Ida Grant Number H175-0 Er
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CONFORMED COPY
IDA GRANT NUMBER H175-0 ER
Development Grant Agreement
(HAMSET II Project)
between
STATE OF ERITREA
and
INTERNATIONAL DEVELOPMENT ASSOCIATION
Dated July 29, 2005
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IDA GRANT NUMBER H175-0 ER
DEVELOPMENT GRANT AGREEMENT
AGREEMENT, dated July 29, 2005, between STATE OF ERITREA (the Recipient) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association).
WHEREAS (A) the Recipient, having satisfied itself as to the feasibility and priority of the project described in Schedule 2 to this Agreement (the Project), has requested the Association to assist in the financing of the Project;
(B)the Association has received from the Recipient, the Recipient’s national strategic plans to combat HIV/AIDS/STI (2003-2007), Tuberculosis (2004-2008) and Malaria (2005-2009) and the draft national strategic plan for reproductive health (the National Strategic Plans), describing the Recipient’s objectives, policies and actions designed to prevent and control the spread of the HIV/AIDS, Malaria, Sexually Transmitted Infections and Tuberculosis and Reproductive Health (the Program) and declaring the Recipient’s commitment to the execution of the Program;
(C)the Executive Directors of the Association approved on February 7, 2002, the Second Multi-Country HIV/AIDS Program for the Africa Region estimated in the amount of five hundred million United States Dollars;
(D)the Project is part of the Second Multi-Country HIV/AIDS Program for the Africa Region; and
(E)WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, to extend the Grant to the Recipient 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 Development Credit Agreements” of the Association, dated January 1, 1985 (as amended through May 1, 2004), with the modifications set forth in Schedule 6 to this Agreement (the General Conditions), constitute an integral part of this Agreement.
Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in the Recitals to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings:
(a) “AIDS” means the Acquired Immuno-Deficiency Syndrome;
(b) “Beneficiary” means a community which has met the eligibility criteria set out in the Operational Manual and the requirements of Part B.7 of Schedule 4 to this Agreement and which, as a result, has received or is entitled to receive a Sub-Grant for the carrying out of a Subproject;
(c) “Community Management Team” means a group of individuals elected by a community for the purpose of planning, preparing and implementing subprojects and referred to in Part C of Schedule 2 to this Agreement;
(d) “DOTS” means “Directly Observed Treatment Strategy”;
(e) “Eligible Categories” means Categories (1) through (6) set forth in the table in Part A.1 of Schedule 1 to this Agreement;
(f) “Eligible Expenditures” means the expenditures for goods, works, consultants’ services referred to in Section 2.02 of this Agreement;
(g) “Environmental Assessment” means the environment assessment report prepared and adopted by the Recipient under the HAMSET Project, describing the environmental, mitigation, monitoring and institutional measures to be applied in the implementation of the Project as the same may be amended from time to time;
(h) “Financial Monitoring Report” means each report prepared in accordance with Section 4.02 of this Agreement;
(i) “HAMSET diseases” means the following diseases and conditions, namely HIV/AIDS, Malaria, STI (as hereinafter defined), Tuberculosis and Reproductive Health;
(j) “HAMSET Diseases Control Project” or “HAMSET Project” means the Project financed under the Development Credit Agreement (Credit No. 3444-ER) signed between the State of Eritrea and the Association on December 19, 2000;
(k) Health Care Waste Management Plan or “HCWMP” means a national plan prepared and adopted by the Recipient on October 2004, for the management of hazardous health/medical waste, referred to in Part C.9(e) of Schedule 4 to this Agreement, as the same may be amended from time to time;
(l) “HIV” means the Human Immuno-Deficiency Virus;
(m) “IAPSO” means the Inter-Agency Procurement Services of the United Nations Development Programme;
(n) “Initial Deposit” means the initial amount to be paid into the Project Account pursuant to Section 3.03 (ii) of this Agreement;
(o) “MOH” means the Recipient’s Ministry of Health or any legal successor thereto;
(p) “Monitoring and Evaluation Indicators” means the agreed performance indicators set forth in Schedule 5 to this Agreement to be utilized by the Recipient under the Project to measure the progress in the implementation of the Project and the degree to which the objectives thereof are being achieved;
(q) “Nakfa” means the currency of the Recipient;
(r) “National Steering Committee” means a committee set up under HAMSET, and referred to in Part A.2 of Schedule 4 to this Agreement;
(s) “National Technical Committee” means a technical body responsible for reviewing plans and activities of implementing partners and addressing project strategic implementation and coordination issues referred to in Part A.3 of Schedule 4 to this Agreement;
(t) “Operational Manual” means a manual satisfactory to the Association referred to in Part C.11 of Schedule 4 to this Agreement, setting forth details of all procedures, guidelines, timetables and criteria (including the eligibility criteria for Sub-Grants and Subprojects) required for the Project as such manual may be amended from time to time with prior agreement of the Association;
(u) “Participating Agencies” or “PAs” means those agencies primarily involved in the implementation of the Part A of the Project and includes selected line Ministries (other than the Ministry of Health) and civil society organizations;
(v) “Procurement Plan” means the Recipient’s procurement plan, dated May 13, 2005 covering the initial 18 month period of Project implementation, as the same shall be updated from time to time in accordance with the provisions of Section 3.02 to this Agreement, to cover succeeding 18 months of Project implementation.
(w) “PMU” means the Project Management Unit established under the HAMSET Project and referred to in Part A.4 (a) of Schedule 4 to this Agreement;
(x) “Project Account” means the account referred to in Section 3.03 of this Agreement;
(y) “Project Year” means the calendar year which is also the Recipient’s fiscal year;
(z) “Report-based Disbursements” means the Recipient’s option for withdrawal of funds from the Grant Account referred to in Part A5 of Schedule 1 to this Agreement;
(aa) “Results-Based Framework” means the guiding framework for community Subprojects referred to in Part B.7 of Schedule 4 to this Agreement, to be developed and adopted by the Recipient as an integral part of the Operational Manual; ;
(bb) “Special Account” means the account referred to in Part B of Schedule 1 to this Agreement;
(cc) “STI” means sexually transmitted infection;
(dd) “Sub-Grant” means a sub-grant to be made to a Beneficiary for the purpose of financing a Subproject or activity under Part C of the Project;
(ee) “Sub-Grant Agreement” means the agreement referred to in paragraph B.8 of Schedule 4 to this Agreement;
(ff) “Subproject” means a community subproject or activity to be carried out under Part C of the Project which has met the eligibility criteria and is eligible for financing, on a grant basis, in accordance with the provisions of the Operational Manual;
(gg) Zoba” means a Regional administration of the Recipient, as defined under Proclamation for the Establishment of Regional Administrations, No: 86 of 1996 of the Eritrean Laws.
ARTICLE II
The Grant
Section 2.01. The Association agrees to make available to the Recipient, on the terms and conditions set forth or referred to in this Agreement, an amount in various currencies equivalent to fifteen million nine hundred thousand Special Drawing Rights (SDR 15,900,000).
Section 2.02. The amount of the Grant may be withdrawn from the Grant 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, works and services required for carrying out the Project and to be financed out of the proceeds of the Grant.
Section 2.03. The Closing Date shall be June 30, 2010 or such later date as the Association shall establish. The Association shall promptly notify the Recipient of such later date.
Section 2.04. (a) The Recipient shall pay to the Association a commitment charge on the principal amount of the Grant 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 Recipient from the Grant Account or canceled; 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 2.04 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 Recipient; and (iii) in US dollars or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of Section 4.02 of the General Conditions.
Section 2.05. Commitment charges shall be payable semiannually on April 1 and October 1 in each year.
ARTICLE III
Execution of the Project
Section 3.01. (a) The Recipient 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 the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, health 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 Recipient and the Association shall otherwise agree, the Recipient shall carry out the Project in accordance with the implementation program set forth in Schedule 4 to this Agreement.
Section 3.02. (a) Except as the Association shall otherwise agree, procurement of the goods, works and services required for the Project and to be financed out of the proceeds of the Grant shall be governed by the provisions of Schedule 3 to this Agreement, as said provisions may be further elaborated in the Procurement Plan.
(b)The Recipient shall update the Procurement Plan in accordance with guidelines acceptable to the Association, and furnish such update to the Association not later than 12 months after the date of the preceding Procurement Plan, for the Association’s approval.
Section 3.03.The Recipient shall: (i) establish and therafter maintain in Nakfa, until completion of the Project, a Project Account in a commercial bank on terms and conditions satisfactory to the Association into which the Recipient shall deposit its counterpart contributions to Project costs; (ii) pay into the Project Account an initial amount (the Initial Deposit) equivalent to $350,000; and (iii) thereafter during each following six months deposit into the Project Account the amounts required to cover the said contributions for each such six months, as determined by the Recipient and the Association.
Section 3.04. For the purposes of Section 9.06 of the General Conditions and without limitation thereto, the Recipient shall:
(a)prepare, on the basis of guidelines acceptable to the Association, and furnish to the Association not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Recipient and the Association, a plan for the future operation of the Project; and
(b)afford the Association a reasonable opportunity to exchange views with the Recipient on said plan.
ARTICLE IV
Financial Covenants
Section 4.01. (a) The Recipient shall maintain a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Association, adequate to reflect the operations, resources and expenditures related to the Project.
(b)The Recipient shall:
(i)have the financial statements referred to in paragraph (a) of this Section for each fiscal year (or other period agreed to by the Association), audited, in accordance with consistently applied auditing standards acceptable to the Association, by independent auditors acceptable to the Association;
(ii)furnish to the Association as soon as available, but in any case not later than six months after the end of each such year (or such other period agreed to by the Association), (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year (or other period agreed to by the Association), as so audited, and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Association; and
(iii)furnish to the Association such other information concerning such records and accounts, and the audit of such financial statements, and concerning said auditors, as the Association may from time to time reasonably request.
(c)For all expenditures with respect to which withdrawals from the Grant Account were made on the basis of reports referred to in Part A.5 of Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements of expenditure, the Recipient shall:
(i)retain, until at least one year after the Association has received the audit report for, or covering, the fiscal year in which the last withdrawal from the Grant Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures;
(ii)enable the Association’s representatives to examine such records; and
(iii)ensure that such reports or statements of expenditure are included in the audit for each fiscal year (or other period agreed to by the Association), referred to in paragraph (b) of this Section.
Section 4.02. (a) Without limitation upon the Recipient’s progress reporting obligations set out in Schedule 4 to this Agreement, the Recipient shall prepare and furnish to the Association a financial monitoring report (FMR), in form and substance satisfactory to the Association, which:
(i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided under the Grant, and explains variances between the actual and planned uses of such funds;
(ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and
(iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report.
(b)The first FMR shall be furnished to the Association not later than 45 days after the end of the first calendar quarter after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar quarter; thereafter, each FMR shall be furnished to the Association not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter.
ARTICLE V
Effectiveness; Termination
Section 5.01. The following events are specified as condition to the effectiveness of this Agreement within the meaning of Section 12.01 (b) of the General Conditions:
(a)the Recipient has adopted an Operational Manual, in form and substance satisfactory to the Association; and
(b) the Recipient has pursuant to Section 3.03 (ii) opened a Project Account with an initial deposit of $350,000 equivalent.
Section 5.02. The date ninety (90) days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions.
ARTICLE VI
Representative of the Recipient; Addresses
Section 6.01. The Minister of National Development of the Recipient is designated as representative of the Recipient for the purposes of Section 11.03 of the General Conditions.
Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions:
For the Recipient:
Ministry of National Development
P. O. Box 1386
Asmara
Eritrea
Facsimile:
291-1-126422
For the Association:
International Development Association
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Cable address:Telex:Facsimile:
INDEVAS248423 (MCI) or(202) 477-6391
Washington, D.C.64145 (MCI)
IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names in Asmara, Eritrea as of the day and year first above written.
STATE OF ERITREA
By /s/ Dr. Futur Woldai
Authorized Representative
INTERNATIONAL DEVELOPMENT ASSOCIATION
By /s/ Colin Bruce
Authorized Representative
SCHEDULE 1
Withdrawal of the Proceeds of the Grant
A.General
1.The table below sets forth the Categories of items to be financed out of the proceeds of the Grant, the allocation of the amounts of the Grant to each Category and the percentage of expenditures for items so to be financed in each Category:
Amount of the
Grant Allocated% of
(Expressed inExpenditures
CategorySDR Equivalent)to be Financed
(1)Works600,000100% of foreign expenditures
90% of local expenditures
(2)Goods 4,900,000100% of foreign
expenditures and 90%
of local expenditures
(3)Consultants’ services,5,800,000100% of foreign expenditures
studies, trainingand 90% of local expenditures
and workshops
(4)Sub-Grants2,250,000100% of amounts
disbursed
(5)Operating Costs900,00055%
(6)Unallocated1,450,000
______
15,900,000
TOTAL======
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 Recipient for goods, or services supplied from the territory of any country other than that of the Recipient;
(b)the term “local expenditures” means expenditures in the currency of the Recipient or for goods, or services supplied from the territory of the Recipient; and
(c)the term “Operating Costs” means the expenditures incurred under the Project on account of maintenance of vehicles, fuel, equipment, office rent, office supplies, utilities, consumables, reasonable bank charges, travel per diems and allowances accommodation costs and salaries of temporary staff (excluding salaries of the Recipient’s civil servants).