12-Jul-2024 Date: ____________________ H.E. Nadia Fettah Minister of Economy and Finances Ministry of Economy and Finances Avenue Mohammed V Rabat Kingdom of Morocco Re: Kingdom of Morocco: Loan No.9317-MA (Public Sector Performance -ENNAJAA- Program) Second Amendment to the Original Loan Agreement Excellency: We refer to the loan agreement (the “Original Loan Agreement”) between the Kingdom of Morocco (the “Borrower”) and the International Bank for Reconstruction and Development (the “Bank”), dated March 23, 2022, as amended on November 23, 2023, for the above-mentioned Program. The capitalized terms used in this amendment letter (the “Amendment Letter”) and not defined herein have the meanings ascribed to them in the Original Loan Agreement. We also refer to the loan agreement entered into between the Borrower and the Bank for the purposes of providing additional financing for activities related to the Program (the “Loan Agreement”). In line with the changes introduced to the Program through the Loan Agreement, the Original Loan Agreement referred to in paragraph 1 above is hereby amended as follows: 1. Result Area 1 and Result Area 2 in Schedule 1 of the Original Loan Agreement are hereby amended and replaced in their entirety to read as follows: “Result Area 1. Improving the Efficiency of Public Expenditure Provision of support for the implementation of the Organic Budget Law and the strengthening of the value for money in public procurement through the following activities, including: (a) the adoption of quality standards of performance indicators and a management control charter; (b) the reform of the budget structure of the Regions, including a performance-based classification; (c) the integration of gender and climate responsive considerations into the Borrower’s results-based budget, including the provision of training on gender-budgeting to selected ministries; (d) the upgrading of the Borrower’s public procurement database; (e) the preparation of an open contracting data Standards readiness study; (f) the implementation of management controls for programmatic budgeting; (g) the strengthening of budgetary unity through the rationalization of special treasury accounts; (h) the implementation of financial management instruments to non-commercial establishments (établissements et entreprises publiques); (i) the identification of expenditures under regional development programs in the Program Area (at project level) in the Integrated Financial Management System -2- (“GID”), (j) the publication of citizen budgets at regional and municipal levels in the Program Area; (k) the roll-out of an open budget platform; (l) the roll-out of a multi-year action plan aimed at increasing budget transparency, and (m) the upgrade of the Isthitmar public investment monitoring platform. Result Area 2. Improving Public Revenue Management Provision of support for the strengthening of public revenue management through the following activities, including: (a) the roll-out of a multi-year risk management action plan aimed at ensuring increased tax compliance; (b) the strengthening of the data sharing with the tax administration through the interoperability of relevant platforms; (c) the introduction of digital tools to pay taxes and the digitalization of back-end processes; (d) the upgrade of the GIR-CT system to synchronize central government systems with municipal systems; (e) the preparation of the new reform law on local taxation; (f) the update of the revenue recovery code for non-commercial establishments; (g) the upgrade of the DDE state domain geographic information system (“GIS”) platform; and (h) reengineering of procedures manuals and elaboration of risk mapping for revenue collection I connection with state domains.” 2. Section I.A.2 of Schedule 2 to the Original Loan Agreement is hereby amended to read as follows: “2. The Borrower shall ensure, throughout Program implementation, the participation and collaboration of the Regions (including their AREPs) in the implementation, coordination, monitoring and evaluation of Program activities to be carried out at the regional level, including to ensure compliance with relevant provisions of POM as applicable to said Region(s), including the pertinent actions under the Program Action Plan and the Anti-corruption Guidelines.” 3. Section II.B of Schedule 2 to the Original Loan Agreement is hereby amended to read as follows: “B. involve the procurement of: (a) works, estimated to cost USD115,000,000 equivalent or more per contract; (b) goods, estimated to cost USD75,000,000 equivalent or more per contract; (c) non-consulting services, estimated to cost USD75,000,000 equivalent or more per contract; or (d) consulting services, estimated to cost USD30,000,000 equivalent or more per contract.” 4. Section III of Schedule 2 to the Original Loan Agreement is hereby amended to read as follows: “Section III. Program Monitoring, Reporting and Evaluation 1. The Borrower shall furnish to the Bank each Program Report not later than one hundred twenty days (120) days after the end of each CY, covering the CY. 2. Without limitation upon the provisions of Section 5.13 of the General Conditions, the Borrower shall prepare or cause to be prepared periodic ACG Reports, in form and substance satisfactory to the Bank. The Borrower shall furnish, or cause to be furnished, each ACG Report to the Bank together with the Program Report not later than one hundred twenty (120) days after the end of each CY, covering the CY.” -3- 5. The table of DLIs/DLRs in Section IV.A.2 of Schedule 2 to the Original Loan Agreement is hereby amended to read as setforth in the Annex. 6. Section IV.B.1 of Schedule 2 to the Original Loan Agreement is hereby amended to read as follows: “B. Withdrawal Conditions; Withdrawal Period 1. Notwithstanding the provisions of Part A of this Section, no withdrawal shall be made: (a) on the basis of DLRs achieved prior to the Signature Date; (b) for any DLRs under Categories (1) to (11), until and unless the Borrower has furnished evidence satisfactory to the Bank that said DLR has been achieved; and (c) for DLR#3.3(a) under Category (3), until and unless the Borrower has furnished evidence satisfactory to the Bank that the grievance mechanism system at the level of the Region Fez-Meknes is operational.” 7. Section IV.B.4 of Schedule 2 to the Original Loan Agreement is hereby amended to read as follows: “The Closing Date is December 31, 2028.” 8. The Appendix to the Original Loan Agreement is hereby amended as follows: (a) the following new definitions have been added, and existing definitions are consequently renumbered to keep the alphabetical order: ““ACG Report” means the Borrower’s periodic report, in form and substance satisfactory to the Bank, and in accordance with the provisions of the Anti-Corruption Guidelines, including whether or not there has been: (1) any credible and material allegations and other indications of fraud and corruption under the Program which come to the Borrower’s attention during such period, (2) any investigations launched by the Borrower into such allegations, their progress and findings, and (3) any remedial or corrective actions taken or planned in response to such allegations or the findings of such investigations.” ““AREP” means the regional agency for project implementation in each Region.” ““Council of Government” means the Borrower’s Conseil du Gouvernement.” ““CY” means the Borrower’s calendar year, from January 1 to December 31.” ““DDE” means the State Domains Directorate of the MEF. ““DEPP” means the Directorate of Public Enterprises and Privatization within the MEF.” ““Integrated Financial Management System” or “GID” means the Borrower’s integrated financial management system.” -4- ““Program Area” means the Regions and Municipalities participating in the Program, as set forth in the POM. ““Secrétariat Général du Gouvernement” means the Borrower’s Secretary General of the Government.” ““Technical Committee” means the committee referred to in Section I.A.1(c) of Schedule 2 to this Agreement.” (b) the following definitions have been amended and replaced in their entirety to read as follows: ““Program Action Plan” means the Borrower’s plan dated November 10, 2021, and revised as of May 17, 2024 and referred to in Section I.B.2 of Schedule 2 to this Agreement, as may be amended from time to time with the agreement of the Bank.” ““Program Operational Manual” or “POM” means the Borrower’s manual referred to in Section I.B.1 of Schedule 2 to this Agreement, setting forth, inter alia: (a) the technical, administrative, and fiduciary procedures applicable to the Program, (b) the list of Regions (and AREPs) and Municipalities participating in the Program; (c) the Verification Protocol; (d) the Program Action Plan; (e) the Program Report and ACG Report templates; (f) the protocol/arrangements for periodic reporting to the Bank on, and sharing the findings of, any case of fraud and corruption denounced and/or investigated under the Program, in accordance with the Anti-Corruption Guidelines (to be included as an attachment to the POM); as the POM may be amended from time to time with the Bank’s prior written consent.” ““Regional Development Plans” means, for each Region, the Plan de Developpement Regional, the six (6) years development program developed by regional government as per the 2016 Borrower’s Organic Law on Regions no. 111-14.” All the terms and conditions of the Original Loan Agreement that have not been amended hereby shall remain unchanged and in full force and effect. Please confirm your agreement with the foregoing, on behalf of the Borrower, by countersigning and dating, this Amendment Letter. This Amendment Letter shall become effective -5- as of the date of its countersignature. Sincerely, INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By: ___________________________ Jesko S. Hentschel Country Director for Morocco Middle East and North Africa Region CONFIRMED AND AGREED: KINGDOM OF MOROCCO By: ____________________________ Authorized Representative Nadia Fettah Name: __________________________ Minister of economy and finances Title: ___________________________ 18-Jul-2024 Date: ___________________________ -6- Annex Category (including Disbursement Amount of the Loan Disbursement Linked Result (as Linked Indicator as Allocated applicable) applicable) (expressed in EUR) (1) DLI #1: Strengthening DLR#1.1: the MEF has issued a DLR#1.1: 8,582,000 the performance approach circular (or equivalent introduced by the Organic administrative/legal act) Budget Law establishing the quality standards to be met by the Performance Projects. DLR#1.2: the MEF has issued a circular (or equivalent DLR#1.2: 8,582,000 administrative/legal act) establishing a model of management charter. DLR#1.3: Eleven (11) ministries DLR#1.3: 18,881,500 have implemented at least two For each ministry having quality standards laid out in the implemented at least two MEF’s circular (or equivalent quality standards as set administrative/legal) mentioned forth in the Verification under DLR. 1.1. Protocol, 1,716,500 available for withdrawal, up to 18,881,500. DLR#1.4: Ten (10) ministries DLR#1.4: 17,164,000 have adopted the management For each ministry having charter referred to in DLR#1.2. adopted the management charter, 1,716,400 available for withdrawal, up to17,164,000. DLR#1.5: Additional nine (9) DLR#1.5: 0 ministries have adopted the management charter referred to in DLR#1.2. DLR#1.6: Sixteen (16) ministries/ DLR#1.6: 0 institutions have adopted a roadmap/guidelines for implementing management control. DLR#1.7: Streamline of Special DLR#1.7 (a): 0 Appropriation Accounts (“CAS”) through : (a) the introduction of a capping rule for earmarked tax revenues; and (b) the reduction of -7- CAS earmarked tax revenue in DLR#1.7(b): 0 proportion to general budget tax revenue, annually. DLR#1.8: Nine (9) non- DLR#1.8:0 commercial establishments (établissements et entreprises publics) having adopted at least two additional instruments to modernize their financial management as further described in the POM. (2) DLI#2: Introducing a DLR#2.1: The MEF has issued a DLR#2.1: 4,291,000 sustainable and equitable circular establishing the budgeting procedures, the calendar, definitions and scope of application of climate budgeting. DLR#2.2: Adoption of climate DLR#2.2: 17,163,999 tagging in the budget of three (3) For each climate sensitive ministerial departments. budget published, 5,721,333 available for withdrawal, up to 17,163,999. DLR#2.3: Publication of a DLR#2.3: 21,455,001 climate-sensitive budget in compliance with the circular in DLR#2.1. DLR#2.4: The MEF implements gender budget tagging through: (a) integration of gender tagging in DLR#2.4(a): 0 three-year budget programming pursuant to the Chef du Gouvernement circular on drawing up three-year budget programming proposals, or any other circular or equivalent act on gender marking. DLR#2.4(b): 0 (b) application of the gender marking methodology by eight (8) ministerial departments. (3) DLI#3: Enhancing the DLR#3.1: Publication of an DLR#3.1: 4,291,000 regionalization agenda by MI’s circular requesting Regions strengthening the budget to present a three-year budgeting -8- programming of the of each public investment project Regions programmed in their Regional Development Plans and State- Region Contract. DLR#3.2: The platform DLR#3.2: 12,873,000 monitoring Regional Development Plan, with functionalities described in the POM, including performance indicators, is operational in at least three Regions. DLR#3.3: Timely publication of two (2) semestrial financial and physical public investment execution as detailed in the POM: (a) by the Region of Fes Meknes DLR#3.3(a): 17,164,000 (b) by two additional Regions. DLR#3.3(b): 8,582,000 Per Region, 4,291,000 DLR#3.4: The platform for monitoring the Regional Development Plan is enhanced for improved reporting and sustainability monitoring: (a) Accounting identification at project-level in GID is DLR#3.4(a): 0 operational. (b) A module for monitoring the DLR#3.4 (b): 0 sustainable development objectives of projects is operational in the Regional Development Plan monitoring platform. DLR#3.5: Extension of the GID and GIR-CT accounting and budgeting information systems: (a) Six (6) Regional Project DLR#3.5: (a): 0 Execution Agencies (AREP) in the Program Area have adopted and are using the GID-AREF and GIR-CT information systems. -9- (b) The DGCT and the DLR#3.5: (b): 0 Directorates General Services of the six (6) Regions and of the six (6) largest Municipalities in the Program Area have access to GID reporting information systems data for consultation (with a maximum of one-week lag). DLR#3.6: Annual publication of a citizen's budget by six (6) DLR#3.6: 0 largest Municipalities, and six (6) Regions on their websites. (4) DLI #4: Improving the DLR#4.1: The TGR has DLR#4.1: 17,164,000 efficiency of public upgraded the procurement procurement through data database under terms of production and analysis reference set forth in the POM to inform the future national procurement observatory. DLR#4.2: The national DLR#4.2: 13,732,000 procurement observatory is operational. DLR#4.3: Six (6) statistical DLR#4.3: 5,149,500 reports of the national For each statistical report procurement observatory have published, 858,250 been published. available for withdrawal, up to 5,149,500. DLR#4.4: Digitalization of the DLR#4.4: 0 post contract award documents. - 10 - (5) DLI#5: Improving tax DLR#5.1: The MEF has adopted DLR#5.1: 8,582,000 compliance and a multi-year action plan to performance of the tax improve tax compliance, under administration terms of reference as set forth in the POM. DLR#5.2: A national tax compliance management and risk DLR#5.2: 8,582,000 analysis unit in the MEF is created and operational. DLR#5.3: A tax compliance risk management committee is DLR#5.3: 8,582,000 operational. DLR#5.4: Based on the actions DLR#5.4: 17,163,000 proposed by the national tax For each twenty (20) compliance management and risk percentage point increase, analysis unit by March 31, 2024, 5,721,000 is available for 60% of the actions proposed have withdrawal, up to been subject to decision for 17,163,000. action. DLR#5.5: The debt recovery rate has increased: DLR#5.5(a): 0 (a) By 5 percent on average for a total of twenty (20) public establishments (établissement et entreprise publiques); DLR#5.5(b): 0 (b) By a cumulative 10 percent for each of the twenty (20) public establishments in DLR#5.5(a). (6) DLI#6: Increasing DLR#6.1: The Borrower’s has DLR#6.1: 5,149,500 resources of Municipalities published an arrêté implementing article 6 of Law 07-20 on local taxation management. DLR#6.2: Interfacing functions DLR#6.2: 34,328,000 of the GIR-CT with local From a baseline of 0, for systems is implemented in at each large Municipality, least 100 large Municipalities 343,280 available for enabling these Municipalities to withdrawal, up to manage the entire local taxation 34,328,000. chain of operations. - 11 - DLR#6.3: The electronic DLR#6.3: 8,582,000 declaration and payments system for municipal taxes is operational. DLR#6.4: the new governance DLR#6.4: 20,598,000 framework mandated by article 6 For each twenty (20) large of Law No. 07-20 is operational Municipality, 1,029,900 in 400 Municipalities. available for withdrawal, up to 20,598,000. DLR#6.5: 0 DLR#6.5: Pursuant to Framework Law No. 69-19 on tax reform, a draft law on local taxation and fees is submitted to the Secrétariat Général du Gouvernement. (7) DLI#7: Improving data DLR#7.1: The Government DLR#7.1: 6,866,000 exchange and Council has adopted and interoperability of submitted to Parliament draft information systems Law on digital administration. DLR#7.2: A general interoperability framework consolidating the norms, procedures and technical DLR#7.2: 4,291,000 standards required for users to interface with the national interoperability platform, has been adopted. DLR#7.3: The national interoperability platform is operational. DLR#7.3: 4,291,000 DLR#7.4: The regulatory acts implementing Law on interoperability have been prepared and submitted to the DLR#7.4: 8,582,000 Secrétariat Général du Gouvernement. DLR#7.5: The list of administrative procedures prioritized for digitalization in DLR#7.5: 8,582,000 conformity with Law No. 55-19 on the simplification of administrative formalities and procedures has been validated by the National Commission on - 12 - Simplification of Administrative Procedures. DLR#7.6: the ADD has DLR#7.6: 3,432,000 integrated 12 use cases with the For each use case integrated national interoperability platform with the national for digitalization of associated interoperability platform services. for digitalization of associated services, 286,000 available for withdrawal, up to 3,432,000. DLR#7.7: The integration of the DLR#7.7: 3,432,000 12 use cases on the For each use case integrated interoperability platform has on the interoperability resulted in the simplification of platform resulting in the administrative procedures. simplification of administrative procedures, 286,000 available for withdrawal, up to 3,432,000. DLR#7.8: A public DLR#7.8: 4,291,000 administration and institutions users satisfaction survey of the platform regarding the national interoperability platform has been completed by the ADD. DLR#7.9: 3, 334,000 DLR#7.9: One (1) end-users satisfaction survey among companies and citizens regarding the digitalization of priority service has been completed by the MTNRA. (8) DLI#8: Improving the DLR#8.1: List of priority actions DLR#8.1: 4,291,000 proactive disclosure of open to be implemented public data for open data is established by the Open Data Steering Committee in consultation with non-government stakeholders. DLR#8.2: (a) The COPIL’s membership is extended to include actors identified in the DLR#8.2: 8,582,000 ODRA; and (b) the COPIL has: - 13 - (i) defined in guides or manuals the norms and standards for the processing and publication of data and metadata by the public administration and institutions on the open data platform; and (ii) adopted a monitoring and evaluation plan for the open data initiative. DLR#8.3: The draft regulatory text on proactive disclosure under DLR#8.3: 8,582,000 the Access to Information Law No. 31.13 has been validated by the MNTRA for its submission to the Council of Government. DLR#8.4: The national open DLR#8.4: 8,582,000 data portal is operational and include an interactive module to facilitate user participation in quality control and rapid feedback. DLR#8.5: A data inventory DLR#8.5: 8,582,000 has been developed, and priority data sets for processing and publication have been identified. DLR#8.6: At least one (1) annual hackathon-type event to promote opn data use DLR#8.6: 4,291,000 has been organized by the ADD. DLR#8.7: 245 quality, updated, priority datasets published free of charge with essential metadata in an open and reusable DLR#8.7: 8,582,000 format on the national platform From a baseline of 145 data.gov.ma (or linked to a datasets, for each five (5) sectoral data new datasets, 429,100 platform), from a baseline of 145 available for withdrawal, datasets. up to 8,582,000. (9) DLI#9: Improving DLR#9.1: Publication of a DLR#9.1: 0 budget transparency citizen's budget for the mid-year budget implementation phase. DLR#9.2: 0 - 14 - DLR#9.2: the open budget platform is operational. DLR#9.3(a): 0 DLR#9.3: (a) adoption, and (b) implementation of an action plan DLR#9.3(b): 0 up to 60% to enhance budget transparency. (10) DLI#10: Improvement DLR#10.1: Introduction of a DLR#10.1: 0 of the programming, provision for prioritizing public monitoring and investments in the draft transparency of public amendment of the Organic Law investments of Finance. DLR#10.2: Isthitmar platform is DLR#10.2: 0 interoperable with budget programming module of the Triennal Budget Program (PBT). DLR#10.3: A link is established between the investment projects programmed by the annual budget law and supported by Istithmar , and the execution of their budget appropriations in GID: (a) Piloting for three (3) DLR#10.3(a): 0 ministerial departments/institutions. (b) Roll-out to ten (10) ministerial DLR#10.3(b): 0 departments/institutions in charge of major investment projects as defined in the Verification Protocol. (11) DLI#11: Enhancing DLR#11.1: The DDE has the value of state-owned collected and digitized graphic DLR#11.1: 0 private domain data via the GIS platform in the Program area. DLR#11.2: The DDE has DLR#11.2: 0 achieved annually at least 90% of defined targets in terms of land area subject to the registration procedure (procédure d'immatriculation) in the Program Area, during three (3) CYs. DLR#11.3: The DDE improved revenue collection through: - 15 - DLR#11.3 (a)(i): 0 (a) The MEF has submitted (i) the draft law on the state private DLR#11.3 (a)(ii): 0 domain; and (ii) the related draft implementation decrees; to the Secrétariat Général du Gouvernement. (b) The DDE has drawn up and implemented a risk mapping for DLR#11.3 (b): 0 the revenue circuit managed at DDE level, together with an action plan for implementing related measures. (c) The annual increase in revenues generated by the state's DLR#11.3 (c): 0 assets averages at least 7% of the target defined in the budget law (excluding innovative financing) in the Program Area, in two (2) CY. (12) Front-end Fee to be paid column to be left blank 965,500 pursuant to Section 2.03 of this Agreement in accordance with Section 2.05(b) of the General Conditions TOTAL AMOUNT 386,200,000