Conformed Copy - TF025678 - Financial Sector Adjustment Project - Japanese Grant Agreement

Page 1 September 18, 1998 His Excellency Bakhtior Khamidov Deputy Prime Minister and Minister of Macroeconomics Tashkent Republic of Uzbekistan Re: Japanese Grant for Financial Sector Adjustment Project Grant Number TF025678 Excellency: I am writing on behalf of the International Bank for Reconstruction and Development (the Bank) to indicate the Bank's agreement, as administrator of grant funds provided by Japan, to make a grant in an amount not exceeding US Dollars four hundred fourteen thousand four hundred ($414,400) (the Grant) to Uzbekistan (the Recipient). This amount is part of the US$828,800 Grant made available by Japan for the captioned Project. 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/ Kiyoshi Kodera Acting Country Director Uzbekistan Europe and Central Asia Region AGREED: REPUBLIC OF UZBEKISTAN By /s/ Bakhtior Khamidov Authorized Representative On this 20th day of October 1998. ANNEX Purposes, Terms, and Conditions of the Grant 1. Purposes and Activities 1.1. The purposes of the Grant are to assist in the preparation of the Financial Sector Reform Project, which has as main objective(s): (a) establishing the conditions for the emergence of a competitive and efficient financial sector; (b) reforming the regulatory environment for financial sector activity; (c) developing and implementing a strategy for restructuring the large sectoral banks and (d) promoting the process of establishing a competitive and stable capital market. The activities (the Activities) for which the Grant is given are as follows: (a) Preparation of the foundation for the restructuring of the banks; Page 2 (b) Revision of Government policy as regards the use of Credit subsidies; and (c) Development of the framework for secondary trading in securities. 2. Implementation Generally 2.1. The Recipient 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 to visit the territory of Uzbekistan for purposes related to the Grant. Without limitation on the foregoing, the Recipient shall, if the Bank shall so request, prepare and furnish to the Bank promptly upon completion of the Activities a report, in form and substance satisfactory to the Bank, on the results and impact of the Activities. 3. Procurement 3.1. Except as the Bank shall otherwise agree, procurement of the consultants