Conformed Copy - TF027436 - Strengthening of Accountability in Poor Local Government Units - IDF Grant

Page 1 August 3, 2001 Honorable Jose Isidro Camacho Secretary Department of Finance Roxas Blvd., Manila Re: Grant for the Strengthening of Accountability in Poor Local Government Units IDF Grant No. TF027436 Excellency: I am writing on behalf of the International Bank for Reconstruction and Development (the Bank) to indicate the Bank's agreement to make to Republic of the Philippines (the Recipient) a grant in an amount not exceeding two hundred fifty thousand United States Dollars (US$250,000) (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 Annex to this Letter-Agreement. 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, dating, and returning to us the enclosed copy of this Letter-Agreement. Upon receipt by the Bank of the copy of this Letter-Agreement countersigned by you, this Letter-Agreement will become effective as of the date of the countersignature. Very truly yours, INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Robert Van Pulley Country Director, Philippines East Asia and Pacific Region AGREED: REPUBLIC OF THE PHILIPPINES By /s/ Jose Isidro N. Camacho Secretary Date: August 9, 2001 ANNEX Purposes, Terms, and Conditions of the Grant 1. Purposes and Activities 1.1. The purposes of the Grant is to assist the Recipient in improving the weakened governance structure, caused by the East Asia financial crisis, of poor local government units (LGUs) in the areas of financial management and audit. The activities (the Activities) for which the Grant is given are as follows: (a) Improvement of the Financial Management of LGUs Preparation of an improved LGU financial management system through the preparation of a financial management information system plan and charts, integration of regulatory and management reports, preparation of manuals, and hand-on training of accountants in LGU financial management. Page 2 (b) Improvement of Audits of LGUs Design of the audit methodology, program and procedures in the audit of LGUs, preparation of an audit manual for LGUs, and hands-on training for LGU auditors. 2. Implementation Generally 2.1. The Recipient, through the Commission of Audit (COA) and selected pilot LGUs, shall: (a) carry out the Activities with due diligence and efficiency; (b) promptly provide the funds, facilities, services and other resources required for that purpose; (c) furnish all information covering the Activities and the use of the proceeds of the Grant as the Bank shall reasonably request; (d) from time to time exchange views with the Bank's representatives on the progress and results of the Activities; and (e) take all necessary measures required to enable the Bank