(Subject to Change)
November 9, 2007
LOAN NUMBER ______-UA
(Public Finance Modernization Project)
INTERNATIONAL BANK FOR RECONSTRUCTION
Dated , 200_
Agreement dated ____________, 200_, between UKRAINE (“Borrower”) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (“Bank”). The Borrower and the Bank 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 — LOAN
2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in this Agreement, the amount of fifty million Dollars ($50,000,000) (“Loan”), to assist in financing the project described in Schedule 1 to this Agreement (“Project”).
2.02. The Borrower may withdraw the proceeds of the Loan in accordance with Section IV of Schedule 2 to this Agreement.
2.03 The Front-end Fee payable by the Borrower shall be equal to one quarter of one percent (0.25%) of the Loan amount.
2.04 The interest payable by the Borrower for each Interest Period shall be at a rate equal to LIBOR for the Loan Currency plus the Variable Spread. Notwithstanding the foregoing if any amount of the Withdrawn Loan Balance remains unpaid when due and such non-payment continues for a period of thirty days, then the interest payable by the Borrower shall instead be calculated as provided in Section 3.02 (d) of the General Conditions.
2.05 The Payment Dates are January 15 and July 15 in each year.
2.06 The principal amount of the Loan shall be repaid in accordance with the amortization schedule set forth in Schedule 3 to this Agreement.
ARTICLE III — PROJECT
3.01. The Borrower declares its commitment to the objectives of the Project. To this end, the Borrower shall cause the Project to be carried out in accordance with the provisions of Article V of the General Conditions.
3.02. Without limitation upon the provisions of Section 3.01 of this Agreement, and except as the Borrower and the Bank shall otherwise agree, the Borrower shall ensure that the Project is carried out in accordance with the provisions of Schedule 2 to this Agreement.
ARTICLE IV — REMEDIES OF THE BANK
4.01. The Additional Events of Suspension consists of the following:
(a) The IWG has been dissolved, replaced, or removed, or its powers and duties have been altered to the extent that, in the opinion of the Bank, it can no longer carry out its obligations under the Project, without the prior consent of the Bank;
(b) APST has been dissolved, replaced, or removed, or its powers and duties has been altered to the extent that, in the opinion of the Bank, it can no longer carry out its obligations under the Project, without the prior consent of the Bank; and
(c) The PFMS Modernization Strategy has been amended, suspended, abrogated, repealed or waived without prior consent of the Bank.
ARTICLE V — EFFECTIVENESS; TERMINATION
5.01 The Additional Conditions of Effectiveness consist of the following:
(a) the Annual Work Plan for fiscal year 2008 has been approved by the IWG;
(b) the Project Operations Manual has been approved by MoF for Project implementation; and
(c) The PFMS Action Plan has been approved by MoF for implementation of the PFMS Modernization Strategy.
5.02. The Effectiveness Deadline is the date ninety (90) days after the date of this Agreement.
5.03. Any amendment to this Agreement shall be executed by agreement of the parties hereto in accordance with the provisions of Section 10.02 of the General Conditions. Such amendment shall become effective as set forth in the amending agreement.
ARTICLE VI — REPRESENTATIVE; ADDRESSES
6.01. The Borrower’s Representative is the Minister of Finance.
6.02. The Borrower’s Address is:
Ministry of Finance
12/2 Hrushevsky St.
131450 (380-44) 253 82 43
6.03. The Bank’s Address is:
International Bank for Reconstruction and Development
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Cable address: Telex: Facsimile:
INTBAFRAD 248423(MCI) or 1-202-477-6391
Washington, D.C. 64145(MCI)
AGREED at ________________, __________, as of the day and year first above written.
INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT
The objective of the Project is to strengthen public financial management by improving operational efficiency and transparency.
The Project consists of the following parts:
Part 1: Strengthening the Institutional Capacity and Operational Effectiveness
Capacity building as well as the enhancement and optimization of the functions of the MoF, KRU and the STU in certain areas, including but not limited to: (a) improvement of budget planning and mid-term budgeting; (b) methodological support for performance based budgeting (c) formulation and approval of state and local budgets; and; (d) budget execution, monitoring and financial reporting for state and local budgets; (e) state debt management; (f) participation in management of international financial assistance; and (g) public internal financial control.
Part 2: Development of an Integrated PFMS
Integration of key public financial management functions in order to develop a single centralized information system which serves as a core to all public financial management processes, through:
(a) provision of goods and services in order to develop information exchange mechanisms and automation of critical office services;
(b) provision of services and training in order to support the change management activities for effective use and sustainability, and to provide expertise in technical project management and technological aspects of contract management; and
(c) development of integrated PFMS software and installation of central servers as well as installation of the PFMS field hardware and network equipment, with a sufficient level of information security.
Part 3: Project Management
Provision of support to the MoF, to enhance its capacity for effective implementation of the Project, including, inter alia, goods, services (including audit), training and incremental operating costs, as necessary to provide such support.
Section I. Implementation Arrangements
A. Institutional Arrangements
1. The Borrower shall maintain the IWG during Project implementation, which shall (i) act as a body responsible for the strategic coordination and oversight of Project activities; (ii) review and approve the Annual Work Plan of the Project; and (iii) support its implementation.
2. The APST shall be responsible for the overall Project management, including financial and procurement management and other Project-related tasks, in accordance with the Project Operations Manual. APST shall be managed by ,and report to, the Project Manager, and be maintained with adequate staff ,in number, and with qualifications and experience, acceptable to the Borrower and the Bank.
3. The Borrower shall take all actions required to ensure that the Project Operations Manual is applied and followed at all times in the implementation, monitoring and evaluation of the project.
4. Except as the Bank shall otherwise agree, or as the Bank may otherwise deem it necessary to update the Project Operations Manual to reflect and support a sustainable evaluation of the Project, the Borrower shall ensure that the APST does not assign, amend, abrogate or waive the Project Operations Manual or any provisions thereof.
Section II. Project Monitoring Reporting and Evaluation
A. Project Reports
1. The Borrower shall monitor and evaluate the progress of the Project and prepare Project Reports in accordance with the provisions of Section 5.08 of the General Conditions and on the basis of indicators agreed with the Bank. Each Project Report shall cover the period of one year, and shall be furnished to the Bank not later than two months after the end of the period covered by such report.
B. Financial Management, Financial Reports and Audits
1. The Borrower shall implement, by no later than June 30, 2008, an automated accounting and reporting software system at APST to support Project accounting and automatically generate periodic financial reports.
2. The Borrower shall, through the APST, maintain or cause to be maintained a financial management system in accordance with the provisions of Section 5.09 of the General Conditions.
3. Without limitation on the provisions of Part A of this Section, the Borrower shall, through the APST, prepare and furnish to the Bank not later than forty-five (45) days after the end of each calendar quarter, interim unaudited financial reports for the Project covering the quarter, in form and substance satisfactory to the Bank.
4. The Borrower shall have its Financial Statements audited in accordance with the provisions of Section 5.09 (b) of the General Conditions. Each audit of the Financial Statements shall cover the period of one fiscal year of the Borrower. The audited Financial Statements for each such period shall be furnished to the Bank not later than six months after the end of such period.
5. The Borrower, thorough the APST, shall:
(a) have the control framework, the operational processes and procedures followed under the Project, audited for each fiscal year (or other period agreed to by the Bank) in accordance with terms of reference and by independent auditors both acceptable to the Bank;
(b) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year (or such other period agreed to by the Bank): (A) certified copies of the assessment of the internal control framework, the operational processes and procedures referred to in paragraph (a) above for such year (or other period agreed to by the Bank), as so audited; and (B) an opinion on such processes and procedures by said auditors, in scope and detail satisfactory to the Bank, as to whether they provide the Borrower adequate accounting, internal control and financial reporting as intended for the Project; and
(c) furnish to the Bank such other information concerning such internal control framework, operational processes and procedures, and the audit of such internal control framework, operational processes and procedures, and concerning said auditors, as the Bank may from time to time reasonably request.
Section III. Procurement
1. Goods. All goods required for the Project 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 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 Bank of particular contracts refer to the corresponding method described in the Procurement Guidelines, or Consultant Guidelines, as the case may be.
B. Particular Methods of Procurement of Goods
1. International Competitive Bidding. Except as otherwise provided in paragraph 2 below, goods shall be procured under contracts awarded on the basis of International Competitive Bidding.
2. Other Methods of Procurement of Goods. The following table specifies the methods of procurement, other than International Competitive Bidding, which may be used for goods. The Procurement Plan shall specify the circumstances under which such methods may be used.