Conformed Copy - TF025937 - Social Sector Management Improvement Project - Japanese Grant Agreement 1

Page 1 August 5, 1999 Mr. Edgardo Espiritu Secretary Department of Finance Manila Republic of the Philippines Re: Japanese Grant for Social Sector Management Improvement Project Grant TF025937 Dear Sir: 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 five hundred and three thousand four hundred ninety five United States Dollars ($503,495) (the Grant) to the Republic of the Philippines (the Recipient). 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 RE NSTRUCTION AND DEVELOPMENT David Howarth By /s/ Acting Country Director, Philippines East Asia and Pacific Region AGREED: REPUBLIC OF THE PHILIPPINES By /s/ JOEL A . BANARES Title Undersecretary Date: September 14, 1999 Page 2 ANNEX Purposes, Terms, and Conditions of the Grant 1. Purposes and Activities . 1.1. The purpose of the Grant is to assist the Recipient in improving the operation of social sector programs to better achieve such programs' goals. The activities (the Activities) for which the Grant is given are as follows: (a) design and implementation of procurement improvement plans for the Recipient's Department of Health (DOH), the Recipient's Department of Education, Culture, and Sports (DECS), and the Recipient's Department of Social Welfare and Development (DSWD); (b) design and implementation of financial management improvement programs for DOH, DECS, and DSWD; (c) design and implementation of efficient communication and monitoring systems for DOH, DECS, and DSWD; and (d) provision of computers to DOH, DECS, and DSWD and provision of training to selected staff of these agencies' staff, to facilitate the implementation of said plans, programs, and systems. 2. Implementation Generally 2.1. The Recipient shall: (a) carry out the Activities with due diligence and efficiency through the Department of Budget and Management; (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 the Recipient 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' services required for the carrying out of the Activities and to be financed out of the proceeds of the Grant shall be governed by the provisions of Attachment I to this Annex. 3.2. The Recipient shall ensure that all imported goods to be financed out of the proceeds of the Grant shall be insured against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and that any indemnity for such insurance is payable in a freely usable currency to replace or repair such goods. The Recipient shall ensure that any Page 3 facilities relevant to the Activities are at all times operated and maintained in accordance with appropriate practices and that any repairs or renewals of such facilities are promptly made as needed. 4. Withdrawal of Grant Proceeds 4.1. The amount of the Grant shall be credited to an account opened by the Bank on its books in the name of the Recipient (the Grant Account), and may be withdrawn therefrom by the Recipient in accordance with the provisions of this Section 4, for expenditures in respect of the reasonable cost of services required for the Activities and to be financed out of the proceeds of the Grant. 4.2. The expenditures for the following items may be financed out of the proceeds of the Grant and shall be used exclusively in the carrying out of the Activities: Amount of the Grant Allocated % of (in United States Expenditures Item Dollars) be Financed (1) Consultants