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August
16,
2001
H.E. Azra Hadziahmetovic
Minister of Foreign Trade and Economic Relations
Ministry of Foreign Trade and Economic Relations
Musala
9, Sarajevo
71000
Bosnia and Herzegovina
Re:
United Kingdom Grant for Technical Assistance to Support the 
Integration  of the Federation Pension System Grant No. TF028679
Excellency:
I am writing on behalf of the International Development Association
(IDA)
to
indicate  IDA
’s agreement, as administrator of grant funds provided by the Government
of United Kingdom, to make a grant in an amount not exceeding three hundred one
thousand and five hundred
(US$301,500) (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 the Bank 
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 the Bank 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/
Joseph Ingram
Director
Country Office Bosnia and Herzegovina
Europe and Central Asia Region
AGREED:
BOSNIA AND HERZEGOVINA
By
/s/
Azra Hadziahmetovic
Minister of Foreign Trade and Economic Relations
Date:
August 20, 2001
ANNEX
Purposes, Terms and Conditions of the Grant
1.
The purposes of the Grant are to provide technical assistance to support the 
integration of the Federation pension system in Bosnia and Herzegovina, which has as
main objectives to assist the Federation Government in implementing the merger
decision, particularly by developing sound administrative, institutional and financial
management frameworks, as well as facilitating the collection and transparency of
information of the present status of the two pension funds
(the Project).
The
activity
(the Activity) for which the Grant is given is as follows: provision of 
financial consulting services, including financial audits and support for
establishment of the unified pension fund.
2.
The Grant shall be used to finance consultants’ services required for the 
Activities.
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3.
The Bank shall carry out the Activities on behalf of the Recipient.
The
Recipient shall cooperate with the Bank to the extent necessary to permit the Bank to
carry out the Activities promptly and effectively, and to evaluate the results of the
Activities.
The Recipient shall indemnify the Bank against any costs or liabilities
incurred by the Bank as a result of claims against the Bank 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 July 31, 2003 or such later 
date as the Bank may establish by notice to the Recipient
(the Closing Date).
After
the Closing Date, the Bank 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 the
Bank and shall be governed, except as otherwise decided by the Bank after consultation
with the Recipient, 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 the Bank in writing to terminate the 
Activities. Whether or not the Recipient has made such a request, the Bank 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 November 2000 
(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 audit shall be procured under contracts awarded in accordance with 
the provisions, which are consistent with the provisions of the Administrative Manual,
of paragraphs
3.1 and 3.6 of the Consultant Guidelines (Least-Cost Selection).
3.
Services for the preparatory work for integration of two pension funds may be 
procured on a single-source basis, as permitted under paragraphs 3.8 through 3.11 of 
the Consultant Guidelines.