Conformed Copy - C2437 - Capacity Building: Public Sector and Legal Institutions Project - Development Credit Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 2437 MOZ Development Credit Agreement (Capacity Building: Public Sector and Legal Institutions Development Project) between REPUBLIC OF MOZAMBIQUE and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated January 29, 1993 CREDIT NUMBER 2437 MOZ DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated January 29, 1993, between REPUBLIC OF MOZAMBIQUE (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS: (A) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Association to assist in the financing of the Project; WHEREAS: (B) the Association has received a letter dated August 6, 1992, from the Borrower describing its capacity building strategy, (the Capacity Building Strategy) and declaring the Borrower's commitment to the execution of said Capacity Building Strategy; WHEREAS: (C) the Borrower has received from the Swedish International Development Agency (SIDA) a grant (the SIDA Grant) to Page 2 assist in the financing of Parts A.1, A.2 and A.3 of the Project on the terms and conditions set forth in a bilateral agreement (the SIDA Grant Agreement) entered into between the Borrower and SIDA; and WHEREAS the Association has agreed on the basis, inter alia, of the foregoing, to extend the Credit to the Borrower upon the terms and conditions set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Develop- ment Credit Agreements" of the Association, dated January 1, 1985, with the last sentence of Section 3.02 deleted (the General Conditions) constitute an integral part of this Agreement. Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a)"CEJ" means Centro de Estudos Judiciarios, the Center for Judicial Studies to be established by the Borrower and referred to under Part B.2 (h) of Schedule 2 to this Agreement; (b) "DAF" means Departamento de Administracao e Financas, the Department of Administration and Finance of MAE, as hereinafter defined; (c) "GP" means Gabinete de Planeamento, the Planning Unit of MAE, established pursuant to Despacho No. 147/92 dated July 6, 1992, issued by the Minister of State Administration of the Borrower, as hereinafter defined; (d) "IC" means Comissao Inter Ministerial the Inter- ministerial Committee established pursuant to Despacho dated July 20, 1992, issued by the Borrower's Prime Minister and referred to under Part A of Schedule 6 to this Agreement; (e) "MAE" means Ministerio de Administracao Estatal, the Ministry of State Administration of the Borrower; (f) "MOJ" means Ministerio da Justica, the Ministry of Justice of the Borrower; (g) "MULEIDE" means Mulher Lei e Desenvolvimento, the Women's Association for Law and Development established pursuant to its Statutes approved on June 20, 1992; (h) "SLCC" means the Strengthening of Legal Capabilities Component described under Part B of Schedule 2 to this Agreement; (i) "UEM" means Universidade Eduardo Mondlane, the Borrower's University; (j) "WG" means the Working Group established pursuant to Despacho, dated July 14, 1992, issued by the Borrower's Minister of Justice, and referred to under Part B of Schedule 6 to this Agreement; (k) "fiscal year" or "FY" means the Borrower's fiscal year which runs from January 1 to December 31; (l)"Project Preparation Advance" means the project preparation advance granted by the Association to the Borrower pursuant to a Letter of Agreement dated January 6, 1992 and countersigned by the Borrower on February 6, 1992; Page 3 (m) "Special Account" means any of the accounts referred to in Section 2.02 (b) of this Agreement; and (n) "Capacity Building Action Plan" means the actions, programs and activities designed by the Borrower to fulfill the objectives of its Capacity Building Strategy. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Development Credit Agreement, an amount in various currencies equivalent to ten million nine hundred thousand Special Drawing Rights (SDR 10,900,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Credit. (b) The Borrower shall, for the purposes of the Project, open and maintain in dollars two special deposit accounts in a commercial bank on terms and conditions satisfactory to the Association, including appropriate protection against set-off, seizure or attachment: (i) Special Account A shall be opened for the purposes of Part A of the Project (MAE Account); and (ii) Special Account B shall be opened for the purposes of Part B of the Project (SLCC Account). Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedules 4 and 5 to this Agreement. (c) Promptly after the Effective Date, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and pay to itself the amount required to repay the principal amount of the Project Preparation Advance withdrawn and outstanding as of such date and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amount of the Project Preparation Advance shall thereupon be cancelled. Section 2.03. The Closing Date shall be June 30, 1999 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to the Association a commitment charge on the principal amount of the Credit not withdrawn from time to time at a rate to be set by the Association as of June 30 of each year, but not to exceed the rate of one-half of one percent (1/2 of 1%) per annum. (b) The commitment charge shall accrue: (i) from the date sixty days after the date of this Agreement (the accrual date) to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or cancelled; and (ii) at the rate set as of the June 30 immediately preceding the accrual date and at such other rates as may be set from time to time thereafter pursuant to paragraph (a) above. The rate set as of June 30 in each year shall be applied from the next date in that year specified in Section 2.06 of this Agreement. (c) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without restrictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. Page 4 Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Commitment charges and service charges shall be payable semiannually on April 1 and October 1 in each year. Section 2.07. (a) Subject to paragraphs (b) and (c) below, the Borrower shall repay the principal amount of the Credit in semi- annual installments payable on each April 1 and October 1 commencing April 1, 2003 and ending October 1, 2032. Each installment to and including the installment payable on April 1, 2012 shall be one percent (1%) of such principal amount, and each installment thereafter shall be two percent (2%) of such principal amount. (b) Whenever: (i) the Borrower's gross national product per capita, as determined by the Association, shall exceed $790 in constant 1985 dollars for five consecutive years; and (ii) the Bank shall consider the Borrower creditworthy for Bank lending, the Association may, subsequent to the review and approval thereof by the Executive Directors of the Association, and after due consideration by them of the development of the Borrower's economy, modify the terms of repayment of installments under paragraph (a) above by requiring the Borrower to repay twice the amount of each such installment not yet due until the principal amount of the Credit shall have been repaid. If so requested by the Borrower, the Association may revise such modification to include, in lieu of some or all of the increase in the amounts of such installments, the payment of interest at an annual rate agreed with the Association on the principal amount of the Credit withdrawn and outstanding from time to time, provided that, in the judgment of the Association, such revision shall not change the grant element obtained under the above-mentioned repayment modification. (c) If, at any time after a modification of terms pursuant to paragraph (b) above, the Association determines that the Borrower's economic condition has deteriorated significantly, the Association may, if so requested by the Borrower, further modify the terms of repayment to conform to the schedule of installments as provided in paragraph (a) above. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end, shall carry out: (i) Part A of the Project through MAE; and (ii) Part B of the Project through the WG, with due diligence and efficiency and in conformity with appropriate educational, administrative and technical practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Borrower and the Association shall otherwise agree, the Borrower shall carry out the Project in accordance with the Implementation Program set forth in Schedule 6 to this Agreement. Section 3.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agreement. Section 3.03. The Borrower shall, not later than October 31, 1993, and October 31 of each year thereafter, throughout Project Page 5 implementation, prepare and submit to the Association, for its review and comments: (a) an annual progress report on the disbursement profile, financing plan and fiscal consequences of the proposed salary incentive fund referred to under Part A.5 of the Project; and (b) an audit report prepared by independent auditors acceptable to the Association, on the referred fund. Section 3.04. The Borrower shall: (a) not later than December 31, 1994, complete and submit to the Association, for its review and comments, MAE's draft plan for the restructuring of the civil service career system, in accordance with technical and financial terms satisfactory to the Association; and (b) promptly thereafter: (i) approve said plan, taking into account the recommendations made by the Association; and (ii) take all necessary administrative and institutional measures to implement said plan. Section 3.05. The Borrower and the Association shall: (a) not later than November 30 of each year, until the completion of the Project, conduct an annual Project implementation review to: (i) monitor progress in carrying out the Project, taking into account performance indicators and evaluation criteria agreed between the Borrower and the Association; (ii) review, update, refine and approve work plans for Parts A and B of the Project for the upcoming year, and the respective cost estimates; (iii) coordinate all other related activities financed by other donor agencies. Representatives of such agencies may be invited to participate in these discussions; (iv) assess the impact of the salary incentive fund referred to under Part A.5 of the Project, on civil service retention and performance; (v) review the recommendations of the studies referred to under Part B.2 (h) of the Project, and their repercussion in the Project management staff referred to under Part B.2 of Schedule 6 to this Agreement; and (vi) exchange information among staff responsible for Project implementation, as set forth in Parts B and C of Schedule 6 to this Agreement and propose coordinated solutions to any current implementation issues; (b) not later than October 31 of each year, throughout Project implementation, furnish to the Association a report in such detail as the Association shall reasonably request, including: (i) an evaluation of progress achieved by the Borrower, in general, and by each ministry or entity responsible for project implementation, in particular, in carrying out the Project, taking into account the provisions of the respective annual work plan; (ii) a draft work plan to be carried out throughout the upcoming year, including: (A) description of activities to be undertaken under the Project; (B) detailed training programs and action plan to select and employ technical assistance financed under the Project; (C) a financing plan, indicating other available cofinancing sources for each activity, and identifying specific donor agencies invited to participate in the review; and (D) a procurement program detailing goods and services to be procured under the Project; (c) (i) not later than November 30, 1995, carry out a mid- term Project implementation review to evaluate, inter alia, the following: (A) update the Capacity Building Strategy and Capacity Building Action Plan; and (B) review the Project objectives taking into account the updated Strategy and Action Plan; and (d) promptly after completing the reviews, carry out those Page 6 recommendations arising out of said reviews, as agreed between the Borrower and the Association. Section 3.06. The Borrower shall, during the execution of the Project, continue to maintain MAE, WG and other staff responsible for Project implementation, as set forth in Parts B and C of Schedule 6 to this Agreement, in adequate numbers, and with experience, technical qualifications, and terms of reference satisfactory to the Association. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) of this Section including those for the Special Account for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association, as soon as available, but in any case not later than nine months after the end of each such year, a certified copy of the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning said records, accounts and the audit thereof as the Association shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Association has received the audit for the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Association's representatives to examine such records; and (iv) ensure that such records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. ARTICLE V Page 7 Remedies of the Association Section 5.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional events are specified: (a) that an extraordinary situation shall have arisen which shall make it improbable that the Borrower will be able to carry out its Capacity Building Strategy and Capacity Building Action Plan; (b) that the Borrower or any authority having jurisdiction shall have taken any action concerning the Borrower's legal and public administration sectors, that would materially affect the ability of the Borrower, MAE and WG to perform any of their respective obligations under this Agreement; (c) that Despacho dated July 14, 1992 issued by the Minister of Justice of the Borrower establishing the WG shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of WG to perform any of its obligations under this Agreement; and (d) that Despacho No. 147/92 dated July 6, 1992 issued by the Minister of State Administration of the Borrower establishing GP shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of GP to perform any of its obligations under this Agreement. Section 5.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional events are specified: (a) any of the events specified in paragraphs (a) or (b) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty (60) days after notice thereof shall have been given by the Association to the Borrower;and (b) the event specified in paragraphs (c) or (d) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) that the Borrower has employed the staff responsible for Project implementation referred to under Part C of Schedule 6 to this Agreement, with experience, terms of reference and qualifications satisfactory to the Association; (b) that the Borrower has selected the Project Advisor referred to under Part B.2 (f) of Schedule 6 to this Agreement, with experience and qualifications satisfactory to the Association; and (c) that the Borrower has furnished documentary evidence satisfactory to the Association, certifying the Borrower's formal approval of its Capacity Building Action Plan. Section 6.02. The following is specified as additional matters within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association, namely, that this Agreement has been duly ratified by the Borrower's Council of Ministers and is legally binding upon the Borrower in accordance with its terms. Section 6.03. The date one hundred twenty (120) days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Page 8 Representative of the Borrower; Addresses Section 7.01. The Governor of Bank of Mozambique Banco de Mocambique is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Banco de Mocambique Departamento de Relacoes Internacionais Avenida 25 de Setembro 1695 P.O. Box 423 Maputo, Mozambique Cable address: Telex: MOBANCO 6576/7 BMMO Maputo Facsimile: 29178 For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 197688 (TRT), Washington, D.C. 248423 (RCA), 64145 (WUI) or 82987 (FTCC) IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF MOZAMBIQUE By /s/ Hipolito Zozimo Patricio Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Francisco Aguirre-Sacasa Acting Regional Vice President Africa SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Page 9 Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed Part A of the Project (1) Consultants' ser- 1,260,000 100% vices, studies and audits (2) Equipment, supplies 140,000 100% and materials (3) Training 2,380,000 90% Part B of the Project (4) Consultants' ser- 1,400,000 100% vices, studies and audits (5) Equipment, supplies 490,000 100% and materials Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (6) Training 2,810,000 90% (7) Unallocated 2,420,000 __________ TOTAL 10,900,000 ========== 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement; and (b) (i) expenditures under Category (3), unless the Borrower has completed and submitted to the Association for its approval, training programs for Parts A.1 (b) (i); A.2 (b); A.3 (c); and A.3 (f) of the Project; and (ii) expenditures under Category (6), unless the Borrower has completed and submitted to the Association for its approval, training programs for Parts B.1 (d); B.2 (a); B.2 (c); B.2 (e); B.2 (f); B.2 (g) and B.3 (d) of the Project, to be carried out during the first year of the Project, which shall include, inter alia, the following: (i) type and number of trainees; (ii) location and institution where training will be received; (iii) objectives and length of training activity; and (iv) estimated budget. SCHEDULE 2 Description of the Project Page 10 The objectives of the Project are to: (a) strengthen the Borrower's civil service reform program and improve public administration and development management skills; and (b) strengthen legal institutions, including the judiciary, and build up legal professional skills. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Association may agree upon from time to time to achieve such objectives: Part A: Improving Public Administration and Development Management 1. MAE's Planning Unit (GP): (a) establishment and operation of GP; and (b) supporting the implementation and dissemination of GP's work through: (i) carrying out local seminars and workshops and analyses of civil service reform; and (ii) reproduction of reports and materials. 2. Strengthening of the Borrower's personnel administration capabilities: (a) strengthening of MAE's Direccao Nacional da Funcao Publica; (b) training of sectoral ministry staff, at central and provincial levels, in personnel administration techniques; (c) strengthening of the personnel units of sectoral ministries; and (d) production and provision of personnel forms, files and operational manuals. 3. Supporting MAE's institutional development capabilities: (a) strengthening of MAE's DAF; (b) design and implementation of a computerized budgetary control system within MAE's DAF; (c) provision of short-term local training for MAE's DAF staff in accounting, procurement and supplies management techniques; (d) provision of overseas fellowships for graduate training in public administration and management for MAE staff, at the central and provincial levels; (e) acquisition of equipment and supplies; and (f) provision of local training for MAE staff in civil service reform and capacity building coordination. 4. Establishment and operation of a management strengthening mechanism to support selected management development activities. 5. (a) Establishment and operation of the Borrower's civil service staff retention and incentive fund; and (b) strengthening of the Borrower's capabilities to monitor and assess the impact of said fund. Part B: Strengthening of Legal Institutions 1. Strengthening of strategic planning capabilities of legal institutions: (a) carrying out about three workshops to: (i) review the capacity, scope of work, institutional arrangements and staffing of Page 11 the Borrower's main legal institutions; and (ii) recommend eventual adjustments to the functional, organizational, staffing, administrative and professional aspects of said legal institutions and their respective training programs; (b) carrying out diagnostic studies of the Law School to recommend a strategic approach in the design and implementation of its current and future training programs; (c) organization of a National Conference on the legal profession in Mozambique; (d) provision of short-term professional training, including study-tours, local seminars, practical internships and attendance at conferences, to familiarize legal staff with other legal systems and traditions; and (e) strengthening of the Borrower's capabilities to periodically review and refine its strategic approach to build legal capacity. 2. Strengthening of legal and paralegal services: (a) provision of professional graduate training for lawyers and Law School professors in, inter alia, international, financial, economic, tax, commercial, contract, administrative law, environmental law, and alternate dispute resolution methods; (b) design and implementation of practical local training programs for lawyers and paralegal staff; (c) carrying out specialized legal seminars in, inter alia, contract negotiations, commercial law, corporate law, mortgage law, securities, capital markets, international economic law, banking law and maritime law; (d) supporting twinning arrangements with relevant international legal institutions; (e) provision of logistical and administrative support to legal training activities carried out by UEM's Law School in the provinces of Nampula and Sofala; (f) design and implementation of a pre-service and in- service training program for magistrates, court clerks and judiciary staff at large; (g) provision of fellowships for overseas training for magistrates, Law School professors and legal staff; (h) carrying out studies to assess the institutional, financial and technical impact of the establishment of CEJ; and (i) strengthening of the Borrower's legal reform program. 3. Facilitating dissemination of the law and administration of Justice: (a) design of an inter-library and interinstitutional loan system for legal books and materials, and training of legal library staff; (b) acquisition of books, legal materials, journals, software, equipment and supplies; (c) design and implementation of a legal information system; and (d) training of staff responsible for the implementation and maintenance of the selected legal information system. 4. Supporting the institutional development of legal Page 12 institutions: (a) logistical and administrative support to start-up and operate the Administrative Tribunal; (b) logistical and administrative support to start-up the CEJ; (c) strengthening of the Bar Association; (d) strengthening of the implementation of MULEIDE's programs; and (f) strengthening of the WG's Project implementation capabilities. 5. Strengthening of Project implementation capabilities. * * * The Project is expected to be completed by December 31, 1998. SCHEDULE 3 Procurement and Consultants' Services Section I. Procurement of Goods Part A: International Competitive Bidding 1. Except as provided in Part C hereof, goods shall be procured under contracts awarded in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in May 1992 (the Guidelines). 2. Goods shall be exempted from pre-shipment price inspection by a third-party inspection firm. Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A hereof, goods manufactured in Mozambique may be granted a margin of preference in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraphs 1 through 4 of Appendix 2 thereto. Part C: Other Procurement Procedures 1. International or Local Shopping. Items or groups of items estimated to cost less than the equivalent of $100,000 per contract, up to an aggregate amount not to exceed the equivalent of $400,000 may be procured under contracts awarded on the basis of comparison of price quotations solicited from a list of at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Administrator. 2. Direct Contracting. Legal materials, books, journals, and software under Part B of the Project, in an amount not exceeding the aggregate amount provided under Part C.1 of this Schedule, may be procured under direct contracting in accordance with procedures acceptable to the Association. Part D: Review by the Association of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract estimated to cost the equivalent of $150,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Page 13 Account, such procedures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Association pursuant to said paragraph 2 (d) shall be furnished to the Association prior to the making of the first payment out of the Special Account in respect of such contract. (b) With respect to each contract not governed by the pre- ceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract together with the other information required to be furnished to the Association pursuant to said paragraph 3 shall be furnished to the Association as part of the evidence to be furnished pursuant to paragraph 4 of Schedules 4 and 5 to this Agreement, respectively. (c) The provisions of the preceding subparagraph (b) shall not apply to contracts on account of which withdrawals from the Credit Account are to be made on the basis of statements of expenditure. 3. The figure of 10% is hereby specified for purposes of para- graph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants In order to assist the Borrower in carrying out the Project, the Borrower shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Association on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. SCHEDULE 4 Special Account A (MAE Account) 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1), (2) and (3) set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods and services required for Part A of the Project and to be financed out of the proceeds of the Credit allocated from time to time to the eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $400,000 to be withdrawn from the Credit Account and deposited into the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Association has received evidence satisfactory to it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Special Account shall be made as follows: (a) For withdrawals of the Authorized Allocation, the Borrower shall furnish to the Association 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, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into the Special Account such amount or Page 14 amounts as the Borrower shall have requested. (b) (i) For replenishment of the Special Account, the Borrower shall furnish to the Association requests for deposits into the Special Account at such intervals as the Association shall specify. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Association the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into the Special Account such amount as the Borrower 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 the Association from the Credit Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of the Special Account, the Borrower shall, at such time as the Association shall reasonably request, furnish to the Association such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Association shall not be required to make further deposits into the Special Account: (a) if, at any time, the Association shall have determined that all further withdrawals should be made by the Borrower directly from the Credit Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (b) once the total unwithdrawn amount of the Credit allocated to the eligible Categories for Part A of the Project, less the amount of any outstanding special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions with respect to Part A of the Project, shall equal the equivalent of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to the eligible Categories for Part A of the Project shall follow such procedures as the Association shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Association 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 making payments for eligible expenditures. 6. (a) If the Association 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 Schedule; or (ii) was not justified by the evidence furnished to the Association, the Borrower shall, promptly upon notice from the Association: (A) provide such additional evidence as the Association may request; or (B) deposit into the Special Account (or, if the Association shall so request, refund to the Association) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Association shall otherwise agree, no further deposit by the Association into the Special Account shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case may be. Page 15 (b) If the Association shall 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 Borrower shall, promptly upon notice from the Association, refund to the Association such outstanding amount. (c) The Borrower may, upon notice to the Association, refund to the Association all or any portion of the funds on deposit in the Special Account. (d) Refunds to the Association made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Credit Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions. SCHEDULE 5 Special Account B (SLCC Account) 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (4), (5) and (6) set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods and services required for Part B of the Project and to be financed out of the proceeds of the Credit allocated from time to time to the eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $450,000 to be withdrawn from the Credit Account anddeposited into the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Association has received evidence satisfactory to it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Special Account shall be made as follows: (a) For withdrawals of the Authorized Allocation, the Borrower shall furnish to the Association 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, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of the Special Account, the Borrower shall furnish to the Association requests for deposits into the Special Account at such intervals as the Association shall specify. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Association the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into the Special Account such amount as the Borrower 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 Page 16 expenditures. All such deposits shall be withdrawn by the Association from the Credit Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of the Special Account, the Borrower shall, at such time as the Association shall reasonably request, furnish to the Association such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Association shall not be required to make further deposits into the Special Account: (a) if, at any time, the Association shall have determined that all further withdrawals should be made by the Borrower directly from the Credit Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (b) once the total unwithdrawn amount of the Credit allocated to the eligible Categories for Part B of the Project, less the amount of any outstanding special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions with respect to Part B of the Project, shall equal the equivalent of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to the eligible Categories for Part B of the Project shall follow such procedures as the Association shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Association 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 making payments for eligible expenditures. 6. (a) If the Association 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 Schedule; or (ii) was not justified by the evidence furnished to the Association, the Borrower shall, promptly upon notice from the Association: (A) provide such additional evidence as the Association may request; or (B) deposit into the Special Account (or, if the Association shall so request, refund to the Association) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Association shall otherwise agree, no further deposit by the Association into the Special Account shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case may be. (b) If the Association shall 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 Borrower shall, promptly upon notice from the Association, refund to the Association such outstanding amount. (c) The Borrower may, upon notice to the Association, refund to the Association all or any portion of the funds on deposit in the Special Account. (d) Refunds to the Association made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Credit Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions. SCHEDULE 6 Implementation Program Page 17 Part A: Project Coordination Interministerial Committee (IC) 1. (a) An interministerial committee shall be established by the Borrower's Prime Minister with the following membership: Chairperson: Minister of State Administration; and Co-chairpersons: Minister of Finance and Minister of Planning. Other members of the IC are Ministers of Education, Labor and Justice. (b) The Rector of UEM and the Attorney General may be called to participate in the meetings of the IC. 2. The IC shall be responsible, inter alia, for the formulation and coordination of the Capacity Building Strategy. 3. The IC shall meet regularly and frequently, and at least ten times during the first year of the Project. 4. The GP, as hereinafter defined, shall act as the technical secretariat for the IC. Part B: Institutions responsible for Project Implementation 1. Part A of the Project: (a) Planning Unit (GP) (i) A planning unit shall be established by the Minister of State Administration as the technical unit within MAE responsible for the coordination of Part A of the Project. (ii) GP shall be responsible, inter alia, for the following: (A) provision of a secretariat function to support the IC; (B) development of a phased plan for the implementation of the Borrower's Capacity Building Strategy; (C) development of strategies and implementation plans for civil service reform, recommending and drafting policy changes, and overseeing subsequent implementation; (D) coordination of programs implemented by the various directorates of MAE, including the development of an institutional strategy and plan for MAE itself; and (E) implementation of Parts A.1, A.4 and A.5 (b) of the Project. (b) (i) Direccao Nacional da Funcao Publica shall carry out Part A.2 of the Project; (ii) Ministry of Finance shall carry out Part A.5 (a) of the Project; and (iii) Departamento de Recursos Humanos of MAE shall carry out Parts A.3 (d) and A.3 (f) of the Project. (c) Department of Administration and Finance (DAF) (i) DAF shall be responsible for the implementation of Parts A.3 (a), A.3 (b), A.3 (c), and 3 (e) of the Project. Page 18 (ii) The following staff shall be appointed to carry out DAF's implementation tasks: (A) Accountant; (B) Assistant Accountant; (C) Procurement Officer; and (D) Local Informaton Systems Advisor. 2. Part B of the Project: (a) The Ministry of Justice (MOJ) is responsible for overall coordination and implementation of SLCC in close cooperation with the Supreme Court, the Attorney General's Office, the Administrative Tribunal and UEM. In discharging its responsibilities, MOJ shall be assisted by a Working Group (WG), as hereinafter defined. Working Group (WG) (i) The WG shall be composed of a representative and an alternate representative from each of the following institutions: MOJ, Supreme Court, the Attorney General's Office, the Administrative Tribunal and UEM's Law School. (ii) The WG shall approve its operational regulations, and will obtain appropriate delegation of powers to efficiently coordinate and implement Project activities, disburse Credit funds and carry out procurement of goods and services. (iii) The WG shall operate as an interinstitutional body responsible, inter alia, for the following: (A) recommending policy decisions related to building legal and judicial capacity within the scope of this Project; (B) updating the principles of a long-term strategy to build professional capacity within the legal profession; (C) negotiating technical assistance programs within the legal and judicial sector; and (D) coordinating all existing and future donor contributions to the sector, as well as, keeping all interested agencies informed of the development under the SLCC, and avoiding duplication or overlapping of efforts. (iv) The following staff shall be appointed to assist the WG in carrying out its implementation tasks: (b) Project Manager (PM) A Project Manager with experience and qualifications acceptable to the Association shall carry out day-to-day Project management duties. The PM shall report directly to the Chairperson of the WG. (v) The PM shall be responsible, inter alia, for the following: (A) preparing annual action programs; (B) ensuring coordination among the Page 19 institutions represented in the WG; (C) interliasing with other government agencies, the Association, other donor agencies and appropriate private sector entities, such as the Bar Association; (D) integrating the annual reports prepared by the WG members and submitting them to the WG for consideration at the annual Project Implementation reviews; (E) supervision and monitoring of procurement of goods and services necessary under the Project, including calling for bids, evaluation of bids and awarding of contracts; (F) maintaining Project files and records; (G) assisting the WG in the selection, contracting and supervision of consultants' services; (H) supervising the financial aspects and accounts of the Project; (I) selecting, contracting and supervising independent auditors; and (J) managing and supervising office staff. (c) Deputy Project Manager/Accountant (DPM) (vi) A Deputy Project Manager with experience and qualifications acceptable to the Association shall be appointed to assist the PM in discharging his or her responsibilities. (vii) The DPM shall be responsible, inter alia, for: (A) keeping financial records and Project accounts, managing Special Account B; and preparing withdrawal applications to ensure timely disbursements of Credit funds; (B) preparing and submitting all materials necessary to carry out the audits; (C) ensuring timely payment of suppliers and consultants; and (D) act as PM in his or her absence from office to avoid Project implementation delays. (d) Administrative Officer/Procurement (AO/P) (viii) An Administrative Officer with experience and qualifications acceptable to the Association shall be appointed to assist the PM with administrative and procurement matters. (ix) The AO/P shall be responsible, inter alia, for: (A) carrying out all procurement of goods and services necessary under Part B of the Project and ensuring that the guidelines and procedures described in Schedule 3 to this Agreement are followed; (B) day-to-day administrative duties; Page 20 (C) providing and contracting adequate maintenance for Project equipment, offices and computers; and (D) ensuring that Project correspondence and documentation are correctly kept and filed. (e) Support Staff (x) The Borrower shall supply requisite secretarial and support administrative staff to the office of the PM. (f) Project Advisor (xi) The WG shall select, as a Project Advisor (PA), a qualified legal expert or experts who shall provide overall advice to the WG on Project technical and administrative coordination and achievement of Project objectives in accordance with provisions of this Agreement and the Borrower's strategy for the sector; (xii) The PA shall be responsible, inter alia, for the following: (A) assisting the WG in identifying and negotiating with foreign lecturers, legal experts and consultants responsible for the delivery of training activities under Part B of the Project; (B) supplying the WG with information and recommendations on the design of terms of reference and contractual terms for the selection and employment of legal experts to assist the WG in carrying out Part B of the Project; (C) provision of logistical support and coordination to carry out local courses, seminars requiring the participation of foreign experts and interliasing with foreign institutions receiving Mozambican trainees; (D) assisting in designing and implementing twinning arrangements with foreign institutions; (E) identifying and contacting appropriate training institutions for Mozambican lawyers, law professors and students; (F) assessing needs and taking all necessary measures to facilitate the acquisition of legal materials, books, manuals, journals and software; and (G) assisting the PM and the DPM in making all necessary arrangements for effective fulfillment of Project objectives and utilization of Credit funds. (g) The WG shall be responsible for the implementation of Part B of the Project, except for Parts B.1 (b), B.2 (e) of the Project for which the UEM's Law shall be primarily responsible. Part C: Key Project Implementation Staff 1. Part A of the Project: (a) GP: two full-time public administration experts; and (b) DAF: DAF's Accountant. Page 21 2. Part B of the Project within WG: (i) Project Manager; and (ii) Deputy Project Manager. Part D: Schedule of actions to be carried out by the Borrower during Project implementation. Except as the Association and the Borrower shall otherwise agree, the Borrower shall carry out the following: 1. Part A of the Project I. The Borrower shall not later than three months after the Effective Date legally establish GP with staffing and responsibilities satisfactory to the Association and referred to under Part B.1 of Schedule 6 to this Agreement. II. The Borrower shall not later than December 31, 1993: (a) employ all staff mentioned in Part B (c) (ii) of the Project; (b) employ staff for MAE's GP; and (c) develop MAE's DAF computerized budgeting control system. III. The Borrower shall not later than December 31, 1994: submit to the Association for its review and comment the training strategy for public administration; the proposals for the public administration career structure to include provincial and district experience as promotion criteria; an incentive policy to improve attractiveness of district posts; and MAE's institutional development strategy. IV. The Borrower shall not later than June 30, 1995: submit to the Association for its review and comment: revised regulations on the civil service to include experience and training as career advancement criteria; a training plan for the newly established Human Resource Units in sectoral ministries, provinces and districts. V. The Borrower shall not later than December 31, 1995: carry out the training of trainers for Human Resource Units in sectoral ministries, provinces and districts. 2. Part B of the Project (a) (i) Not later than, October 31, 1993, the WG shall carry out the first strategic workshop in accordance with an agenda and budget agreed with the Association, and submitted for its approval one month in advance; (ii) two other workshops shall be carried out during Project implementation, at dates previously discussed and agreed with the Association, but not later than June 30, 1993. (b) Not later than June 1, 1996, the WG shall organize and carry out a National Conference on the legal profession in Mozambique, with the participation of government and private sector agencies, and in accordance with an agenda and budget agreed with the Association. (c) (i) During the first Project year: the Law School shall carry out studies on, inter alia, teaching methodologies and comparative legal terminology. Not later than six months after the Effective Date, the Law School shall prepare and submit to the Association, for its approval, terms of reference and short lists of consultants Page 22 identified to assist in the carrying out of said studies; (ii) throughout Project implementation, the Law School shall carry out, other diagnostic studies on, inter alia, assessment of the quality of undergraduate and graduate training, including relevance of its curriculum and development of its teaching corps, in accordance with an action plan and timetable agreed with the Association during the first Project implementation review. (d) Not later than three months after the Effective Date, and during the first quarter of each year thereafter, the WG shall prepare and submit to the Association, for its review and comments, an action program and budget necessary to carry out the professional training described under Part B.1 (d) of the Project. (e) Not later than February 1 of each year during Project implementation, the WG shall complete and submit to the Association for its approval, the training programs to be carried out during the upcoming academic year, and referred to under Part B.2 of the Project, including inter alia, list of candidates and qualifications, institution where training would be received, length of training program, cost and commitment to work for the respective agency for a similar period of time. (f) During the first year of the Project, but not later than September 1993 the Law School and other legal institutions shall identify and negotiate possible twinning arrangements with relevant foreign academic and professional institutions. (g) Not later than November 30, 1993, prepare and submit to the Association, for its review and comments, terms of reference to carry out the studies described under Part B.2 (h) of the Project. (h) Not later than two weeks before the starting date of the first strategic workshop, the WG shall prepare a report identifying the technical and financial features of the legal information system described under Part B.3 (c) of the Project to be put in place during Project implementation, on the basis of the recommendations of the diagnostic consultancy to be selected and employed promptly after the Effective Date. (i) Not later than December 30 of each year during Project implementation, the WG shall prepare and submit to the Association for its approval a description and estimate budget for the acquisition of legal books, materials, software and equipment estimate to be procured during the upcoming year. (j) Not later than three months after the Effective Date, the Borrower shall employ the Project Advisor in accordance with terms of reference and contractual terms satisfactory to the Association. (k) Not later than six months after the Effective Date, the Borrower shall employ the Administrative Officer/ Procurement and support staff described under Parts B.2 (d) and B.2 (e) of the Project with qualifications, experience and terms of reference acceptable to the Association.