THE WORLD BANK IBRD * IDA I WORLD BANKGROUP OFFICIAL SATU KRISTIINA J. KAHKONEN Country DirectorDO U E T Belarus, Moldova and Ukraine DO CUM ENTS Europe and Central Asia February 16, 2017 His Excellency Octavian Armasu Minister of Finance Ministry of Finance Constantin Tiinase Street, 7 MD-2005 Chisinau Republic of Moldova Excellency: Re: Credit No.5196 -MD (Moldova Education Reform Project) Second Amendment to the Financing Agreement First Amendment to the Supplemental Letter No. 2 We refer to: (a) the Financing Agreement between the Republic of Moldova (the "Recipient") and the International Development Association (the "Association") dated February 7, 2013, with respect to the above-captioned Project, as amended to date (the "Financing Agreement"); and (b) the Supplemental Letter No. 2 of even date therewith, also with respect to the above-captioned Project (the "Supplemental Letter No. 2"). Capitalized terms used in this amendment letter and not defined herein have the meaning ascribed to them in the Financing Agreement. Pursuant to your letter dated November 21, 2016, as well as the recent discussions between the representatives of the Minister of Education's office, the representatives of the Moldovan Social Investment Fund, and the Association's team, requesting the Association to amend the Financing Agreement, we are pleased to inform you that the Association agrees to amend the terms of the Financing Agreement and the Supplemental Letter No. 2 as follows: 1. The Financing Agreement is hereby amended and restated in its entirety as set forth in Annex 1 to this amendment letter. 2. The attachment to Supplemental Letter No. 2 is hereby amended and restated in its entirety as set forth in Annex 2 to this amendment letter. Supplemental Letter No. 1, dated February 7, 2013, with respect to the above- captioned Project shall remain in full force and effect. 1818 H Street NW - Washington, DC 20433 USA H.E. Octavian Armasu -2 - February 16, 2017 Please confirm your agreement with the foregoing amendment by signing this letter in the spaces provided below and returning one fully executed original to us. This amendment letter shall be executed in two counterparts each of which shall be an original. The provisions set forth in this amendment letter shall become effective as of February 7, 2017 upon: (a) receipt by the Association of: (i) this countersigned original; and (ii) evidence that the execution and delivery of this amendment letter behalf of the Recipient has been duly authorized by all necessary governmental actions; and (b) dispatch by the Association to the Recipient of the notice of its acceptance of the evidence required herein. Please also note that the restructuring paper dated February 8, 2017 has been disclosed on the Association's external website as per the Association's policy on Access to Information. Very truly yours, INTERNATIONAL DEVELOPMENT ASSOCIATION By: Satu Kahkonen Country Director Belarus, Moldova, and Ukraine Europe and Central Asia AGREED: REPUBLIC OF MO D By: oRepresentative Name: Title: 67'e -2- Annex 1 CREDIT NUMBER 5196-MD Amended and Restated Financing Agreement (Moldova Education Reform Project) between REPUBLIC OF MOLDOVA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated February 7, 2013, as amended on July 30, 2015 and February 7, 2017 CREDIT NUMBER 5196-MD AMENDED AND RESTATED FINANCING AGREEMENT AGREEMENT dated February 7,2013, as amended on July 30, 2015 and February 7, 2017 entered into between REPUBLIC OF MOLDOVA ("Recipient") and INTERNATIONAL DEVELOPMENT ASSOCIATION ("Association"). The Recipient and the Association hereby agree as follows: ARTICLE I - GENERAL CONDITIONS; DEFINITIONS 1.01. The General Conditions (as defined in the Appendix to this Agreement) constitute an integral part of this Agreement. 1.02. Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the General Conditions or in the Appendix to this Agreement. ARTICLE II - FINANCING 2.01. The Association agrees to extend to the Recipient, on the terms and conditions set forth or referred to in this Agreement, a credit in an amount equivalent to twenty- six million one hundred thousand Special Drawing Rights (SDR 26,100,000) (variously, "Credit" and "Financing") to assist in financing the project described in Schedule 1 to this Agreement ("Project"). 2.02. The Recipient may withdraw the proceeds of the Financing in accordance with Section IV of Schedule 2 to this Agreement. 2.03. The Maximum Commitment Charge Rate payable by the Recipient on the Unwithdrawn Financing Balance shall be one-half of one percent (1/2 of 1%) per annum. 2.04. The Service Charge payable by the Recipient on the Withdrawn Credit Balance shall be equal to three-fourths of one percent (3/4 of 1%) per annum. 2.05. The Interest Charge payable by the Recipient on the Withdrawn Credit Balance shall be equal to one and a quarter percent (1.25%) per annum. 2.06. The Payment Dates are May 15 and November 15 in each year. -2- 2.07. The principal amount of the Credit shall be repaid in accordance with the repayment schedule set forth in Schedule 3 to this Agreement. 2.08. The Payment Currency is USD. ARTICLE III - PROJECT 3.01. The Recipient declares its commitment to the objective of the Project. To this end, the Recipient shall: (a) carry out Parts A. 1, B, and C of the Project through the MOE; and (b) cause Part A.2 of the Project to be carried out by MSIF, all in accordance with the provisions of Article IV of the General Conditions. 3.02. Without limitation upon the provisions of Section 3.01 of this Agreement, and except as the Recipient and the Association shall otherwise agree, the Recipient shall ensure that the Project is carried out in accordance with the provisions of Schedule 2 to this Agreement. ARTICLE IV - REMEDIES OF THE ASSOCIATION 4.01. The Additional Events of Suspension consist of the following: (a) that the Recipient's Law No. 91, dated April 26, 2012, has been amended, suspended, abrogated, repealed or waived, without the Association's prior consent, so as to affect materially and adversely the ability of the Recipient to carry out the Project or to perform any of its obligations under this Agreement. (b) that the Recipient's Governmental Decision No. 468 of May 19, 1997, as amended to the date of this Agreement, has been amended, suspended, abrogated, repealed or waived, without the Association's prior consent, so as to affect materially and adversely the ability of MSIF to carry out Part A.2 of the Project. 4.02. The Additional Event of Acceleration consists of the following, namely that any event specified in Section 4.01 of this Agreement occurs and is continuing for a period of sixty (60) days after notice of the event has been given by the Association to the Recipient. -3- ARTICLE V - EFFECTIVENESS; TERMINATION 5.01. The Additional Condition of Effectiveness consists of the following, namely that the Recipient, through the MOE, has adopted the POM satisfactory to the Association. 5.02. The Effectiveness Deadline is the date one hundred and fifty (150) days after the date of this Agreement. 5.03. For purposes of Section 8.05 (b) of the General Conditions, the date on which the obligations of the Recipient under this Agreement (other than those providing for payment obligations) shall terminate is ten (10) years after the date of this Agreement. ARTICLE VI - REPRESENTATIVE; ADDRESSES 6.01. The Recipient's Representative is the Minister of Finance. 6.02. The Recipient's Address is: Ministry of Finance Cosmonautilor Street, 7 MD2005 Chisinau Republic of Moldova Facsimile: (37322) 225393 6.03. The Association's Address is: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable: Telex: Facsimile: INDEVAS 248423 (MCI) 1-202-477-6391 Washington, D.C. -4- AGREED at Chisinau, Republic of Moldova, as of the day and year first above written. REPUBLIC OF MOLDOVA By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Authorized Representative -5- SCHEDULE 1 Project Description The objective of the Project is to improve learning conditions in targeted Receiving Schools and strengthen the Recipient's education monitoring systems, while promoting efficiency reforms in the education sector. The Project consists of the following parts: Part A. Strengthening the Quality of Education 1. Provision of financing of payments under the Eligible Expenditure Program (EEP) in support of the strengthening of the quality of education in the Recipient's general education subsector, in accordance with the provisions set forth in Section IV of Schedule 2 to this Agreement, specifically in the following key areas: (i) developing and implementing quality assurance standards for Receiving Schools, including, inter alia, with respect to school organization, teaching and learning, school infrastructure and equipment, curriculum and evaluation, and school governance; (ii) establishing teacher and school directors' training and remuneration programs; (iii) improving student assessment systems (both national and international); and (iv) improving the quality of data and management systems. 2. (a) Rehabilitation and upgrading of Receiving Schools, including the preparation of the designs for such works; and (b) related project management, monitoring and evaluation support. Part B. Improving the Efficiency of the Education Sector Provision of financing of payments under the Eligible Expenditure Program (EEP) in support of improving the efficiency of the education sector by eliminating excess capacity and creating a leaner education system, in accordance with the provisions set forth in Section IV of Schedule 2 to this Agreement. Part C. Improving the MOE's Capacity to Monitor the Reform Provision of consultants' services, non-consulting services, goods, training and operating costs to support strengthening of the institutional capacities of the MOE to implement, measure and monitor the Project, through, inter alia: -6- (i) developing and implementing receiving school standards; (ii) developing human resources; (iii) supporting the Recipient's participation in international student assessments and improving its national student assessments; (iv) improving the Recipient's EMIS; (v) monitoring school drop outs; (vi) supporting, including through training, the implementation of per student financing nationwide; (vii) conducting social marketing campaigns in support of the education reform program; (viii) supporting the implementation of a school census; (ix) carrying out studies to support efficiency reforms in the education sector; and (x) providing Project implementation, monitoring and evaluation support and coordinating with MSIF for purposes of Part A.2 of the Project. -7- SCHEDULE 2 Project Execution Section I. Implementation Arran2ements A. Institutional Arrangements 1. The Recipient, through the MOE, shall carry out the agreed activities under Parts A.1, B and C of the Project in order to achieve the agreed results of the Project. A Project coordinator shall be appointed and maintained throughout Project implementation, to ensure the coordination of Project implementation, with terms of reference described in the POM and acceptable to the Association. 2. The Recipient shall cause MSIF to maintain, throughout Project implementation, adequate staff to support the implementation of Part A.2 of the Project, including, inter alia, a coordinator, a financial management officer, a procurement officer, and an environmental specialist. 3. With respect to Part C of the Project, the Recipient, through the MOE, shall appoint and maintain, throughout Project implementation, a Project assistant, at least one procurement officer, a financial management officer, a part-time environmental specialist and one engineer, all subordinated to the Project coordinator and under terms of reference described in the POM and acceptable to the Association. 4. The Recipient shall ensure that the MOE and MSIF carry out the Project in accordance with the provisions of the POM and shall not amend, waive or abrogate any provisions of the POM without the Association's prior approval. 5. The Recipient shall cause the Court of Accounts to carry out the annual financial audit of the Project's financial statements, including but not limited to the EEP, in a manner acceptable to the Association, and shall provide such audit reports to the Association, in accordance with Section II.B.3 of this Agreement. B. Anti-Corruption The Recipient shall ensure that the Project is carried out in accordance with the provisions of the Anti-Corruption Guidelines. C. Safeguards 1. (a) The Recipient shall ensure that the Project is carried out in accordance with the Environmental Management Framework (EMF), and thereafter ensure that the applicable EMPs are implemented, in accordance with their terms and in a manner acceptable to the Association, ensuring that the civil works will not commence in any Receiving School, unless the EMP for the respective Receiving -8- School has been prepared by the Recipient and/or MSIF, disclosed, consulted, and approved by the Association. (b) Except as the Association shall otherwise agree, the Recipient shall not assign, amend, abrogate or waive the EMF or any of its provisions. 2. The Recipient shall ensure that no activities to be carried out under the Project involve Involuntary Resettlement. Section II. Project Monitoring, Reporting and Evaluation A. Project Reports The Recipient shall monitor and evaluate the progress of Parts A. 1, B and C of the Project and cause MSIF to monitor and evaluate the progress of Part A.2 of the Project, and prepare consolidated Project Reports in accordance with the provisions of Section 4.08 of the General Conditions and on the basis of the indicators acceptable to the Association. Each Project Report shall cover the period of one calendar semester, and shall be furnished to the Association not later than forty-five (45) days after the end of the period covered by such report. B. Financial Management, Financial Reports and Audits 1. The Recipient shall maintain or cause to be maintained a financial management system in accordance with the provisions of Section 4.09 of the General Conditions. 2. Without limitation on the provisions of Part A of this Section, the Recipient shall: (a) through MOE, prepare interim unaudited financial reports for Parts A. 1, B, and C of the Project covering each calendar quarter, in form and substance satisfactory to the Association; (b) cause MSIF to prepare and furnish to the MOE not later than thirty (30) days after the end of each calendar quarter, interim unaudited financial reports for Part A.2 of the Project covering each calendar quarter, in form and substance satisfactory to the Association; and (c) through MOE, consolidate and furnish to the Association not later than forty-five (45) days after the end of each calendar quarter, the overall interim unaudited financial reports for the Project referred to in paragraphs B.2 (a) and B.2 (b) of this Section. 3. The Recipient shall: -9- (a) (i) not later than sixty (60) days after the end of each fiscal year of the Recipient, cause MSIF to furnish to the MOE, its annual unaudited financial statements for Part A.2 of the Project; and (ii) have such financial statements consolidated with MOE's financial statements for Parts A.1, B, and C of the Project; and (b) thereafter, have the consolidated Financial Statements referred to in paragraph B.3 (a) of this Section audited, by the Court of Accounts, in accordance with the provisions of Section 4.09 (b) of the General Conditions. Each audit of Financial Statements shall cover the period of one fiscal year of the Recipient. Audited Financial Statements for each such period shall be: (i) furnished to the Association not later than six (6) months after the end of such period; and (ii) made publicly available in a timely fashion and in a manner acceptable to the Association. Section III. Procurement A. General 1 . Goods, Works and Non-consulting Services. All goods, works and non- consulting services required for the Project and to be financed out of the proceeds of the Financing shall be procured in accordance with the requirements set forth or referred to in Section I of the Procurement Guidelines, and with the provisions of this Section. 2. Consultants' Services. All consultants' services required for the Project and to be financed out of the proceeds of the Financing shall be procured in accordance with the requirements set forth or referred to in Sections I and IV of the Consultant Guidelines, and with the provisions of this Section. 3. Definitions. The capitalized terms used below in this Section to describe particular procurement methods or methods of review by the Association of particular contracts, refer to the corresponding method described in Sections H and III of the Procurement Guidelines, or Sections II, III, IV and V of the Consultant Guidelines, as the case may be. B. Particular Methods of Procurement of Goods, Works and Non-consulting Services 1 . International Competitive Bidding. Except as otherwise provided in paragraph 2 below, goods, works and non-consulting services shall be procured under contracts awarded on the basis of International Competitive Bidding procedures. 2. Other Methods of Procurement of Goods, Works and Non-consulting Services. The following methods, other than International Competitive Bidding, may be used for procurement of goods, works and non-consulting services for - 10 - those contracts specified in the Procurement Plan: (a) National Competitive Bidding, subject to the additional provisions set forth in paragraph B.3 of this Section; (b) Shopping; (c) Direct Contracting. 3. Without limitation upon the provisions of paragraphs B.1 and B.2 of this Section, and Section I and paragraphs 3.3 and 3.4 of the Procurement Guidelines, the procurement procedure to be followed for National Competitive Bidding shall be the Open Bidding Procedure set forth in the Law on Public Procurement No. 131 dated July 3, 2015, as further amended on July 1, 2016, September 23, 2016 and October 3, 2016 (the "PPL"), provided, however, that such procedure shall be subject to the following additional provisions: (a) Eligibility: Eligibility to participate in a procurement process and to be awarded an Association-financed contract shall be as defined under Section I of the Procurement Guidelines; accordingly, no bidder or potential bidder shall be declared ineligible for contracts financed by the Association for reasons other than those provided in Section I of the Procurement Guidelines. (b) Registration of Contractors and Suppliers: Registration shall not be used to assess bidders' qualifications. A foreign bidder shall not be required to register as a condition for submitting its bid, and a foreign bidder recommended for contract award shall be given a reasonable opportunity to register, with the reasonable cooperation of the Recipient, prior to contract signing. (c) Participation of Joint Ventures: Participation of Joint Ventures shall be allowed and all its members shall be jointly and severally liable for the entire contract. (d) Bidding Documents: Bidding documents acceptable to the Association shall be used, and shall be prepared so as to ensure economy, efficiency, transparency, and broad consistency with the provisions of Section I of the Procurement Guidelines. (e) Qualification: Qualification criteria shall be clearly specified in the bidding documents. All criteria so specified, and only such specified criteria, shall be used to determine whether a bidder is qualified. Qualification shall be assessed on a "pass or fail" basis, and merit points shall not be used. Such assessment shall be based entirely upon the bidder's or prospective bidder's capability and resources to effectively perform the contract, taking into account objective and measurable factors, including: (i) relevant general and specific experience, and satisfactory past performance and successful completion of similar contracts over a given period; (ii) financial position; and where relevant, (iii) capability of construction and/or manufacturing facilities. Prequalification procedures and documents acceptable to the Association shall be used for large, complex and/or specialized works. The verification of the information upon which a bidder was prequalified, including current commitments, shall be carried out at the time of contract award, - 11 - along with the bidder's capability with respect to personnel and equipment. In the procurement of goods and works where pre-qualification is not used, the qualification of the bidder who is recommended for award of contract shall be assessed by post-qualification, applying the qualification criteria stated in the bidding documents. (f) Cost Estimate: The detailed cost estimates shall be confidential and shall not be disclosed to prospective bidders. The cost estimate will include all taxes including Value Added Tax (VAT). No bids shall be rejected on the basis of comparison with the cost estimates without the Association's prior written concurrence. (g) Bid Submission and Bid Opening: Prospective bidders shall be given at least thirty (30) days from the date of publication of the invitation to bid or the date of availability of the bidding documents, whichever is later, to prepare and submit bids. Bids shall be opened in public, immediately after the deadline for submission of bids. Bids received after the deadline for bid submission shall be rejected and returned to bidders unopened. A copy of the bid opening minutes shall be promptly provided to all bidders who submitted bids, and to the Association with respect to contracts subject to the Association's prior review. (h) Bid Evaluation: Evaluation of bids shall be made in strict adherence to the evaluation criteria specified in the bidding documents. Evaluation criteria other than price shall be quantified in monetary terms. Merit points shall not be used, and no minimum point or percentage value shall be assigned to the significance of price, in bid evaluation. Contracts shall be awarded to the qualified bidder whose bid has been determined: (i) to be substantially responsive to the bidding documents; and (ii) to offer the lowest-evaluated cost. No negotiations shall be permitted. A bidder shall not be required, as a condition for award, to undertake obligations not specified in the bidding documents or otherwise to modify the bid as originally submitted. A bidder shall not be eliminated from detailed evaluation on the basis of minor, non-substantial deviations. (i) Rejection of All Bids and Re-bidding: All bids (or the sole bid if only one bid is received) shall not be rejected, the procurement process shall not be cancelled, and new bids shall not be solicited without the Association's prior written concurrence. (j) Bid Validity: The bid validity period required by the bidding documents shall be sufficient to account for any period that may be required for the approval and registration of the contract as contemplated in the PPL. If justified by exceptional circumstances, an extension of bid validity may be requested in writing from all bidders before the original bid validity expiration date, provided that such extension shall cover only the minimum period required to complete the evaluation, award a contract, and/or complete the registration process, but not more than thirty (30) days; a corresponding extension of any bid guarantee also shall be - 12 - required in such cases. A Bidder may refuse the request for extension of bid validity without forfeiting its bid guarantee. No further extensions shall be requested without the prior written concurrence of the Association. (k) Guarantees: Guarantees shall be in the format included in the bidding documents. The bid guarantee shall be valid for twenty-eight days (28) beyond the original validity period of the bid, or beyond any period of extension if requested. No advance payments shall be made without a suitable advance payment guarantee. Performance security shall not exceed ten percent (10%) of the contract amount. (1) Fraud and Corruption: The bidding documents and contract as deemed acceptable by the Association shall include provisions stating the Association's policy to sanction firms or individuals, found to have engaged in fraud and corruption as defined in the Procurement Guidelines. (m) Inspection and Audit Rights: Each bidding document and contract financed out the proceeds of the Financing shall provide that bidders, suppliers and contractors, and their subcontractors, agents, personnel, consultants, service providers, or suppliers, shall permit the Association to inspect all accounts, records, and other documents relating to the submission of bids and contract performance, and to have them audited by auditors appointed by the Association. Acts intended to materially impede the exercise of the Association's inspection and audit rights provided for in the Procurement Guidelines constitute an obstructive practice as defined in the Guidelines. (n) Contract Modifications: With respect to contracts subject to the Association's prior review, the Recipient shall obtain the Association's no objection before agreeing to: (a) a material extension of the stipulated time for performance of a contract; (b) any substantial modification of the scope of services or other significant changes to the terms and conditions of the contract; (c) any variation order or amendment (except in cases of extreme urgency) which, singly or combined with all variation orders or amendments previously issued, increases the original contract amount by more than fifteen percent (15%); or (d) the proposed termination of the contract. A copy of all contract amendments shall be provided to the Association. C. Particular Methods of Procurement of Consultants' Services 1 . Quality- and Cost-based Selection. Except as otherwise provided in paragraph 2 below, consultants' services shall be procured under contracts awarded on the basis of Quality and Cost-based Selection. - 13 - 2. Other Methods of Procurement of Consultants' Services. The following methods, other than Quality and Cost-based Selection, may be used for procurement of consultants' services for those contracts which are specified in the Procurement Plan: (a) Least Cost Selection; (b) Selection based on Consultants' Qualifications; (c) Procedures set forth in paragraphs 5.2 and 5.3 of the Consultant Guidelines for the Selection of Individual Consultants; and (d) Single-source procedures for the Selection of Individual Consultants. D. Review by the Association of Procurement Decisions The Procurement Plan shall set forth those contracts which shall be subject to the Association's Prior Review. All other contracts shall be subject to Post Review by the Association. Section IV. Withdrawal of the Proceeds of the Financing A. General 1. The Recipient may withdraw the proceeds of the Financing in accordance with the provisions of Article II of the General Conditions, this Section, and such additional instructions as the Association shall specify by notice to the Recipient (including the "World Bank Disbursement Guidelines for Projects" dated May 2006, as revised from time to time by the Association and as made applicable to this Agreement pursuant to such instructions), to finance Eligible Expenditures as set forth in the table in paragraph 2 below. 2. The following table specifies the categories of Eligible Expenditures that may be financed out of the proceeds of the Financing ("Category"), the allocations of the amounts of the Financing to each Category, and the percentage of expenditures to be financed for Eligible Expenditures in each Category: - 14 - Category Amount of the Percentage of Financing Allocated Expenditures to be (expressed in SDR) Financed (inclusive of Taxes) (1) Teacher salaries under 100% of the amount up to the EEP under Parts A.1 withdrawal ceiling set and B of the Project 17,020,000 forth in the table in paragraph B.2 (a) of this Section (2) Consultants' services 980,000 100% (including audits), non- consulting services, goods, Training and Operating Costs under Part C of the Project (3) Works, Consultant's 8,100,000 100% services, and Operating Costs under Part A.2 of the Project TOTAL AMOUNT 26,100,000 4. For the purposes of this Schedule: (i) the term "Training" means expenditures incurred by the Recipient for costs associated with training and/or study tours agreed upon between the Recipient and the Association; and (ii) the term "Operating Costs" means expenditures incurred by the Recipient on account of Project implementation for travel, rent of premises, office supplies, communication and information costs (such as telephone, internet, and other reasonable expenses related to organization of workshops and visibility events under the Project), bank charges, printing and publications (electronic and/or paper), translation and interpretation, consumables, and salaries, including the relevant social charges, but excluding salaries for civil servants, and other expenditures to be agreed upon between the Recipient and the Association. B. Withdrawal Conditions; Withdrawal Period 1 . Notwithstanding the provisions of Part A of this Section, no withdrawal shall be made: (a) for payments made prior to the date of this Agreement; or - 15 - (b) for payments under Category (1) with respect to each tranche, as set forth in the table in paragraph B.2 (a) of this Section, for which a withdrawal request has been submitted, unless the Recipient, through the MOE, has submitted evidence satisfactory to the Association that payments under the EEP have been made to eligible beneficiaries by the Recipient in accordance and in compliance with the procedures set forth in the Recipient's applicable laws and regulations; or (c) for payments under Category (3), unless the POM has been updated in a manner satisfactory to the Association and the updated POM has been adopted by the MOE and the MSIF. 2. Notwithstanding the provisions of Part A of this Section and without limitation to the provision set forth in paragraph 1 above, withdrawals under Category (1) above may be made by the Recipient as follows: (a) Withdrawals shall be made in one (1) up to thirteen (13) tranches and in amounts not exceeding the total of the ceilings per each respective DLI provided in the table below, subject to submission to the Association of evidence satisfactory to the Association and as defined in the POM that the following DLIs have been achieved: Disbursement-Linked Indicator (DLI) Withdrawal ceiling (expressed in SDR) 1) Standards for Receiving Schools approved 1,700,000 2) [intentionally left blank] 3) [intentionally left blank] 4) [intentionally left blank] 5) Updated program for training of school directors and 1,276,667 teachers officially approved and implementation initiated 6) 30% of school directors and 10% of teachers trained 1,276,667 based on the revised program for training of school directors and teachers 7) New remuneration system of school directors and 1,276,667 teachers adopted 8) Enrollment of the Recipient in PISA 2015 confirmed 1,276,667 9) Results of Moldova participation in PISA 2015 1,276,667 analyzed, and publicly disseminated 10) Revised national assessment of all 41 and 9" grades 1,276,667 students completed and its results analyzed, publicly disseminated and used by the MOE 11) Consolidated Education Management Information 1,276,667 System (EMIS) established and approved 12) School Report Cards produced by the consolidated 1,276,667 EMIS and sent to all schools with comparative performance outcomes and trends at regional and country level - 16 - 13) 80% of primary and general secondary schools have 1,276,667 their budgets approved according to the new per student formula methodology 14) 980 classes reorganized in primary and secondary 1,276,667 schools from the baseline in 2011/2012 school year 15) Student-teacher ratio for grades 1-12 is increased 1,276,667 from 10.5:1 to 11.5:1 16) System in place to closely monitor and mitigate drop 1,276,663 outs in general education (using EMIS) (b) If, at any time, the Association determines that any portion of the amounts disbursed by the Recipient under Category (1) was made: (a) for expenditures which are not eligible under the EEP; or (b) not in compliance with the provisions of Section IV.B.2 (a), the Recipient shall promptly refund any such amount to the Association as the Association shall specify by notice to the Recipient. 3. The Closing Date is June 28, 2019. - 17- SCHEDULE 3 Repayment Schedule Date Payment Due Principal Amount of the Credit repayable (expressed as a percentage)* On each May 15 and November 15: commencing May 15, 2018 to and including 1.65% November 15, 2027 Commencing May 15, 2028 to and including 3.35% November 15, 2037 * The percentages represent the percentage of the principal amount of the Credit to be repaid, except as the Association may otherwise specify pursuant to Section 3.03 (b) of the General Conditions. - 18 - APPENDIX Section I. Definitions 1. "Anti-Corruption Guidelines" means the "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and revised in January 2011. 2. "Category" means a category set forth in the table in Section IV of Schedule 2 to this Agreement. 3. "Consultant Guidelines" means the "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011. 4. "Court of Accounts" means the Recipient's court of accounts, as established pursuant Law No. 261-XVI, dated December 5, 2008. 5. "Disbursement-Linked Indicator" or "DLI" means any of the indicators set forth in Section IV.B. of Schedule 2 to this Agreement. 6. "EEP" means "Eligible Expenditure Program", namely a portion of the Recipient's budgetary allocation for financing teacher salaries under Parts A and B of the Project. 7. "Environmental Management Plan" or "EMP" means any of the Recipient's or MSIF's site-specific plans derived from the EMF that have been prepared and will be prepared during the implementation of the Project previous to the commencement of any civil works under the Project, all in a manner acceptable to the Bank. 8. "Environmental Management Framework" or "EMF" means the Recipient's framework dated April 1, 2015, acceptable to the Association and published on May 7, 2015 which contains, inter alia, the environmental protection measures in respect to the Project, including: (a) guidelines for the identification of existing environmental conditions and potential direct and indirect environmental impacts resulting from the carrying out of works under the Project; (b) guidelines for the carrying out of environmental assessments and the preparation of environmental management plans/environmental management plan checklists, when applicable; (c) the recommendation of mitigation measures for each negative impact identified; and (d) measures for enhancing each identified positive impact; as said framework may be amended from time to time with the Association's prior written consent. - 19 - 9. "General Conditions" means the "International Development Association General Conditions for Credits and Grants", dated July 31, 2010, with the modifications set forth in Section II to this Appendix. 10. "Involuntary Resettlement" means the impact of an involuntary taking of land under the Project, which taking causes affected persons to have their: (a) standard of living adversely affected; or (b) right, title or interest in any house, land (including premises, agricultural and grazing land) or any other fixed or movable asset acquired or possessed, temporarily or permanently; or (c) access to productive assets adversely affected, temporarily or permanently; or (d) business, occupation, work or place of residence or habitat adversely affected, temporarily or permanently." 11. "MOE" means the Recipient's Ministry of Education or any successor thereto. 12. "MOF" means the Recipient's Ministry of Finance or any successor thereto. 13. "MSIF" means the Moldova Social Investment Fund, an autonomous public entity established by the Recipient pursuant to the Recipient's Governmental Decision No. 468 of May 19, 1997, as amended to the date of this Agreement. 14. "PISA" means the Programme for International Student Assessment launched by the Organization of Economic Cooperation and Development (OECD), an international study which aims to evaluate education systems worldwide by testing the skills and knowledge of 15-year-old students. 15. "POM" means the Project manual referred to in Section I.A.4 of Schedule 2 to this Agreement, as the same may be amended from time to time with the prior written approval of the Association. 16. "Procurement Guidelines" means the "Guidelines: Procurement of Goods, Works and Non-consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011. 17. "Procurement Plan" means the Recipient's procurement plan for the Project, dated December 4, 2012 and referred to in paragraph 1.18 of the Procurement Guidelines and paragraph 1.25 of the Consultant Guidelines, as the same shall be amended from time to time in accordance with the provisions of said paragraphs. 18. "Receiving Schools" means schools receiving students from closed or reorganized schools, selected in accordance with the criteria set forth in the POM. - 20 - Section II. Modifications to the General Conditions The modifications to the General Conditions are as follows: 1. Section 3.02 is modified to read as follows: "Section 3.02. Service Charge and Interest Charge (a) Service Charge. The Recipient shall pay the Association a service charge on the Withdrawn Credit Balance at the rate specified in the Financing Agreement. The Service Charge shall accrue from the respective dates on which amounts of the Credit are withdrawn and shall be payable semi-annually in arrears on each Payment Date. Service Charges shall be computed on the basis of a 360-day year of twelve 30-day months. (b) Interest Charge. The Recipient shall pay the Association interest on the Withdrawn Credit Balance at the rate specified in the Financing Agreement. Interest shall accrue from the respective dates on which amounts of the Credit are withdrawn and shall be payable semi-annually in arrears on each Payment Date. Interest shall be computed on the basis of a 360-day year of twelve 30-day months." 2. Paragraph 28 of the Appendix ("Financing Payment") is modified by inserting the words "the Interest Charge" between the words "the Service Charge" and "the Commitment Charge". 3. The Appendix is modified by inserting a new paragraph 32 with the following definition of "Interest Charge", and renumbering the remaining paragraphs accordingly: "32. "Interest Charge" means the interest charge specified in the Financing Agreement for the purpose of Section 3.02(b)." 4. Renumbered paragraph 37 (originally paragraph 36) of the Appendix ("Payment Date") is modified by inserting the words "Interest Charges" between the words "Service Charges" and "Commitment Charges". 5. Renumbered paragraph 50 (originally paragraph 49) of the Appendix ("Service Charge") is modified by replacing the reference to Section 3.02 with Section 3.02 (a). -21 - Annex 2 Amended and Restated Attachment to Supplemental Letter No. 2 Moldova Education Reform Project Performance Monitoring Indicators Project Development Objective: To improve learning conditions in targeted receiving schools and strengthen the Recipient's education monitoring systems, while promoting efficiency reforms in the education sector. Data Collection and Reporting PDO Level Results Indicators Baseline En0d Target Frequency and Responsibility for B n E 9Reports Data Collection Instruments Data Collection 1. Total receiving schools that meet 0 15 Semi-annual (i) Project implementation progress Pre-University infrastructure requirements under monitoring reports; (ii) third party verification Division of MoE national quality assurance standards reports (through PMU) and MSIF 2. School report cards with 0 5 Semi-annual (i) Consolidated EMIS database; (ii) Pre-University comparative data on school monitoring Project implementation progress reports Division of MoE performance (2014 - 2018 ) publicly reports (through PMU) disseminated 3. Student-teacher ratio for Grades 1- 10.85:1 11.85:1 Semi-annual (i) National Bureau of Statistics (NBS) Pre-University 12 of primary and general secondary monitoring data on students and teachers; (ii) Division of MoE education reports consolidated EMIS database (through PMU) Component 1. Strengthening the Qualrity of EducationDivisi 1. New minimum quality assurance No Yes Once (i) Report on standards for receiving Pre-University standards formally adopted by MOE schools; (ii) Project implementation Division of MoE progress reports (through PMU) - 22 - 2. Additional receiving schools that 0 6 Semi-annual (i) Project implementation progress Pre-University meet infrastructure requirements monitoring reports; (ii) third party verification Division of MoE under national quality assurance reports (through PMU) standards financed by the national budget 3. Updated training program for Existing Work plan to Semi-annual (i) Report on the status and quality of Pre-University school directors and teachers program for update the monitoring teaching and school management in Division of MoE officially approved and training of existing system reports Moldova; (ii) Project implementation (through PMU) implementation initiated school directors for training of progress reports and teachers to school directors be updated and teachers approved and pilot training completed 4. School directors trained under the 0 percent 30 percent Semi-annual (i) Project implementation progress Pre-University revised training program monitoring reports; (ii) List of school directors Division of MoE reportsattending project supported training (through PMU) 5. School teachers trained under the 0 percent 10 percent Semi-annual (i) Project implementation progress Pre-University revised training program monitoring reports; (ii) List of school teachers Division of MoE reportsattending project supported training (through PMU) 6. Number of additional qualified 0 830 Semi-annual (i) Project implementation progress Pre-University primary teachers resulting from monitoring reports; (ii) list of school teachers Division of MoE project interventions (CORE reports attending project supported training (through PMU) INDICATOR) 7. New remuneration program for Existing New Once (i) Report on the analysis of the existing Pre-University school directors and teachers remuneration remuneration remuneration program of school Division of MoE adopted by the government program of program for directors and teachers; (ii) Government's (through PMU) school directors school directors decision and teachers to and teachers is be updated formally adopted reports;(ii)thirdpartyverification Diviby Governmentsio - 23 - 8. Report analysing Moldova's No report One report Once (i) Report on Moldova's performance in MoE's Agency for performance in PISA 2015 publicly publicly PISA Quality Assurance disseminated disseminated 9. System for learning assessment at Yes Yes Semi-annual (i) Project implementation progress Pre-University the primary level (CORE monitoring reports Division of MoE INDICATOR) reports (through PMU) 10. Administration of revised Existing All 4th grade Semi-annual (i) Project implementation progress MoE's Agency for national testing of all 41 grade national tests students tested in monitoring reports Quality Assurance students completed and scoring Romanian reports guidelines for language and all 4' grade Math based on students revised national testing 11. Administration of revised Existing All 9th grade Semi-annual (i) Project implementation progress MoE's Agency for national testing of all 91 grade national tests students tested in monitoring reports Quality Assurance students completed and scoring Romanian reports guidelines for language and all 9' grade Math based on students revised national testing 12. Report analysing results of 0 3 Semi-annual (i) AQA's report on student performance MoE's Agency or national assessments publicly monitoring Quality Assurance disseminated I reports Component 2. Improving the Efficiency of the Education Sector 1. Primary and general secondary 38 percent 80 percent Semi-annual (i) Monitorul Oficial; (ii) rayon's data Head of Main schools have their budgets approved monitoring reflecting the approved school budget; Division of according to the new per student reports (iii) Project implementation progress Economics, Assets formula reports and Finance (through PMU) 2. Total classes reorganized in 0 980 Semi-annual (i) National Bureau of Statistics Pre-Universit - 24 - primary and general secondary monitoring database; (ii) consolidated EMIS Division of MoE schools reports database; (iii) Project implementation (through PMU) progress reports 3. System in place to closely No system in Dropout rates are Semi-annual (i) Project implementation progress Pre-University monitor drop outs in primary and place to determined using monitoring reports; (ii) data on student enrolments, Division of MoE general secondary schools (using monitor and data reports drop outs and social-background of (through PMU) EMIS) mitigate disaggregated at students; (iii) consolidated EMIS dropouts the level of schools Component 3. Improve the Ministry of Education's Capacity to Monitor the Reform 1. Consolidated Education Existing school Consolidated Semi-annual (i) EMIS database with data on students, Pre-University Management Information System mapping EMIS's data used monitoring teachers, non-teaching staff and schools; Division of MoE (EMIS) for primary and general system for producing reports (ii) Project implementation progress (through PMU) secondary education established School Report reports Cards 2. Direct project beneficiaries 0 336,700 Semi-annual (1) National Bureau of Statistics (NBS) Head of Pre- (CORE INDICATOR) monitoring data on student and teachers; (ii) University reports consolidated EMIS database; (iii) Project Education implementation progress reports Department - 25 -