, G-5/1, Islamabad, Pakistan / Phone: (92-51) 9090000 / Fax: (92-51) 2279648 Dr. Kazim Niaz -4 Annex 2 SCHEDULE 3 Disbursement Linked Indicators, Disbursement Linked Results and Allocated Amounts DISBURSEMENT-LINKED RESULTS DISBURSEMENT RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE LINKED INDICATORS PRIOR RESULTS ACHIEVED IN 2018 ACHIEVED IN 2019 ACHIEVED IN 2020 ACHIEVED IN ACHIEVED IN 2022 ACHIEVED IN 2023 ACHIEVED IN 2024 (YEAR 1) (YEAR 2) (YEAR 3) 2021 (YEAR 4) (YEAR 5) (YEAR 6) (YEAR 7) DoAg has extended the coverage of E-vouchers providing subsidies for agricultural inputs to at least XX farmers with less than 5 hectares of farm land. DoAg has DoAg has DoAg has DoAg has DoAg has DoAg has DoAg has extended the extended the extended the extended the extended the DoAg has extended extended the extended the coverage of E- coverage of E- coverage of E- coverage of E- coverage of E- the coverage of E- coverage of E- coverage of E- vouchers vouchers providing vouchers providing vouchers providing vouchers providing vouchers providing 1. Improving vouchers providing vouchers providing providing subsidies for subsidies for subsidies for subsidies for subsidies for access to quality subsidies for subsidies for subsidies for agricultural inputs agricultural inputs agricultural inputs agricultural inputs agricultural inputs to farm inputs agricultural inputs agricultural inputs agricultural to at least 350,000 to at least 400,000 to at least 100,000 to at least 150,000 at least 250,000 to at least 25,000 to at least 50,000 inputs to at least farmers with less farmers with less farmers with less farmers with less farmers with less farmers with less farmers with less 200,000 farmers than 5 hectares of than 5 hectares of than 5 hectares of than 5 hectares of than 5 hectares of than 5 hectares of than 5 hectares of with less than 5 farm land in FY23. farm land in FY24. farm land in farm land in farm land in FY22. farm land in farm land in hectares of farm FY19. FY20. FY17. FY18. land in FY21. Allocated USD 1,000,000 USD 2,000,000 USD 3,000,000 USD 4,500,000 USD 5,500,000 USD 6,000,000 USD 6,500,000 USD 7,000,000 Amounts 2. Revitalizing provincial crop Punjab Assembly and livestock has amended (as research and New Agriculture notified in the extension and Livestock Gazette) the systems Research and Agricultural - - - - - - Extension Research Board Strategies approved Act (1997), to by competent reconstitute the forums. Board with a majority of professionals from the private sector. Allocated - - - - - - USD 1,000,000 USD 2,000,000 Amounts 20-A, Shahrah-e-Jamhuriat, G-5/1, Islamabad, Pakistan / Phone: (92-51) 9090000 / Fax: (92-51) 2279648 Dr. Kazim Niaz -5 DISBURSEMENT-LINKED RESULTS DISBURSEMENT RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE LINKED INDICATORS PRIOR RESULTS ACHIEVED IN 2018 ACHIEVED IN 2019 ACHIEVED IN 2020 ACHIEVED IN ACHIEVED IN 2022 ACHIEVED IN 2023 ACHIEVED IN 2024 (YEAR 1) (YEAR 2) (YEAR 3) 2021 (YEAR 4) (YEAR 5) (YEAR 6) (YEAR 7) (i) DoL&DD has established in its recurrent budget separate heads of account for DoL&DD’s preventive and budgetary curative animal allocations for FY23 healthcare; and 3. (a) Improving for preventive vs. (ii) DoL&DD’s - - livestock health curative animal budgetary healthcare have allocations for achieved a 80:20 FY19 for ratio. preventive vs. curative animal healthcare have achieved a 3:1 ratio. Allocated - - USD 5,000,000 USD 6,000,000 Amounts DoL&DD has DoL&DD has DoL&DD has DoL&DD has DoL&DD has registered at least registered at least registered at least registered at least registered at least 12,000 animals in 22,000 animals in 30,000 animals in its 50,000 animals in 60,000 animals in 3. (b) Improving its progeny testing its progeny testing progeny testing its progeny testing its progeny testing livestock program for program for program for Sahiwal program for program for breeding Sahiwal cow, Nili- Sahiwal cow, Nili- cow, Nili-Ravi Sahiwal cow, Nili- Sahiwal cow, Nili- Ravi buffalo, and Ravi buffalo, and buffalo, and Ravi buffalo, and Ravi buffalo, and Cholistani cow. Cholistani cow. Cholistani cow. Cholistani cow. Cholistani cow. Allocated USD 3,000,000 USD 5,000,000 USD 7,000,000 USD 10,000,000 USD 5,000,000 Amounts 4. (a) Modernizing the wheat marketing system (pro-memoria) 4. (b) Punjab’s Assembly (i) Punjab’s (A) Punjab’s (A) Punjab’s (A) Punjab’s (A) Punjab’s Transitioning has allocated at Cabinet has Assembly has Assembly has Assembly has Assembly has to High-Value least 6% of the approved and allocated at least allocated at least allocated at least allocated at least - - Agriculture amounts budgeted notified in the 10% of the amount 12% of the amount 14% of the 15% of the amount (“HVA”) for DoAg. under Gazette an budgeted for budgeted for amount budgeted budgeted for DoAg. 20-A, Shahrah-e-Jamhuriat, G-5/1, Islamabad, Pakistan / Phone: (92-51) 9090000 / Fax: (92-51) 2279648 Dr. Kazim Niaz -6 DISBURSEMENT-LINKED RESULTS DISBURSEMENT RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE LINKED INDICATORS PRIOR RESULTS ACHIEVED IN 2018 ACHIEVED IN 2019 ACHIEVED IN 2020 ACHIEVED IN ACHIEVED IN 2022 ACHIEVED IN 2023 ACHIEVED IN 2024 (YEAR 1) (YEAR 2) (YEAR 3) 2021 (YEAR 4) (YEAR 5) (YEAR 6) (YEAR 7) the ADP for FY18 Agricultural DoAg. under the DoAg. under the for DoAg. under under the ADP for towards HVA. Policy*; and ADP for FY20 ADP for FY21 the ADP for FY23 towards (ii) (A) Punjab’s towards HVA; and towards HVA; and FY22 towards HVA; and (B) Assembly has (B) DoAg. has (B) DoAg. has HVA; and (B) DoAg. has spent at allocated at least spent at least 70% spent at least 80% DoAg. has spent least 80% of the 8% of the amounts of the FY19 of the FY20 at least 80% of FY22 allocated budgeted for allocated allocated the FY21 budgetary resources. DoAg. under the budgetary budgetary allocated ADP for FY19, resources. resources. budgetary towards HVA; and resources. (B) DoAg. has spent at least 60% of the FY18 allocated budgetary resources. Allocated USD 6,000,000 USD 6,000,000 USD 6,000,000 USD 6,000,000 USD 6,000,000 USD 6,000,000 - - Amounts 5. Providing incentives to agribusinesses for investments in value addition and agricultural technology (pro-memoria) Punjab’s Assembly Providing has approved and incentives to notified in the agribusinesses Gazette the for investments operational manual - - in value for the addition and agribusiness fund; agricultural and set in place the technology implementation mechanism. Allocated USD 1,000,000 - - Amounts 6. Improving market conditions for meat and raw milk (pro-memoria) 20-A, Shahrah-e-Jamhuriat, G-5/1, Islamabad, Pakistan / Phone: (92-51) 9090000 / Fax: (92-51) 2279648 Dr. Kazim Niaz -7 DISBURSEMENT-LINKED RESULTS DISBURSEMENT RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE LINKED INDICATORS PRIOR RESULTS ACHIEVED IN 2018 ACHIEVED IN 2019 ACHIEVED IN 2020 ACHIEVED IN ACHIEVED IN 2022 ACHIEVED IN 2023 ACHIEVED IN 2024 (YEAR 1) (YEAR 2) (YEAR 3) 2021 (YEAR 4) (YEAR 5) (YEAR 6) (YEAR 7) Punjab’s Assembly DoAg. has has approved and ensured that all notified in the agricultural 7. Modernizing Gazette the Punjab produce agricultural Agricultural marketing markets Marketing operates Regulatory exclusively under Authority Act the PAMRA (“PAMRA Act”)*. Act*. Allocated USD 2,000,000 USD 20,000,000 Amounts PFD has - PFD has established established and and operationalized: operationalized 1 7 mobile foods regional lab and 2 8. Improving food testing labs, all in additional mobile safety accordance with the labs, all in ISO/IEC accordance with 17025:2005 the ISO/IEC standard. 17025:2005 standard. Allocated USD 5,000,000 - USD 5,000,000 Amounts (i) Punjab’s (i) PID has (i) PID has: (A) Cabinet has (i) PID has registered 1.2 demarcated the approved and critical (i) PID has registered 0.5 million tube wells notified in the groundwater areas developed an million tube wells in electronic Gazette a Punjab PID has increased application for in electronic georeferenced Punjab’s Assembly of Punjab; and (B) Water Policy; the Abiana electronic georeferenced database; and (ii) 9. Improving has approved and notified and (ii) PID has collection in georeferenced database; and (ii) E-Abiana billing notified in the published the sustainability FY21 to reach improved the Gazette the Punjab groundwater database for PID has improved has been extended and efficiency 85% of the Abiana assessment Groundwater Act zoning and map tubewells.; and the equity of water in all 61 canal of irrigation improved for FY18, based on thereof; and (ii) E-Abiana billing distribution for divisions across assessment. irrigated cultivated (ii) PID has pilot has been rolled targeted canals Punjab; and area (perennial or increased the out in 3 Canal with a delivery (iii) PID has made not) to at least Abiana collection divisions. performance ratio 60% of recovery of in FY20 to reach PKR 2 billion; of 0.85. Abiana through E- 80% of the Abiana system 20-A, Shahrah-e-Jamhuriat, G-5/1, Islamabad, Pakistan / Phone: (92-51) 9090000 / Fax: (92-51) 2279648 Dr. Kazim Niaz -8 DISBURSEMENT-LINKED RESULTS DISBURSEMENT RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE LINKED INDICATORS PRIOR RESULTS ACHIEVED IN 2018 ACHIEVED IN 2019 ACHIEVED IN 2020 ACHIEVED IN ACHIEVED IN 2022 ACHIEVED IN 2023 ACHIEVED IN 2024 (YEAR 1) (YEAR 2) (YEAR 3) 2021 (YEAR 4) (YEAR 5) (YEAR 6) (YEAR 7) improved until December assessment 2023; and (iv) PID has improved the equity of water distribution for targeted canals with a delivery performance ratio of 0.90. (a) USD 3,000,000 (a) USD 1,000,000 (a) USD 1,000,000 for DLR (i) above; for DLR (i) for DLR (i) (a) USD 3,000,000 (a) USD 3,000,000 (b) USD 3,000,000 above; above; and for DLR (i) above; for DLR (i) above; for DLR (ii) above; Allocated (b) USD 1,000,000 USD 1,000,000 (b) USD 1,000,000 USD 2,000,000 and and (b) USD (c) USD 3,000,000 Amounts for DLR (ii) for DLR (ii) above. (b) USD 3,000,000 2,000,000 for DLR for DLR (iii) above; and for DLR (ii) above. (ii) above. above; and (d) USD 2,000,000 for (iv) above. DoAg. has (i) DoAg. has approved the developed and Diagnostic Report adopted a five-year DoAg. has DoAg. has DoAg. has DoAg. has DoAg. has assessing the Crop work plan for the implemented the implemented the implemented the DoAg. has implemented the implemented the Loan Insurance rolling out of an agricultural agricultural agricultural implemented the agricultural agricultural Scheme and agricultural insurance scheme insurance scheme insurance scheme agricultural insurance scheme insurance scheme in 10. Rolling-out an analyzing options insurance scheme; in additional in additional in additional insurance scheme in additional additional Districts agricultural for an agricultural (ii) DoAg. has Districts to those Districts to those Districts to those in most vulnerable Districts to those to those covered in insurance insurance piloted an covered in FY18 covered in FY18 covered in FY18 districts, with an covered in FY18, FY18 though FY21, system coverage*. agricultural and FY19, with an though FY20, though FY22, with insurance take-up with an insurance with an insurance insurance scheme insurance take-up with an insurance an insurance take- reaching 200,000 take-up reaching take-up reaching in at least 2 reaching 500,000 take-up reaching up reaching policies sold in 250,000 policies 800,000 policies Districts, with an policies sold in 750,000 policies 1,000,000 policies FY24. sold in FY19. sold in FY22. insurance take-up FY20. sold in FY21. sold in FY23. reaching 50,000 policies. Allocated USD 1,000,000 USD 650,000 USD 1,140,000 USD 1,250,000 USD 1,680,000 USD 2,900,000 USD 4,900,000 USD 1,980,000 Amounts 11. Increasing Punjab’s Assembly (A) Punjab’s (A) Punjab’s (A) Punjab’s (A) Punjab’s public has allocated at Assembly has Assembly has Assembly has Assembly has 20-A, Shahrah-e-Jamhuriat, G-5/1, Islamabad, Pakistan / Phone: (92-51) 9090000 / Fax: (92-51) 2279648 Dr. Kazim Niaz -9 DISBURSEMENT-LINKED RESULTS DISBURSEMENT RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE LINKED INDICATORS PRIOR RESULTS ACHIEVED IN 2018 ACHIEVED IN 2019 ACHIEVED IN 2020 ACHIEVED IN ACHIEVED IN 2022 ACHIEVED IN 2023 ACHIEVED IN 2024 (YEAR 1) (YEAR 2) (YEAR 3) 2021 (YEAR 4) (YEAR 5) (YEAR 6) (YEAR 7) investment in least 6% of the allocated at least allocated at least allocated at least allocated at least Climate-Smart amount budgeted 10% of the amount 12% of the amount 14% of the 15% of the amount Agriculture for agriculture budgeted for budgeted for amount budgeted budgeted for (“CSA”) under the ADP for agriculture under agriculture under for agriculture agriculture under FY18 to the ADP for FY20 the ADP for FY21 under the ADP the ADP for FY23 investments in to investments in to investments in for FY22 to to investments in CSA*. CSA; and (B) CSA; and (B) investments in CSA; and (B) DoAg. has spent at DoAg. has spent at CSA; and (B) DoAg. spent at least least 70% of the least 80% of the DoAg. has spent 80% of the budgetary budgetary at least 80% of budgetary resources resources allocated resources allocated the budgetary allocated therefor in therefor in FY19. therefor in FY20. resources FY22. allocated therefor in FY21. An amount to be An amount to be An amount to be An amount to be calculated pursuant calculated An amount to be calculated pursuant calculated pursuant to the following pursuant to the calculated pursuant to the following to the following formula, provided following to the following formula, provided formula, provided that the amount is formula, provided formula, provided that the amount is that the amount is >0: {[(% of CSA that the amount is that the amount is Allocated >0: {[(CSA >0: {[(CSA allocation under >0: {[(CSA >0: {[(CSA Amounts allocation under allocation under FY17’s ADP / % allocation under allocation under FY19’s ADP / FY20’s ADP / of CSA allocation FY21’s ADP / FY22’s ADP / CSA CSA allocation in CSA allocation in in FY16’s ADP) - CSA allocation in allocation in FY21’s FY18’s ADP) -1] / FY19’s ADP) -1] / 1] / 0.50} x FY20’s ADP) -1] ADP) -1] / 0.07} x 0.25} x 0.20} x USD 2,000,000 / 0.17} x USD 6,000,000 USD 6,000,000 USD 6,000,000 USD 6,000,000 12. Communications The Participating - The Participating The Participating The Participating , beneficiary P&DD has Departments have Departments have Departments have Departments have feedback developed a prepared and prepared and prepared and prepared and capacity communications implemented the implemented the implemented the implemented the building, and strategy for the FY21 FY19 institutional FY20 institutional FY22 institutional monitoring and Program, including institutional capacity building capacity building capacity building evaluation beneficiary capacity building plan, in a manner plan, in a manner plan, in a manner feedback, and plan, in a manner and substance and substance and substance started its and substance acceptable to the acceptable to the acceptable to the implementation. acceptable to the Bank. Bank. Bank. Bank. 20-A, Shahrah-e-Jamhuriat, G-5/1, Islamabad, Pakistan / Phone: (92-51) 9090000 / Fax: (92-51) 2279648 Dr. Kazim Niaz -10 DISBURSEMENT-LINKED RESULTS DISBURSEMENT RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE RESULTS TO BE LINKED INDICATORS PRIOR RESULTS ACHIEVED IN 2018 ACHIEVED IN 2019 ACHIEVED IN 2020 ACHIEVED IN ACHIEVED IN 2022 ACHIEVED IN 2023 ACHIEVED IN 2024 (YEAR 1) (YEAR 2) (YEAR 3) 2021 (YEAR 4) (YEAR 5) (YEAR 6) (YEAR 7) Allocated - - USD 1,000,000 USD 2,250,000 USD 2,250,000 USD 2,250,000 USD 2,250,000 Amounts *These DLRs are not time-bound. The Years in which they are expected to be achieved as per this Schedule are strictly for indicative purposes. These DLRs can accordingly be met up and until the Closing Date. 20-A, Shahrah-e-Jamhuriat, G-5/1, Islamabad, Pakistan / Phone: (92-51) 9090000 / Fax: (92-51) 2279648