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December
6, 1999
Mr. M. Kurtovic
Minister of Foreign Trade and
Economic Relations
Musala
9
71000
Sarajevo
Bosnia and Herzegovina
Re:
Dutch Grant for Procurement Monitoring and Auditing Project
Grant Number TF024779
Dear Mr.
Kurtovic:
I am writing on behalf of the International Development Association
(IDA)
to
indicate IDA
’s agreement, as administrator of grant funds provided by the Netherlands,
to make a grant in an amount not exceeding eight hundred thousand United States
dollars
(US$800,000) (the Grant) to Bosnia and Herzegovina (the Recipient). 
The Grant is made in response to the Recipient’s request for financial 
assistance and for the purposes and on the terms and conditions set forth in the Annex
to this Letter Agreement.
The Recipient hereby confirms its request that IDA carry
out the activities described in paragraph
1
of the Annex to this Letter Agreement, and
represents that it is authorized to contract the Grant for the said purposes and on
the said terms and conditions.
Please confirm your agreement with the foregoing, on behalf of the Recipient, by
signing, dating, and returning to us the enclosed copy of this Letter Agreement.
Upon
receipt by IDA of the copy of this Letter Agreement countersigned by you, this Letter
Agreement will become effective as of the date of the countersignature.
Very truly yours,
INTERNATIONAL DEVELOPMENT ASSOCIATION
By
/s/
Christiaan Poortman
Country Director,
Bosnia and Herzegovina
Europe and Central Asia Region
AGREED:
BOSNIA AND HERZEGOVINA
By
/s/
M.
Kurtovic
Minister of Foreign Trade and Economic Relations
Date:
12/9/1999
ANNEX
Purposes, Terms and Conditions of the Grant
1.
The purposes of the Grant are to assist in the preparation of the Procurement 
Monitoring and Auditing Project, which has as main objectives the consolidation of
well-functioning budget, auditing and procurement systems; enhancement of the 
reliability, relevance and timeliness of financial information; improvement of
transparency and accountability
in government policies and strategies and procurement. 
(the Project).
The activities
(the Activities) for which the Grant is given are as 
follows:
(a) development of policies and guidelines for (i) strengthening domestic and 
external resource management,
(ii) introducing strategic public resource allocation, 
and
(iii)
improving financial planning and control capacity.
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(b) development policies and guidelines for incorporating externally financed 
projects within the Entity budgets and for more strategic external aid management.
(c) preparation of guidelines and training programs to strengthen economic 
policy and analysis capacity in Ministries of Finance and policy and programming
capacity in line ministries.
(d) preparation of legislative and budgetary frameworks for establishment of 
sound External Audit institutions and for creation of effective Internal Audit
functions.
(e) preparation of training programs and materials for auditors in analysis , 
presentation and publication of audit findings.
2.
The Grant shall be used to finance consultants
’
services required for the
Activities.
3.
IDA shall carry out the Activities on behalf of the Recipient.
The Recipient
shall cooperate with IDA to the extent necessary to permit IDA to carry out the
Activities promptly and effectively, and to evaluate the results of the Activities.
The Recipient shall indemnify IDA against any costs or liabilities incurred by IDA as
a result of claims against IDA in connection with the Activities, except those
resulting from the gross negligence or willful misconduct of its staff or external
consultants.
4.
The Activities shall be completed by not later than June 30, 2000, or such later 
date as IDA may establish by notice to the Recipient
(the Closing Date). After the 
Closing Date, IDA may at any time cancel the remaining balance of the Grant.
5.
The engagement and supervision of the consultants (the Consultants) required to 
assist in the carrying out of the Activities shall be the responsibility solely of IDA
and shall be governed, except as otherwise decided by IDA, by the provisions of the
Attachment to this Annex.
6.
The Recipient shall be responsible for the payment of any taxes levied by, or in 
the territory of, the Recipient on the Consultants or any of the Consultants’ 
personnel
(other than nationals or permanent residents thereof)
in connection with the
Activities.
7.
The Recipient may at any time request IDA in writing to terminate the 
Activities. Whether or not the Recipient has made such a request, IDA may at any time 
suspend or, after consultation with the Recipient, terminate the right of the
Recipient to receive Grant funds for the Activities if any of the following events has
occurred and is continuing: (a) the Recipient has failed to perform any of its 
obligations under this Letter Agreement; or
(b)
the right of the Recipient, or any
other entity to which the International Bank for Reconstruction and Development
(the
IBRD) has made a loan with the guarantee of the Recipient, to make withdrawals under 
any loan agreement with the IBRD or any development credit agreement with IDA shall
have been suspended.
8.
The Bank is not an agent of, or trustee for, the Recipient and shall not have 
any fiduciary relationship with the Recipient.
The Recipient shall have no right to
any portion of the Grant that is not expended by the Bank pursuant to this Letter
Agreement.
Attachment
Consultants' Services
1.
Consultants' services shall be procured in accordance with the relevant provisions
of Statement
15.00 of the Bank's Administrative Manual, dated July 1997 (the 
Administrative Manual), the Introduction and Section IV of the "Guidelines: Selection 
and Employment of Consultants by World Bank Borrowers" published by the Bank in 
January
1997
and revised in September
1997
and January
1999
(the Consultant 
Guidelines) and the following provisions of this Attachment.
2.
Services for strengthening public resource management and economic and sectoral
policy and analysis capacity, and establishment of external and internal audit
capacity may be procured on a single-source basis, as permitted under paragraphs 3.8 
through
3.11 of the Consultant Guidelines.
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3.
Services for development of financial planning and control capacity and support
for undertaking audits shall be procured under contracts awarded to individual
consultants in accordance with the provisions, which are consistent with the
provisions of the Administrative Manual, of paragraphs
5.1 through 5.3 of the 
Consultant Guidelines.