OFFICIAL THE WORLD BATlBOCUMENTS IBRD IDA I WORLD BANKGROUP January 26, 2018 Secretary Economic Affairs Division Government of Pakistan Islamabad Dear Secretary: Re: Islamic Republic of Pakistan: Accelerating Growth and Reforms Multi-Donor Trust Fund Grant for Debt Management Strengthening Programme at Economic Affairs Division Grant No. TF0A6592 Letter Agreement In response to the request for financial assistance made on behalf of the Islamic Republic of Pakistan ("Recipient"), I am pleased to inform you that the International Bank for Reconstruction and Development/International Development Association ("World Bank"), acting as administrator of grant funds provided by various donors ("Donors") under the Accelerating Growth and Reforms Multi-Donor Trust Fund, proposes to extend to the Recipient, a grant in an amount not to exceed six hundred thousand United States Dollars (USD 600,000) ("Grant") on the terms and conditions set forth or referred to in this letter agreement ("Agreement"), which includes the attached Annex, to assist in the financing of the project described in the Annex ("Project"). This Grant is funded out of the abovementioned trust fund for which the World Bank receives periodic contributions from the Donors. In accordance with Section 3.02 of the Standard Conditions (as defined in the Annex to this Agreement), the World Bank's payment obligations in connection with this Agreement are limited to the amount of funds made available to it by the Donors under the abovementioned trust fund, and the Recipient's right to withdraw the Grant proceeds is subject to the availability of such funds. The Recipient represents, by confirming its agreement below, that it is authorized to enter into this Agreement and to carry out the Project in accordance with the terms and conditions set forth or referred to in this Agreement. 20-A, Shahrah-e-Jamhuriat, G-5/1, Islamabad, Pakistan / Phone: (92-51) 9090000 / Fax: (92-51) 2279648 Secretary, Economic Affairs Division -2- January 26, 2018 Please confirm the Recipient's agreement to the foregoing by having an authorized official of the Recipient sign and date the enclosed copy of this Agreement, and returning it to the World Bank. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION By ,--- Patchamuthu Illa an Country Director, Pakistan AGREED: ISLAMIC REPUBLIC OF PAKISTAN By __ __ __ _ _ AuthorizedRepresentative Name A,; 0#v*h s4 Title £,C4.457 1AP Date: 3t -,P/ - .o7 f Enclosures: (1) Standard Conditions for Grants Made by the World Bank Out of Various Funds, dated February 15, 2012 (2) Disbursement Letter of the same date as this Agreement, together with the "Disbursement Guidelines for Investment Project Financing", dated February 2017 20-A, Shahrah-e-Jamhuriat, G-5/1, Islamabad, Pakistan / Phone: (92-51) 9090000 / Fax: (92-51) 2279648 ANNEX Article I Standard Conditions; Definitions 1.01. Standard Conditions. The Standard Conditions for Grants Made by the World Bank out of Various Funds dated February 15, 2012 ("Standard Conditions"), constitute an integral part of this Agreement. 1.02. Definitions. Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the Standard Conditions or in this Agreement. (a) "Computer Center" means one of the four agencies within EAD responsible for maintaining an up-to-date databank of public and publicly guaranteed (PPG) external debt. (b) "Debt Management (DM) Wing" means one of the four agencies within EAD responsible for the debt service. (c) "DMFAS 5.3" means Debt Management and Financial Analysis System released in 2003. (d) "DMFAS 6.0" means Debt Management and Financial Analysis System, which is the latest enhanced and web-enabled version of DMFAS. (e) "EAD" means the Recipient's Economic Affairs Division or any successor thereto. (f) "Operating Costs" means the reasonable costs of incremental expenditures incurred by the Recipient in relation to the implementation of the Project, which expenditures would not have been incurred absent the Project, including, inter alia: (i) office rental and utilities fees; (ii) office staples and office equipment operation and maintenance; (iii) vehicles rental, operations and maintenance; (iv) travel; (v) banking services and insurance costs; and (vi) advertisement, communication and dissemination expenses; and (vii) translation and printing costs, but excluding salaries, salary supplements, allowances and salary top- ups of the Recipient's civil services. (g) "Rescheduling Wing" means one of the four agencies within EAD and part of the DM Wing, responsible for rescheduling of the PPG external debt. (h) "Research and Statistics Wing" means one of the four agencies within EAD responsible for disbursements under PPG external debt. (i) "Training and Workshops" means the reasonable costs of training, workshops and conferences relevant for the Project, including purchase and publication of materials, rental of facilities, course fees and local and international travel and subsistence of trainers and trainees. (j) "United Nations Conference on Trade and Development" or "UNCTAD" means a permanent intergovernmental body established by the United Nations General Assembly in 1964, providing technical assistance support in debt management to strengthen the capacity of developing countries to manage their debt in an effective and sustainable way, supporting poverty reduction, development and good governance. Article II Project Execution 2.01. Project Objectives and Description. The objective of the Project is strengthening the functional capacity of the Economic Affairs Division to ensure sustainability of the public and publicly guaranteed external debt data statistics and reporting. The Project consists of the following parts: Part 1: Installation and Implementation of UNCTAD DMFAS (version 6.0) Upgradation from DMFAS 5.3 to DMFAS 6.0 to ensure sustainability and availability of the public and publicly guaranteed (PPG) external debt recording system currently in use at EAD, through the provision of technical assistance by UNCTAD, including training of EAD staff and users in DMFAS 6.0; and strengthening EAD's overall capacity to integrate debt data quality control checks into the recording and verification process. Part 2: Enabling Installation and Implementation of DMFAS 6.0 (a) Facilitating Critical Human Resources (HR) Needs: Addressing the critical human resources gaps through the hiring of necessary staff during the life of the Project to enable the installation of DMFAS 6.0, and for successful execution of the Project. (b) Building Capacity ofBack-Office Staff ofEAD: Capacity building of the technical staff of the back offices at EAD (i.e. Computer Center, Research and Statistics Wing, Debt Management Wing, and Rescheduling Wing), through targeted training, including debt management and financial modelling, Oracle, and advanced Microsoft Office, as well as participation in relevant international fora. 2.02. Project Execution Generally. The Recipient declares its commitment to the objectives of the Project. To this end, the Recipient shall carry out the Project through EAD, in accordance with the provisions of: (a) Article II of the Standard Conditions; (b) 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 and as of July 1, 2016, ("Anti- Corruption Guidelines"); and (c) this Article II. 2.03. Institutional and Other Arrangements. By no later than three (3) months after the date of countersignature of this Agreement, procure and install, computer hardware, networks and operating systems, with specifications and upgrades acceptable to the UNCTAD, including necessary license for Oracle, to initiate implementation of DMFAS 6.0 under the Project. 2.04. Annual Work Plans and Budget. (a) The Recipient shall, throughout Project implementation, furnish to the World Bank for approval as soon as available, but in any case, no later than the first quarter of each year, an annual work plan and budget for the Project for each subsequent fiscal year, of such scope and detail as the World Bank shall have reasonably requested, except for the annual work plan and budget for the first fiscal year which shall be furnished prior to the commencement of any activities under the Project. (b) The Recipient shall, no later than three (3) months after furnishing each annual work plan and budget referred to in the preceding paragraph to the World Bank, finalize and adopt, and thereafter ensure that the Project is carried out in accordance with such plan and budget as agreed in writing with the World Bank. 2.05. Donor and Visit. (a) The Recipient shall take or cause to be taken all such measures as the World Bank may reasonably request to identify publicly the Donors' support for the Project. (b) For the purposes of Section 2.09 of the Standard Conditions, the Recipient shall, upon the World Bank's request, enable the representatives of the Donor(s) to visit any part of the Recipient's territory for purposes related to the Project. 2.06. Project Monitoring, Reporting and Evaluation. (a) The Recipient shall monitor and evaluate the progress of the Project and prepare Project Reports in accordance with the provisions of Section 2.06 of the Standard Conditions and on the basis of the indicators set forth below in paragraph (b) of this Section. Each Project Report shall cover the period of one (1) calendar semester, and shall be furnished to the World Bank not later than forty-five (45) days after the end of the period covered by such report. (b) The performance indicators referred to above in paragraph (a) consist of the following: (i) Publication of Status Report July-December 2018 using DMFAS 6.0 (public document listing down all elements related to PPG external debt inlcuding commitments, disbursements, creditors for foreign loans and grants contracted by EAD); and (ii) Monthly Disbursement Report of Foreign Economic Assistance for the Months of December 2018, January 2019 and February 2019 using DMFAS 6.0 (public document listing movements on disbursements related to PPG external loans and grants contracted by EAD on granular frequency). (c) The Recipient shall prepare the Completion Report in accordance with the provisions of Section 2.06 of the Standard Conditions. The Completion Report shall be furnished to the World Bank not later than six (6) months after the Closing Date. 2.07. Financial Management. (a) The Recipient shall ensure that a financial management system is maintained in accordance with the provisions of Section 2.07 of the Standard Conditions. (b) The Recipient shall ensure that interim unaudited financial reports for the Project are prepared and furnished to the World Bank not later than forty-five (45) days after the end of each calendar semester, covering the semester, in form and substance satisfactory to the World Bank. (c) The Recipient shall have its Financial Statements for the Project audited in accordance with the provisions of Section 2.07 (b) of the Standard Conditions. Such audit of the Financial Statements shall cover the entire period during which withdrawals from the Grant Account were made, unless otherwise requested by the World Bank. The audited Financial Statements for such period shall be furnished to the World Bank not later than six (6) months after the end of such period. 2.08. Procurement All goods, non-consulting services and consulting services required for the Project and to be financed out of the proceeds of the Grant shall be procured in accordance with the requirements set forth or referred to in the "World Bank Procurement Regulations for IPF Borrowers" dated July 2016, revised November 2017 ("Procurement Regulations"), and the provisions of the Recipient's procurement plan for the Project ("Procurement Plan") dated December 7, 2017 provided for under Section IV of the Procurement Regulations, as the same may be updated from time to time in agreement with the World Bank. Article III Withdrawal of Grant Proceeds 3.01. Eligible Expenditures. The Recipient may withdraw the proceeds of the Grant in accordance with the provisions of: (a) Article III of the Standard Conditions; (b) this Section; and (c) such additional instructions as the World Bank may specify by notice to the Recipient (including the "Disbursement Guidelines for Investment Project Financing", dated February 2017, as revised from time to time by the World Bank and as made applicable to this Agreement pursuant to such instructions), to finance 100% of Eligible Expenditures consisting of Goods, Consulting Services, Non-Consulting Services, Training and Workshops and Operating Costs, all inclusive of Taxes. 3.02. Withdrawal Conditions. Notwithstanding the provisions of Section 3.01 of this Agreement, no withdrawal shall be made for payments made prior to the date of this Agreement. 3.03. Withdrawal Period. The Closing Date referred to in Section 3.06 (c) of the Standard Conditions is June 30, 2019. Article IV Recipient's Representative; Addresses 4.01. Recipient's Representative. The Recipient's Representative referred to in Section 7.02 of the Standard Conditions is its Secretary, Additional Secretary, Joint Secretary, Deputy Secretary, or Section Officer of the Economic Affairs Division. 4.02. Recipient's Address. The Recipient's Address referred to in Section 7.01 of the Standard Conditions is: The Secretary to the Government of Pakistan Economic Affairs Division Islamabad Islamic Republic of Pakistan Facsimile: 92-51-921-8976 4.03. World Bank's Address. The World Bank's Address referred to in Section 7.01 of the Standard Conditions is: International Bank for Reconstruction and Development International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Facsimile: 1-202-477-6391