Official Documents- Agreement for IDF Grant TF028844

OFFICIAL TFo198f DOCUMENTS he World Bank 818 H Stret N W t.o2) 477-1234 -ERNAT:CNAL aANK FOR RECONSTRUCT:CN AND DEVELOPMENT Washington. O.C. Z433 Cable Address: INTSAFRAD 7ERNATICrAL CE7,LCPMENT ASSOCIATICN U S.A. Cable Address: INDEVAS ao2gSeptember 9, 1994 His Excellency Jorge Caret Dickman Minister of Economy and Finance - Jr. Junin 319 Lima, Perit f Re: Grant for Institutional Stren(e nin' of the Recipient's Ministry of Economy and Finance (NEF) IDF Grant No028844 Excellency: I am writing on behalf of the International Bank for Reconstruction and Development (IBRD) to indicate [BRD's agreement to make to the Republic of Peru (the Recipient) a grant in an amount not exceeding USS500,000 (the Grant). 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 Annexes to this letter. The Recipient represents, by confirming its agreement below, that it is authorized to contract and withdraw 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 and dating the enclosed copy of this letter. This Agreement will become effective on the date of countersignature. Very truly yours, INITERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By 'oshiak Abe Country Director Latin America and the Caribbean Region AGREED: REPUBLIC OF PERU By Jorge Camet Dickman Minister of Economy and Finance ANNEX I Page 1 of 3 Annex to Letter of Agreement for an IDF Grant: Purposes. Terms, and Conditions of the Grant 1I The objective of the Grant is to provide technical assistance in the implementation of the Recipient's IBRD-supported economic and social programs through Insiituto Peruano de Economia (IPE).- The activities for which the Grant is given are as follows: (a) Fiscal Pcicy. (i) Improvement of the Recipient's Ministry of Economy and Finance (MEF's) capacity to design tax and trade policies and to coordinate the Recipient's agencies involved in tax administration and collection: the internal tax administration unit (SUNAT) and the customs authority (SUNAD). (ii) Streamlining the process of updating operations within the Recipient's Treasury, through adoption of a " Cj Unica" account system, reform of budgetary procedures and coordination between the Recipient's Treasury, the Recipient's Central Bank, and other interested agencies. (iii) Strengthening of the statistical unit at MEF (OFINE) aimed at providing timely statistical data and forecasting to the Recipient's " Comit6 de Caia", agency in charge of controlling and prioritizing public investment. (b) Financial Sector. Assessment of the regulatory framework for the Recipient's financial sector and recommendations for improving the enforcement capacities of the corresponding supervisory institutions in the areas of capital markets, mutual funds, insurance and banking. (c) Agiculture. Technical Assistance to MEF on reforms aimed at establishing a well- functioning market for the assignment of land and water rights. (d) Public Sector Reform. Development of the initial framework for the Recipient's public sector restructuring, including, inter alia, strengthening the enforcement capacity of regulatory agencies to ensure competitive conditions in specific sectors, such as telecommunications, public utilities, and transportation, and designing of effective decentralization schemes in the social sectors. ANNEX I Page 2 of 3 zE:penditures to be financed with the Grant are as follows: Amount of the Grant Allocated (Expressed % of Expenditures Cateiorv in Dollar Eauivalent) to be Financed Consultant's Services 500,000 1000/0 TOTAL 500,000 3. To facilitate the carrying out of the activities outlined above, the Recipient shall open and 2t l account (the Special Account) in dollars on terms and conditions satisfactory to IBRD. Deposits into, and payments out of the Special Account shall be made in accordance with the provisions of Annex 2 to this letter. 4. The Recipient shall carry out the activities outlined above with due diligence and efficiency, promptly provide the funds, facilities, services, and other resources required for the purpose; funish all information covering such activities and the use of the proceeds of the Grant as IBRD shall reasonably request; and from time to time exchange views with IBRD's representatives on the progress and results of such activities. 5. (a) Without limitation to the provisions of paragraph 4 above, the Recipient shall enter into an agreement with IPE under terms and conditions satisfactory to IBRD (the IPE Agreement) which shall include, inter alia, the cbligation of IPE to: (i) carry out, on behalf of the Recipient, the activities described in paragraph I above; (ii) comply with all the other applicable provisions of this annex, including, inter alia, those set forth in paragraphs 6 and 7 below; and (iii) maintain records and separate accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the activities described in paragraph I above. (b) Except as IBRD shall otherwise agree, the Recipient shall not amend, suspend, terminate, waive or fail to enforce the IPE Agreement or any provision thereof. 6. Consultants acceptable to IBRD shall be employed by the Recipient or IPE on terms and conditions satisfactory to IBRD for the activities described in paragraph 1. The consultants shall be selected in accordance with principles and procedures satisfactory to IBRD and on the basis of Guidelines: Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency (Washington, D.C. : World Bank, 1981) (the Guidelines). No substitution of such consultants or modification of the terms and conditions of their employment shall be made except vTh the prior approval of IBRD. ANNEX I Page 3 of 3 7. IBRD shall disburse funds to or on the order of the Recipient to meet the expenditures specified in paragraph 2 above. The Recipient shall submit a written application for withdrawal of such funds in the form specified by IBRD. Withdrawal applications for the Grant shall be: (a) signed on behalf of the Recipient by its Minister of Economy and Finance or such other person or persons as such Minister shall appoint in writing; and (b) accompanied by evidence of the expenditures made or, if IBRD shall so agree, to be made. Authenticated specimen signatures of the designated persons shall be provided with the first application. 8. The Grant shall be disbursed in U.S. dollars. However, the Recipient may request any other currency required to meet an expenditure to be financed by the Grant, and IBRD will purchase that currency with U.S. dollars. 9. Withdrawals shall be made only for expenditures for services supplied from countries eligible under the Guidelines. No withdrawals shall be made on account of payments for any taxes levied by, or in the territory of the Recipient. 10. No withdrawals of the Grant shall be made after a date two years from the date of signature by the Bank of the Letter of Agreement in respect of the Grant (the Closing Date), except that the Bank may disburse against withdrawal applications for expenditures incurred prior to the Closing Date and received by the Bank within four months after the Closing Date. Any amount of the Grant then remaining unwithdrawn shall be canceled. 11. IBRD may at any time, by notice to the Recipient, suspend further withdrawals of the Grant if any of the following events has occurred: (a) funds withdrawn shall not have been used for the purpose agreed between the Recipient and IBRD; (b) the activities referred to in paragraph I above shall not have been carried out in accordance with the standards or methods agreed between the Recipient and IBRD; (c) the Recipient shall not have complied with any of the obligations herein specified; (d) the right of the Recipient, or any other entity to which IBRD has made a loan with the guarantee of the Recipient, to make withdrawals under any Loan Agreement with IBRD or any Development Credit Agreement with the International Development Association shall have been suspended; or (e) the Recipient or IPE shall have failed to comply with any of its obligations under the IPE Agreement. 12.. IBRD may, by notice to the Recipient, cancel any amount of the Grant remaining unwithdrawn: (a) at any time after withdrawals of the Grant shall have been suspended pursuant to the provisions of paragraph 11 above; or (b) if the recipient fails to take action, satisfactory to IBRD, regarding the implementation of the activities referred to in paragraph I of this Anex, within six months from the date it was notified by the Bank that such a Grant was approved. ANNEX 2 Page 1 of 2 Special Account For the purpose of this Annex: (a) the term "Eligible Category" means the Category set forth in paragraph 2 of Annex I to this Letter, (b) the term "Eligible Expenditures" means expenditures in respect of the reasonable cost of services required for the Project and to be financed out of the proceeds of the Grant allocated from time to time to the Eligible Category in accordance with the provisions of paragraph 2 to this Letter- and (c) the term "Authorized Allocation" means an amount equivalent to US$85,000 to be withdrawn from the proceeds of the Grant and deposited in the Special Account pursuant to paragraph 3 (a) of this Annex. 2. Payments out of the Special Account shall be made exclusively for Eligible Expenditures in accordance with the provisions of this Annex. 3. (a) After IBRD has received evidence satisfactory to it that the Special Account has been duly opened. the Recipient shall furnish to IBRD a request or requests for a deposit or deposits which do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or requests, IBRD shall, on behalf of the Recipient, deposit in the Special Account such amount or amounts out of the proceeds of the Grant as the Recipient shall have requested. (b) (i) For replenishment of the Special Account, the Recipient shall furnish to IBRD requests for deposits in the Special Account at such intervals as IBRD shall specify. (ii) Prior to or at the time of each such request, the Recipient shall furnish to IBRD the documents and other evidence required pursuant to paragraph 4 of this Annex for the payment or payments in respect of which replenishment is requested. On the basis of each such request, IBRD shall, on behalf of the Recipient, deposit into the Special Account out of the proceeds of the Grant such amount as the Recipient shall have requested and as shall have been shown by said documents and other evidence to have been paid out of the Special Account for Eligible Expenditures. All such deposits shall be withdrawn by IBRD from the proceeds of the Grant under the Eligible Category, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. ANNEX 2 Page 2 of 2 4 For each payment made by the Recipient out of the Special Account, the Recipient shall, at such time as BRD shall reasonably request, furnish to IBRD such documents and other evidence showing that such payment was made exclusively for Eligible Expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Annex, IBRD shall not be required to make firther deposits into the Special Account if at any time, IBRD shall have determined that all further withdrawals of the proceeds of the Grant should be made directly by the Recipient. Thereafter, withdrawals of the proceeds of the Grant remaining unwithdrawn shall follow such procedures as IBRD shall specify by notice to the Recipient. Such firther withdrawals shall be made only after and to the extent that BRD shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice will be utilized in malking payments for Eligible Expenditures. 6. (a) If IBRD shall have determined at any time that any payment out of the Special Account: (i) was made for an expenditure or in an amount not eligible pursuant to paragraph 2 of this Annex; or (ii) was not justified by the evidence furnished to IBRD, the Recipient shall, promptly upon notice from IBRD: (A) provide such additional evidence as IBRD may request; or (B) deposit into the Special Account (or, if IBRD shall so request, refund to IBRD) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless IBRD shall otherwise agree, no further deposit by IBRD into the Special Account shall be made until the Recipient has provided such evidence or made such deposit or refund, as the case may be. (b) If IBRD shadl have determined at any time that any amount outstanding in the Special Account will not be required to cover further payments for Eligible Expenditures, the Recipient shzll, promrtly upon notice from IBRD, refund to IBRD such outstanding amount. (c) The Recipient may upon notice to IBRD, refund to BRD all or any portion of the funds on deposit in the Special Account. (d) Refunds to EBRD made pursuant to paragraph 6 (a), (b) and (c) of this Annex shall be added to the unwithdrawn amount of the Grant.