International bank for

INTERNATIONAL BANK FOR

AGREEMENT dated August 12, 2010, entered into between: LAO PEOPLE’S DEMOCRATIC REPUBLIC (“Recipient”); and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVLOPMENT/INTERNATIONAL DEVELOPMENT ASSOCIATION (“World Bank”), acting as Administrator of grant funds provided under the EFA-FTI Catalytic Trust Fund.

The Recipient and the World Bank hereby agree as follows:

Article I

Standard Conditions; Definitions

1. 
   The Standard Conditions for Grants Made by the World Bank Out of Various Funds, dated July 1, 2008, (“Standard Conditions”), with the modifications set forth in Section II of the Appendix to this Agreement, constitute an integral part of this Agreement.
   

2.02. Without limitation upon the provisions of Section 2.01 of this Agreement, and except as the Recipient and the World Bank shall otherwise agree, the Recipient shall ensure that the Program is carried out in accordance with the provisions of Schedule 2 to this Agreement.

3.02. The Recipient may withdraw the proceeds of the Grant in accordance with Section IV of Schedule 2 to this Agreement.

3.03. The Grant is funded out of the abovementioned trust fund for which the World Bank receives periodic contributions. In accordance with Section 3.02 of the Standard Conditions, the Recipient may withdraw the Grant proceeds subject to the availability of such funds.

Article IV

Additional Remedies

4.01. The Additional Events of Suspension referred to in Section 4.02(i) of the Standard Conditions consist of the following:

1. 
   the right of the Recipient to withdraw the proceeds under the Financing Agreement Amending and Restating Development Financing Agreement and Providing Additional Financing for the Second Education Development Project dated February 8, 2010 shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the said Financing Agreement;
   

2. 
   the Co-financing Agreement has failed to become effective by December 31, 2010, or such later date as the World Bank has established by notice to the Recipient; provided, however, that the provisions of this paragraph shall not apply if the Recipient establishes to the satisfaction of the World Bank that adequate funds for the Program are available from other sources on terms and conditions consistent with its obligations under this Agreement;
   

(c) subject to paragraph (d), the right of the Recipient to withdraw the proceeds of any grant made to the Recipient by the Co-financier for the financing of the Program shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the agreement providing therefor; and

(d) sub-paragraph (c) of this Section 4.01 shall not apply if the Recipient establishes to the satisfaction of the World Bank that:

1. 
   such suspension, cancellation, or termination is not caused by the failure of the Recipient to perform any of its obligations under such Co-financing Agreement; and
   
2. 
   adequate funds for the Program are available to the Recipient from other sources on terms and conditions consistent with the obligations of the Recipient under this Agreement.
   

5.02. The Recipient’s Address referred to in Section 7.01 of the Standard Conditions is:

Ministry of Finance

23 Singha Road

Nongbone Village

Saysettha District

Vientiane, Lao PDR

Facsimile: 856-21-412142

5.03. The World Bank’s Address referred to in Section 7.01 of the Standard Conditions is:

International Bank for Reconstruction and Development and International Development Association

1818 H Street, N.W.

Washington, D.C. 20433

United States of America

Cable: Telex: Facsimile:

INTBAFRAD or

INDEVAS 248423 (MCI) or 1-202-477-6391

Washington, D.C. 64145 (MCI)
AGREED at Vientiane, Lao People’s Democratic Republic, as of the day and year first above written.

LAO PEOPLE’S DEMOCRATIC REPUBLIC

By /s/ Viengthong Siphandone

Authorized Representative

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND INTERNATIONAL DEVELOPMENT ASSOCIATION acting as Administrator of grant funds provided under the EFA-FTI Catalytic Trust Fund

By /s/ Annette Dixon

Authorized Representative

The objective of the Program is to support the Recipient to increase the coverage and improve the quality of pre-primary and primary education with a focus on the most educationally disadvantaged children.

The Program consists of the following parts:

Part A: Access and Quality for Pre-Primary and Primary Education

1. 
   Community-Based Contracting for School Construction
   

2. 
   Community Grants
   

3. 
   Quality Inputs
   

4. 
   School Feeding
   

Carry out a school feeding program for primary and pre-primary school children in remote rural communities.

5. 
   Non-Formal Education
   

1. 
   Strengthen Policy Planning and Implementation Capacities at Central and Local Levels
   

2. 
   Strengthen Functioning of Educational Management Information Systems
   

3. 
   Student Assessment
   

4. 
   Strengthen Monitoring and Evaluation Capacity
   

5. 
   Program Management
   

Support the ESDF Coordination Unit in project management, conduct workshops, and carry out audits.

1. 
   The Recipient shall:
   

(b) maintain, until completion of the Program, the Program Steering Committee, chaired by the Vice Minister of Education, and consisting of:

(i) the directors of all the departments within the MOE; and

2. 
   representatives from the MPI and the MOF for the purpose of providing inter-ministerial coordination of Program activities;
   

(c) maintain, until completion of the Program, a Program Working Group, consisting of a representative from each of the Implementing Units, chaired by the deputy director general of the DPC, for the purpose of coordinating and supporting Program activities, provided with sufficient resources and assigned with qualified staff in adequate numbers, in a manner and substance satisfactory to the World Bank; and,

500. 
     maintain, throughout the period of implementation of the Program, an ESDF Coordination Unit:
     

(ii) assigned with qualified staff consisting of, inter alia, a program coordinator, a program manager, a counterpart technical adviser, and administrative staff in adequate numbers, in a manner and substance satisfactory to the World Bank.

2. The Recipient shall:

(a) implement and maintain until completion of the Program:

(i) a Program Implementation Manual, satisfactory to the World Bank, that includes, inter alia: (i) Program implementation arrangements; (ii) the procurement procedures set forth in Section III of this Schedule 2 and standard procurement documentation; (iii) reporting requirements, financial management procedures and audit arrangements as set forth in Section II of this Schedule 2; (iv) the Program performance indicators, consistent with the provisions set forth in Section II.A.1 to this Schedule 2; and (v) procedures for the monitoring and reporting of the progress of the Program;

(ii) a Financial Management Manual, satisfactory to the World Bank, that sets forth the day-to-day financial management measures and procedures to be undertaken by the Recipient in the carrying out of the Program, consistent with the provisions set forth in Section II of this Schedule; and

(iii) in respect of Part A.1 of the Program, an Operational Manual for Community-Based Contracting, satisfactory to the World Bank, for the purposes of setting forth, inter alia, the principles of the Program, implementing entities’ responsibilities, program staffing and program cycles, quality control, procurement arrangements consistent with Section III of this Schedule, monitoring and evaluation processes, flow of funds, the Land Acquisition Process Framework, Environmental Guidelines and the Ethnic Group Development Plan;

(b) carry out the Program in accordance with the relevant provisions of the manuals referred to in paragraph (a), in a manner and substance satisfactory to the World Bank, and shall not amend, revise, delete, suspend, abrogate, or waive such manuals, or any part or parts thereof, without the prior written approval of the World Bank;

(c) maintain: (i) a Program manager to be responsible for the day-to-day management of the Program; (ii) an Implementing Unit and Implementing Unit head within each of the MOE’s departments, centers, institutes and the NUOL; and (iii) a Provincial Implementing Unit in each of the Project Provinces and a District Implementing Unit in each corresponding Program Districts, provided with sufficient resources and assigned with qualified staff in adequate numbers, in a manner and substance satisfactory to the World Bank;

(d) provide such other requisite resources as shall be satisfactory to the World Bank;

5. 
   take all measures necessary to enable said Program manager, Implementing Unit, Implementing Unit heads, Provincial Implementing Unit and District Implementing Unit to carry out  their respective activities under the Program in a manner and substance satisfactory to the World Bank;
   

(g) maintain, until completion of the Construction Sub-project Grants in a Program District, district engineers in said Program District whose qualifications and experience shall be acceptable to the World Bank;

(h) maintain, until completion of the Program, a computerized financial management system in the department of finance in the MOE, and train the accounting staffs of the MOE in the Program Provinces and the Program Districts in the preparation of financial monthly reports; all in a manner and substance satisfactory to the World Bank; and

(i) carry out its procurement activities in accordance with, inter alia, procurement bidding documents acceptable to the World Bank, in a manner and substance satisfactory to the World Bank.

3. In the event of any inconsistency between the provisions of this Agreement and those of any of MOE’s, Financial Management Manual and Operational Manual for Community-Based Contracting, the provisions of this Agreement shall prevail.

B. Sub-grants

1. No Sub-grant shall be eligible for financing out of the proceeds of the Financing unless the corresponding proposals for the Sub-project has been prepared and submitted, and the review of proposals and award of the Community Grant or Construction Sub-project Grant has been undertaken, in accordance with the guidelines, procedures and selection criteria set forth in the Implementation Manual and the Operational Manual for Community Based Contracting.

(ii) are of benefit to the communities, and to the poor in particular; and

(iii) respond to a public need.

(b) The amount of each Community Grant shall be determined in accordance with the provisions of the Program Implementation Manual and the Operational Manual for Community-Based Contracting, as the case may be.

4. (a) A Construction Sub-project Grant may be provided to support activities under Part A.1 of the Program pertaining to Sub-projects, provided, however, that such Sub-projects:
(i) are technically and financially feasible, and capable of being implemented by the communities themselves with only locally available technical assistance;

(ii) are of benefit to the communities, and to the poor in particular; and

(iii) respond to a public need.

(b) The amount of each Construction Sub-project Grant shall be determined in accordance with the provisions of the Program Implementation Manual and the Operational Manual for Community-Based Contracting, as the case may be.

4. 
   requirements to: (i) carry out its Sub-project with (A) due diligence and efficiency and in accordance with due diligence and efficiency and in conformity with sound technical, economic, financial, managerial, environmental and social standards and practices satisfactory to the World Bank and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for such Construction Sub-project and Community Sub-project; and (B) in accordance with the provisions of the Anti-Corruption Guidelines Applicable to Recipients of Grant and Credit Proceeds other than the Recipient; (ii) provide, promptly as needed, the resources required for the purpose of the Sub-project; (iii) procure the goods, works and services to be financed out of the Sub-grant in accordance with the provisions of Section III of Schedule 2 to this Agreement; (iv) maintain adequate records to reflect, in accordance with sound accounting practices, the operations, resources and expenditures relating to the Sub-project; (v) enable the Recipient and the World Bank to inspect the Sub-project, its operation and any relevant records and documents; (vi) from time to time, at the request of either the Recipient or the World Bank, exchange views with the Recipient and the World Bank regarding progress achieved in carrying out its Construction Sub-project and Community Sub-project; and (vii) prepare and furnish to the Recipient and the World Bank all such information as the Recipient or the World Bank shall reasonably request relating to the foregoing.
   

6. 
   No Sub-project shall be eligible for financing out of the proceeds of the Financing unless a Sub-grant Agreement has been concluded to this effect on terms and conditions set forth in this Part B and the Program Implementation Manual and the Operational Manual for Community-Based Contracting.
   

7. 
   The beneficiary shall exercise its rights under each Sub-grant Agreement in such manner as to protect the interests of the Recipient and the World Bank and to accomplish the purposes of said Sub-grant Agreement. Except as the World Bank shall otherwise agree in writing, the beneficiary shall not assign, amend, abrogate or waive any Sub-grant Agreement or any of its provisions.
   

The Recipient shall ensure that the Program is carried out in accordance with the provisions of the “Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants”, dated October 15, 2006 (“Anti-Corruption Guidelines”), with the modifications set forth in Section III of the Appendix to this Agreement.

1. In the carrying out of the Program, the Recipient shall:

1. 
   take and cause to be taken all such actions as shall be necessary to apply and cause to be applied:
   
   1. 
      the Environmental Guidelines; and
      

2. 
   not amend, revise, delete, abrogate, suspend, or waive any of such Guidelines, or Plan or any provision thereof, without the written prior consent of the World Bank.
   

2. 
   In the event of any inconsistency between the provisions of this Agreement and those of any of the Environmental Guidelines, and the Ethnic Group Development Plan, the provisions of this Agreement shall prevail.
   

1. The Recipient shall monitor and evaluate the progress of the Program and prepare Program Reports in accordance with the provisions of Section 2.06 of the Standard Conditions and on the basis of the indicators set forth in Annex C to this Schedule 2. Each Program Report shall cover the period of one (1) calendar semester, and shall be furnished to the World Bank not later than forty-five (45) days after the end of the period covered by such report.

2. The Recipient shall prepare the Completion Report in accordance with the provisions of Section 2.06 of the Standard Conditions. The Completion Report shall be furnished to the World Bank not later than six (6) months after the Closing Date.