THE WORLD BANK I BANK DUNIA OFFCIAL DOCUMENTS Letter No. CD-236/IDF BKP/VIII2012 August 10, 2012 Mr. Robert Pakpahan Expert Staff of Minister of Finance on State Revenue With Full Mandate as Director General of Debt Management Ministry of Finance Gedung Frans Seda JI. Dr. Wahidin No. 1 Jakarta 10710 Dear Mr. Pakpahan: Re: Indonesia: IDF Grant for Supporting Effective Implementation of BPK's Strategic Plan 2011-2015 Project IDF Grant No. TF012193 In response to the request for financial assistance made on behalf of the Republic of Indonesia ("Recipient"), I am pleased to inform you that the International Bank for Reconstruction and Development ("World Bank") proposes to extend to the Recipient, a grant from the World Bank's Institutional Development Fund ("IDF") in an amount not to exceed three hundred fourteen thousand United States Dollars (U.S.$314,000) ("Grant") on the terms and conditions set forth or referred to in this letter agreement ("Agreement"), which includes the attached Annex, to assist in the financing of the project described in the Annex ("Project"). The Recipient represents, by confirming its agreement below, that it is authorized to enter into this Agreement and to carry out the Project in accordance with the terms and conditions set forth or referred to in this Agreement. ISEB Tower 2, JI. Jend. Sudirman Kay. 52-53, Jakarta 12190 * Telephone: (62-21) 5299 3000 * Facsimile: (62-21) 5299 3110 P.O. Box 1324/JKT, Jakarta 10013 * Telex: IBRDIA 60086 * Headquarters: The World Bank, Washington DC, USA Mr. Robert Pakpahan 2 of 7 August 10, 2012 Ministry of Finance Please confirm the Recipient's agreement to the foregoing by having an authorized official of the Recipient sign and date the enclosed copy of this Agreement, and returning it to the World Bank. Upon receipt by the World Bank of this countersigned copy, this Agreement shall become effective as of the date of the countersignature; provided, however, that the offer of this Agreement shall be deemed withdrawn if the World Bank has not received the countersigned copy of this Agreement within 90 days after the date of signature of this Agreement by the World Bank, unless the World Bank shall have established a later date for such purpose. Very truly yours, INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Jos *n . assinette Acting o ntry ir tor, Indonesia AGREED: REPUBLIC OF INDONESIA By Authorized Representative/' Name Robert Pakpahan Expert Staff of State Revenue Title Full Mandate as Director General of Debt Management Date: August 27, 2012 Enclosures: (1) Standard Conditions for Grants Made by the World Bank Out of Various Funds, dated February 15, 2012 (2) Disbursement Letter of the same date as this Agreement, together with World Bank Disbursement Guidelines for Projects, dated May 1, 2006 ISEB Tower 2, J. Jend. Sudirman Kay. 52-53, Jakarta 12190 * Telephone: (62-21) 5299 3000 * Facsimile: (62-21) 5299 3110 P.O. Box 1324/JKT, Jakarta 10013 * Telex: IBRDIA 60086 * Headquarters: The World Bank, Washington DC, USA Mr. Robert Pakpahan 3 of 7 August 10, 2012 Ministry of Finance IDF Grant No. TF012193 ANNEX Article I Standard Conditions; Definitions 1.01. Standard Conditions. The Standard Conditions for Grants Made by the World Bank Out of Various Funds dated February 15, 2012 ("Standard Conditions") constitute an integral part of this Agreement. 1.02. Definitions. Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the Standard Conditions or in this Agreement. The following terms have the meaning given below. (a) "BPK" means Badan Pemeriksa Keuangan, the Supreme Audit Board of the Recipient and any successor thereto. (b) "FY" means fiscal year of the Recipient. (c) "Strategic Initiatives" means strategic initiatives of the BPK as set out in the Decree of the Secretary General of the BPK No. 238/K/X-XIII.2/5/2011 dated May 9, 2011 regarding the implementation plan of BPK's strategic plan 2011-2015. Article II Project Execution 2.01. Project Objectives and Description. (a) The objective of the Project is to support BPK in effective monitoring of the implementation plan which supports execution of a strategic plan for FY 2011-2015 to ensure that implementation continues to contribute to the identified strategic objectives. (b) The Project consists of the following parts: Part 1. Analyzing the progress on thirty-two (32) Strategic Initiatives laid out in the implementation plan: (i) reviewing the progress on Strategic Initiatives for one year; and (ii) training for BPK's Strategic Initiatives management team. Part 2. Monitoring change management plans and their progress for thirty-two (32) Strategic Initiatives: (i) providing technical assistance to review change management plans in BPK's department that implement the Strategic Initiatives; and (ii) training on change management. ISEB Tower 2, JI. Jend. Sudirman Kay. 52-53, Jakarta 12190 * Telephone: (62-21) 5299 3000 * Facsimile: (62-21) 5299 3110 P.O. Box 1324/JKT, Jakarta 10013 * Telex: IBRDIA 60086 * Headquarters: The World Bank, Washington DC, USA Mr. Robert Pakpahan 4 of 7 August 10, 2012 Ministry of Finance 2.02. Project Execution Generally. The Recipient declares its commitment to the objectives of the Project. To this end, the Recipient shall carry out the Project through the BPK in accordance with the provisions of: (a) Article II of the Standard Conditions; (b) the "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and revised in January 2011 ("Anti-Corruption Guidelines"); and (c) this Article II. 2.03. Institutional and Other Arrangements. The Recipient shall ensure that BPK shall establish and maintain until completion of the Project, a Project Implementing Unit ("PIU") under the Directorate of Strategic Planning and Performance Management or any successor thereto. The PIU will manage the Project implementation, including preparing budget documents and the Project's financial reports. 2.04. Project Monitoring, Reporting and Evaluation. (a) The Recipient shall monitor and evaluate the progress of the Project and, upon the World Bank's request, prepare Project Reports, in accordance with the provisions of Section 2.06 of the Standard Conditions and on the basis of indicators acceptable to the World Bank. Each Project Report shall cover such period as shall be indicated in the World Bank's request and shall be furnished to the World Bank not later than one month after the date of such request. (b) The Recipient shall, upon the World Bank's request, 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 five months after the Closing Date. 2.05. Financial Management. (a) The Recipient shall ensure that a financial management system is maintained in accordance with the provisions of Section 2.07 of the Standard Conditions. (b) The Recipient shall ensure that interim unaudited financial reports for the Project are prepared and furnished to the World Bank as part of the Project Report not later than forty-five (45) days after the end of each calendar quarter, covering the quarter, in form and substance satisfactory to the World Bank. (c) The Recipient shall have its Financial Statements audited in accordance with the provisions of Section 2.07 (b) of the Standard Conditions. Each such audit of the Financial Statements shall cover the period of one fiscal year of the Recipient. The audited Financial Statements for each such period shall be furnished to the World Bank not later than six months after the end of such period. 2.06. Procurement (a) General. All goods and consultants' services required for the Project and to be financed out of the proceeds of the Grant shall be procured in accordance with the requirements set forth or referred to in: (i) Section I of the "Guidelines: Procurement of Goods, Works and Non-consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011 ("Procurement Guidelines"), in the case of goods; ISEB Tower 2, J. Jend. Sudirman Kay. 52-53, Jakarta 12190 * Telephone: (62-21) 5299 3000 * Facsimile: (62-21) 5299 3110 P.O. Box 1324/JKT, Jakarta 10013 * Telex: IBRDIA 60086 * Headquarters: The World Bank, Washington DC, USA Mr. Robert Pakpahan 5 of 7 August 10, 2012 Ministry of Finance (ii) Sections I and IV of the "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011 ("Consultant Guidelines") in the case of consultants' services; and (iii) the provisions of this Section, as the same shall be elaborated in the procurement plan prepared and updated from time to time by the Recipient for the Project in accordance with paragraph 1.25 of the Consultant Guidelines ("Procurement Plan"). (b) Definitions. The capitalized terms used in the following paragraphs of this Section to describe particular procurement methods or methods of review by the World Bank of particular contracts, refer to the corresponding method described in Sections II and III of the Procurement Guidelines, or Sections II, III, IV and V of the Consultant Guidelines. (c) Particular Methods of Procurement of Goods Goods shall be procured under contracts awarded on the basis of Shopping. (d) Particular Methods of Procurement of Consultants' Services (i) Except as otherwise provided in item (ii) below, consultants' services shall be procured under contracts awarded on the basis of Quality- and Cost-based Selection. (ii) The following methods may be used for the procurement of consultants' services for those assignments which are specified in the Procurement Plan: (A) Single-source Selection of consulting firms; (B) Selection of Individual Consultants; and (C) Single-source procedures for the Selection of Individual Consultants. (e) Review by the World Bank of Procurement Decisions. The Procurement Plan shall set forth those contracts which shall be subject to the World Bank's Prior Review. All other contracts shall be subject to Post Review by the World Bank. Article III Withdrawal of Grant Proceeds 3.01. Eligible Expenditures. The Recipient may withdraw the proceeds of the Grant in accordance with the provisions of: (a) Article III of the Standard Conditions; (b) this Section; and (c) such additional instructions as the World Bank may specify by notice to the Recipient (including the "World Bank Disbursement Guidelines for Projects" dated May 2006, as revised from time to time by the World Bank and as made applicable to this Agreement pursuant to such instructions), to finance Eligible Expenditures as set forth in the following table. The table specifies the categories of Eligible Expenditures that may be financed out of the proceeds of the Grant ("Category"), the allocations of the amounts of the Grant to each Category, and the percentage of expenditures to be financed for Eligible Expenditures in each Category: ISEB Tower 2, JI. Jend. Sudirman Kay. 52-53, Jakarta 12190 * Telephone: (62-21) 5299 3000 * Facsimile: (62-21) 5299 3110 P.O. Box 1324/JKT, Jakarta 10013 * Telex: IBRDIA 60086 * Headquarters: The World Bank, Washington DC, USA Mr. Robert Pakpahan 6 of 7 August 10, 2012 Ministry of Finance Category Amount of the Grant Percentage of Allocated Expenditures to be (expressed in USD) Financed (inclusive of Taxes) (1) Goods 12,000 100% (2) Consultants' services 189,000 100% (3) Training and workshops 113,000 100% TOTAL AMOUNT 314,000 For the purposes of this Section, the term "Training and workshops" means Project-related training and workshops conducted in the territory of the Recipient, including purchase and publication of materials, rental of facilities, and meals. 3.02. Withdrawal Conditions. Notwithstanding the provisions of Section 3.01 of this Agreement, no withdrawal shall be made for payments made prior to the date of countersignature of this Agreement by the Recipient. 3.03. Withdrawal Period The Closing Date referred to in Section 3.06 (c) of the Standard Conditions is August 14, 2015. Article IV Recipient's Representative; Addresses 4.01. Recipient's Representative. The Recipient's Representative referred to in Section 7.02 of the Standard Conditions is the Minister of Finance. 4.02. Recipient's Address. The Recipient's Address referred to in Section 7.01 of the Standard Conditions is: Ministry of Finance c/o Directorate General of Debt Management Jalan DR. Wahidin Raya No. 1 Jakarta 10710 Indonesia Cable: Facsimile: FINMINISTRY 45799 62-21-381-2859 Jakarta ISEB Tower 2, JL Jend. Sudirman Kay. 52-53, Jakarta 12190 * Telephone: (62-21) 5299 3000 * Facsimile: (62-21) 5299 3110 P.O. Box 1324/JKT, Jakarta 10013 * Telex: IBRDIA 60086 * Headquarters: The World Bank, Washington DC, USA Mr. Robert Pakpahan 7 of 7 August 10, 2012 Ministry of Finance 4.03. World Bank's Address. The World Bank's Address referred to in Section 7.01 of the Standard Conditions is: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable: Telex: Facsimile: INTBAFRAD 248423 (MCI) or 1-202-477-6391 Washington, D.C. 64145 (MCI) ISEB Tower 2, JI. Jend. Sudirman Kay. 52-53, Jakarta 12190 * Telephone: (62-21) 5299 3000 * Facsimile: (62-21) 5299 3110 P.O. Box 1324/JKT, Jakarta 10013 * Telex: IBRDIA 60086 * Headquarters: The World Bank, Washington DC, USA