I OFFICIAL T- The World Bank 0 (202) 473-1000 INTERNATIONAL 3ANK FOR RECONSTRUCTION AND DEVEL OPME 14T 4 3 Cable Address: INTBAFRAD INTERNATIONAL EVELOPMENT ASSOCIATION U.S.A. I Cable Address: INDEVAS Date: 1 / /3 Mr. Hideaki Suzuki Executive Director for Japan MC12-305; MSN MC12-120,; The World Bank 318 H. Street, NW Washington, DC 20433 L, nited States of America Trust Fund Administratio'. A 'ran,Yement between the Ministry of Finance of Japan and the International Bank for Reconstruction and Development and the International Development Ass6ciation concern fng the Poverty Dynamics and Public Service Delivery Multi-Donor Trust Fund "TFO071) 73), the Investment Climate and Trade and Integration Multi-Donor Trust Fund (TFO71 77), the Global Public Goods Multi-Donor Trust Fund (TFO71178) and ihe Econon ic L evelopment and Structural Change Multi-Donor Trust Fund (TFO71393) for the ,irc wle, ge for Change Program II Jear Mr. Suzuki: 1. We are pleased to cor firm the intention of the Ministry of Finance of Japan (the "Donor") to make available, subject io Parliamentary approval, as a grant the sum of one million five hundred thousand Unired Stat -s dollars (US$1,500,000) (the "Contribution") for the Knowledge for Change Prograrr (KCP II) comprising the Poverty Dynamics and Public Service Delivery Multi-Donor Trust Fund (T071173), the Investment Climate and Trade and Integration Multi-Donor Trust Fund (1F(711 7), the Global Public Goods Multi-Donor Trust Fund [TFO71178) and the Economic DeNelopment and Structural Change Multi-Donor Trust Fund (TFO71393) (the "Trust Fund"), and :uch Contribution is to be allocated entirely to the Economic Development and Structural Ch nge Vulti-Donor Trust Fund (TFO71393) in accordance with the terms of this Arrang-ment ([he "Arr ingement"). Other donors are also expected to contribute to the Trust Fund on th. terms ind conditions specified in the Annexes to this Arrangement. 2. The Contribution will b- used to finance the activities and the categories of expenditure set forth in the "Charter, De!cription of Activities and Expenditures under the Multi-Donor Trust Fund for the Knowledge for Ch nge Irogram II (KCP II)" attached hereto as Annex 1. The Contribution wiLl be adriinistered by the Bank on behalf of the Donor in accordance with the terms of this Arranl:;ement md the "Standard Provisions Applicable to the Multi-Donor Trust Fund for the Knowleige for Change Program II (KCP II)" (the "Standard Provisions") attached hereto as Annex 2. RC A 248 23. 0 WUI 64145 0 FAX (202) 477-6391 -2- February 11, 2013 4. Following countersilgnature )f this Arrangement by the Donor, the Donor hereby authorizes the Bank to transf-r the Contribution from the PHRD Multilateral Account (F050728) to the Economic ar d St -uctural Change Multi-Donor Trust Fund (TFO71393), in irstallments in accordance with ihe f< Ilowing schedule: (a) promptly following .ou-iters gnature of this Arrangement by the Donor One Million Untied States Dollars (U;$1,()00,000); and (b) by June 30, 2015, fiv! ht ndre I thousand United States Dollars (US$500,000). 5. The Contribution may rot b, earmarked for specific interventions and will instead be ailocated in accordance with the decisions of the Internal Management Committee (IMC) of the KCP II. The Bank E.cknowldgcs the preference and interest of the Donor that the Contribution will be used to finance the "Job Ct .ation, Structural Change, and Economic Development in MENA 'Lessons from East Asik" sti dy. This preference will be taken into consideration when activities are selected for funding for KCP II. However, it is understood that the Bank will not be i a position to guarantee the t the Cc ntribution will be used for such purposes and the Bank will iot have any obligation to the Donor f such preference cannot be achieved. 5. Any notice, request or o.her ;ommunication to be given or made under this Arrangement shall be in writing z.nd delivere I by mail, facsimile or e-mail to the respective party's address specified below or at such o her addi ess as such party notifies in writing to the other party from t-me to time: For the Bank: Eler.a Chi-L n Lee Senior Reso ircc Mai iagement Officer Developmer t Econo nics Vice Presidency (DEVCP) The World Bank, 1813 H St., NW Washington DC 204 13 USA Tel. +1 (202) 4, 8-22 90 Fax : +1 (20 2) f 22-1158 For the Donor: Shigeo Shin izu Director Developmei it P licy Division Internationa L 1[ ireat Ministry of Finince 3-1..1, Kasurnigasek , Chiyoda-ku Tokyo 100-3943 Jap in Tel. No. +8 [-3-358 -8035 Fax No. +81-3-5251-2139 -3- February 11, 2013 7. All references rade .n the Annexes and related documents to "Agreement" and "shall" wil I have tie same meaning as the terms "Arrangement" and "will" used herein. 8. All annexes [iereto cons :itutc an integral part of this Arrangement. This Arrangement may be amended only in writ.ng betv een the Bank and the Donor; provided, however, that such annexes may be amerded onl: with th,- agreement of all donors contributing to the Trust Fund. Please confirm your igreme it with the foregoing, on behalf of the Donor, by signing, dating, and returning to us thc en close d copy of this Arrangement. Upon receipt by the Bank of a copy of this Arrangement cou ntersign,-d by you, this Arrangement will become effective as of the cate of the countersignature. Sincerely, INTERNATIONAL DANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNA'LTIONY,L DEVELOPMENT ASSOCIATION Kaushik Basu Senioi Vi e Pr ,sident and Chief Economist AGREED: MINISTRY OF FINANCE OF JAI AN P,Y: Dae 15/o -3 Mr. Hideaki Suzuki Executive Direc-or for J,par -4- February 11, 2013 ANNEX I Charter, Description of Activities ; nd Expenditures under the Multi-Donor Trust Fund for the I nowled;,,e for Change Program II (KCP II) The purpose of the K CP II is to act as an effective, transparent and efficient vehicle for the pooling of intelle tual an I fli ianci al resources and to generate new knowledge in support of the Bank's mission. It will ,nec urag.- and improve dialogue with partner agencies, developing country clients, and other int rested parties. Building on the gains of KCP I and the recommendations of the Prog am Eva uation (November 2007), the fundamental objective of the KCP II is to promote high qualily, ct tting edge research (including data collection in the direct context of research) that creatts ktowledge to support policies for poverty reduction and sustainable development. A si ibsidiar, objective is to assist the development of research capacity in client countries. Focus of activities to be supporled The KCP II will suplpor inn wative research programs sponsored by the Development Economics Vice Presidency ()EC) of the Bank, in conjunction with other parts of the Bank The fDcus will be on economic atud social knowledge-generation activities, with a multi-disciplinary approach towards the latter. Geographically, the k CP II fi nds will be targeted towards activities concerning the IDA countries and/or the poorest grojps in IBRD countries, with particular priority for Africa and Asia, both of which have lai ge and ntractable poverty problems. However, other regions and countries, including raiddle incotrie, are not excluded since many of the world's absolutely poor are found in those countrieE ard w )rk in those countries, activities from other regions and countries may be used for coriparisor purposes, lessons learned, and for other economic links to the priority countries. There will be four 1 rus: Funds under the KCP II for research related to overarching themes of (i) Poverty Dynamics ind Public Service Delivery, (ii) Investment Climate and Trade and Integration, (iii) Global Public Goods, and (iv) Economic Development and Structural Change. The first addresse:, issues at the heart of poverty reduction, empowerment and sustainable development; thc seconc focuses on the major elements of a business program conducive to growth, with eniphasis (n the role of small- and medium-scale industries; the third focuses on global issjes that req iire ,ollective action and coordination across countries because lack of action or progress in som- coi ntries could undermine benefits for all; and the fourth will analyze the policies and factors that a e necessary to make it possible for a developing country to u pgrade its industrial structure contint ously and develop rapidly. Indicative programs that will b sul ported include: A. Poverty Dynamics and Pi iblic Sei vice Delivery Poverty measuremenr. Improving the tools used in the Bank for monitoring, describing and forecasting income jove ty and inequality, including aggregate poverty measures, sharper poverty profil es, and I etter household surveys. -5- February 11, 2013 * Pro-poor growth. To adv ance understanding of what makes pro-poor growth and the role played by governmen, irclud ng the role of initial conditions, what drives distributional changes in survey dat., and ch irning (the gainers and losers). * Social inclus.!on and empowt rment. How best to mitigate different forms of inequality (for example, gender ind ethn [city) and promote social inclusion and empowerment, and civic engagement and par ticip ttion. * Conflict. An analysis of ,onfl ct issues: war, terrorism, crime and violence. * Sustainable developmem. Ho v to frame poverty reduction strategies which take account of the probl!ms an. confli;ts caused by socioeconomic inequalities, demographic stresses, the struggle fbr control of resource rents, and environmental damage and natural resource degradation. * Public service deliveiy for hi man development. An evaluation and analysis of delivery options, prioritizing initially e lucation and health sectors, with a focus on provision at the local level, and examinirg thc hypothesis that greater participation by households using the service acts to improv e set vice performance. * Social protection. H4 ow to hi lp people manage risk, cope with adverse shocks, avoid variability in incomes an d sm )oth consumption. B. Investment Climate and Trale aj d Integration * Internationai migrat on and development. This research program aims to advance the understanding of the deN elop nent impact of migration on sending countries as well as identifying policies, regulat ons and institutional reforms for improved migration outcomes and a "win win-wit " situation for developing and developed countries and for migrants. * Stability and growth. Tiis r,-search program includes the medium-term prospects for world economic growth ind leveloping country growth; a shift in trade policy analysis from the traditional tar ff a.;enda to services and investment liberalization, product standards and proper y fight,, and competition policies; more effective deployment of international resourcc flows both public and private); and how to make globalization more pro-pocr. * Governance and inA ritutiom. The role of institutions and governance in creating an attractive climate for private sector development, including anti-corruption programs; the institutional reforms necded to generate private investment and job creation; and the interactions cf behavior znd social and economic outcomes. * Finance and develooment. [he program is organized around two areas - access to financial services an,[ fiinanct for the poor, which directly addresses the empowerment aspects of poverty. * Regulation and infrustructui e. A review of the elements of a regulatory framework and of the provision of in ras ruct ire conducive to a healthy climate for investment. * Urban development. How to enhance the contribution of urban development to poverty reduction and econon ic grow :h. * Rural development. Definil ion and access regulation of rights to key productive resources (e.g. land and vatei), the functioning of rural markets, the impact of key public goods services on rui al I velil toods, rural non-farm employment, the development impact of community-based rur 1 org anizations, insurance and risk mitigation in agriculture. -6- February 11, 2013 C. Global Public Goods * Climate change - mitigation and adaptation. Identifying policy and regulatory reforms to mitigate GHG emissic ns b ised on improved understanding of the climate threat, its differentiated econorr ic mpa.t across the globe, the effectiveness and cost-benefit of different interventions and responses, the need to address adaptation problems for vulnerable co intries a ad treas (the longer mitigation actions are delayed), and the need to build local capacity to coinple nent international commitments. * Deforestation and biudiv ?rsitj . There is a need to better understand how local ecosystem destruction can be slowed down in cost-effective ways before global impacts grow as carbon and hydrologi :al :yclt s, or species mutation rates are affected through the scale and speed of human iriterventi ns in natural processes. * Communicable disea.es. In oi der to better assess and manage this global risk in a period of rapid and growin: trade and travel, policymakers need analysis of the costs and benefits of reducing ihe risk of disease emergence; early-waming disease monitoring programs; avoidance of .mer Yence of resistant strains; vaccine development; alternate programs for vaccine deployi ient; alternative quarantine systems (and determinants of compliance); .tc. * Knowledge and intellectualp -operty rights (IPRs). This is the next generation of assets that can increase or decrease E lobal inclusiveness with consequences for the evolution of fair and effective glo ral insti utions. There is a need to better understand policies and programs to s:rengthe i th- caf acity of developing countries to develop their own patents, to participate in intcmationl discussions, and to analyze the merits inter alia of collaborative efforts it faten examination, standards for the breadth and novelty of patent claims, protection of rig4ts to genetic resources and traditional knowledge, etc. * Governance and insiltutPons to provide Global Public Goods (GPGs). In a world of sovereign entities, there i:; no )lobal authority to coordinate and enforce the provision of global public goods. "heie is i need to identify and evaluate innovative institutions and mechanisms (incentives and 1)urden sharing/compensation arrangements) to encourage fuller participation in addressing Global Public Goods problems and complying with agreements -- including iiistitt tions and mechanisms capable of picking up signals early, reconciling conflicting natior al and international interests, and creating commitment devices that ensure de ive -y of GPGs over the long term. D. Economic Development aId Struo tural Change * Patterns of ifdustrialization. As a foundation for this entire research program, it is crucial to understand, sys ema ically, how countries develop economically, what types of economic trarsformat onE tak( place, and how these are reflected in shifts among sectors of the economy. The research will focus on the role of industrialization in development, and when and how do.s ii take s root, * Innovation and techi nol6gica upgrading. Technological upgrading and innovation are essential ingredients for 1ong- un productivity growth, itself the main driver of long-run income growth. In de'veloping countries, they typically take the form of adaptation and adoption of known t.chnolog ies rather than introduction of new ones. However, the incentives and obstacLhs t0 the ;e processes are still poorly understood. Further, they often involve exterialities :hat mal lead to too low a rate of technological upgrading and require some form of policy i itervention. The proposed research seeks to shed light on these issues. -7- February 11, 2013 * Country case studies of vucc,,ss and failure. This research will build on the work on patterns of industriali:,.ation. Y.fter identifying the countries that have been particularly successful or unsucce;sftl in industrializing and development, it will use a case-study approach to dig deepl) into the strategies and policies that were most responsible. * The optimal financia,' stucture. There is a need to better understand what the optimal financial structure is lependir g on the level of industrialization and development. The nature of productive actiNity -v,ill vary depending on the development level, and so will the nature of risk and tl e ab lity to bear different kinds of risks. Since the financial sector's purpose is in large pa t to finance productive activity and to share risk, it seems logical that the optima'. fit anci il structure will also vary with the level of development. * The process of indusiriaiizati n in Sub-Saharan Africa. The development struggles of Sub-Saharan Africa are well enown, but it is perhaps less well appreciated how little progress there has b en in it dustrialization. The industrial share of GDP of African economies hardly grew at all between the early 1970s and the late 1990s, and within industry, manufacturing a so g -ew only slowly, in marked contrast to developments in the high-performing Asian economies. By and large, the region has not yet made the manufacturing transition hat, in the historical record so far, has been nearly essential to development. This re:;earch 'ill focus on the question of why so many Sub-Saharan Africa countries have iot madc this transition, and what can be done to hasten it. Governance structure The Bank will be resr onsible 'or administering the KCP II. However, other development partners will have an importa it role it its management. The governance structure of the KCP II wNill include a Consulkative G oup (CG), an Internal Management Committee (IMC), a Program Administration Unit (PAU), aid a Panl of External Technical Experts. The CG will -onsist of represrntatives of the official donors, developing country policy makers, the World Bank and other iiterested parties, and will be chaired by the Senior Vice President and Chief Economis t, EEC (or his nominee). The CG will meet once a year to consider long-term strategies and pro-ide gen,-ral guidance on the operation of the trust funds in the context of DEC's program an a whol . The CG will also be engaged in the discussion of the annual work program and financia l plan and will review the KCP II's performance on the basis of an annual report on the acti- itie; fin mced by the KCP II during the previous twelve months. Decisions will be made by co iseisus. In conjunction with the annual CG meeting, the Bank may organize a seminar to discuss a specif c topic concerning knowledge creation of relevance to the group. The IMC will be chai -ed by tf e Senior Vice President and Chief Economist, DEC (or his nominee). The IMC will incl.ide repr.:sentatives of DEC and the Bank's operational units. The IMC will invite proposals froi n E EC ;nd from DEC in conjunction with other parts of the Bank, periodically, and review them against he agreed criteria, selecting proposals for financing in light of the funds available at a pat tict lar t me, and taking into account the geographical and thematic balance of the KCP portfolio. The PAU will handle the day- o-day business of the KCP II and will be a point of contact for routine issues. The unit will report to the head of the IMC. The Panel of Ext.-rnOl T-chnical Experts will review and provide ex ante recommendations of the proposals to be submitted to the IMC for review and approval. The -8- February 11, 2013 Panel of External Techmical E:.:pei ts w 11 consist of several experts selected by the Bank, and who must have substantial experience in re ;earch fields relevant to the KCP II. In addition, and on a case by case basis the PAU mE yu e B, nk Peer Reviewers when suitable. Procedures and criteria Proposals should demons rate relevance to the objectives of the program and details of key aspects such as innovation, )artn ers, country participation, deliverables, and development impact. Consistent with the funlam ntal objectives of the KCP II as outlined in the first paragraph of the Charter, the nece ;sary criteria for assessing proposals are as follows: * be innovative and ablc to prov de new knowledge, which can lead to better development policies; * address the objectives of the '"rust Fund (poverty dynamics and basic service delivery, investment climate and tr, de a id integration, and global public goods). * be results-focused, while iema ning cost effective. The desirable criteria are: * demonstrate country parti-ipat on and ownership, * incorporate developing; countrn capacity building, * be applicable :o a diffirent cot citry or region, and * demonstrate c Doperati:n mong different parts of the Bank and/or between the Bank and other donors/agencies. Funding The funding of activities pe-formed or supported by the KCP II requires a well- coordinated partnership involving the World Bank Group, other multilateral institutions and donor organizations, as well ais the aE reement and active cooperation of governments in which KCP II-financed activities take ph.ce. Donors, if they so desire, may specify the allocation of their contribution among the four Trust Funds under the KCP II. Scme donors may also wish to express a preference for a certain program activity or activities, and thei views will be taken into consideration when activities are selected for funding from the KCP. I- owever, the Bank's Trust Fund Policy Guidelines do not guarantee that such pr-ference,; in iy b fulfilled. Communication with the KC P II Do iors In addition to the anr ual CG meeting, the Bank will maintain regular communications with donors during the course o' the year, including updating the donors during the Call for Proposal stage and providing resu ts ol the IMC decision meetings on project proposals. The KCP web site will provide up-to-date infoimation on team composition, activities and new projects approved by the IMC, as well as links to the papers and other publications funded by the KCP II. T e Bank, as necessary, will organize ;n information meeting or workshop in connection with the Bank/IMF's Spring or Annual Mc etinj s on topics and activities relevant to the KCP II to discuss methods, present initial findings, and solicit comments and suggestions from donors, including their chief economists and advisers. Furthermore, the Bank will establish a data portal for easy ac:ess to relevant dala gathered throt gh projects funded by the KCP II, while abiding by the -9- February 11, 2013 Bank guidelines on the release and di;closure of such data. Finally, the Bank will maintain and update a contact list of donor rep -eser tatives for dissemination of periodic information related to th- activities of the program. )or ors , hould inform the PAU on a timely manner of any changes in respect of their KCP? II repr.-settatiN -s. Eligible expenditures Eligible expendilures under the KCP II would be Associated Overheads, Short Term Consultant Fees, Contractual iervices. Extended Term Consultants, Temporary Staff Costs, Staff Costs without Indirects (Benefit;), 'Travel Expenses, Equipment Costs, Media & Workshops Costs and would incl.de the fillowing: * compensation, travel expense and other reimbursable expenditures of consultants and experts (including the me nbei s of the technical review panel and evaluators) engaged by the Bank or entities to whom he Bank provides grants of the KCP II funds for activities to be supported by th.: K ZP I . This may include the salaries and benefits of Extended Term Consultants (ETCs) and 2oterminous staff; * Bank staff travel cocts up t< a maximum of fifteen percent (15%) of each amount awarded to a KCP pro ect; * Travel expenses incurred by developing country participants in attending the annual CG meeting, up to a ceiling of$ 2( ,000 per year; * Software and data, )ub icati )n and printing costs associated with the preparation of reports or other materials -elat ng to the KCP I-supported activities; * costs associated with org;aniz ng workshops, seminars or conferences, including costs associated with partic ipa ion )y relevant international experts and developing country participants; and * Associated Overhead .xp-ndii ures related to the fulfillment of the KCP II's mandate. Dissemination Information gained from ctivi ties financed through the KCP will be widely disseminated both to donors and client cointries either in report form, or through the web, complemented where appropriate with workshiors an I conferences. Such dissemination will be subject to and made in accordance with the B anl's pc licies on disclosure of information. Evaluation The KCP II -v ill be su bject to in external evaluation, to be funded from the KCP II trust fL.nds, before the completion date )f th: program. -10- February 11, 2013 ANNEX 2 Standard Provisioins Applicab e to the Multi-Donor Trust Fund for the Knowledge for C _ani e Program II (KCP II) The following provisi4 ins (her inafter referred to as the "Standard Provisions") shall be arplicable to and form an integral part of all agreements/arrangements entered into between the International Bank for Reccnstruction and Development ("IBRD") and the International Development Association (" DA") (-ollectively, the "Bank") and donor countries and/or organizations (hereinafter reft rred to is the "Donors") that provide grants (referred to as the "Contributions") to be admini.,ter:d by the Bank for the Multi-Donor Trust Fund for the KCP II Program (the "Project"). 1. Administration of the Conribu ions 1.1 The Bank sha 1 be res :on ;ible only for performing those functions specifically set forth in this Agreement and shall not b. subject to any other duties or responsibilities to the Donors, including, without limitation, a.ny duti s or obligations that might otherwise apply to a fiduciary or trustee under general principles of t -ust or fiduciary law. Nothing in this Agreement shall be considered a waiver of any pri/ileges cr immunities of the IBRD and IDA under their Articles of Agreement or any app icable law, all o: which are expressly reserved. 1.2 The Contribution shall be adm nistered in accordance with the Bank's applicable policies and procedures, inclucing its f rarewo k regarding anti-corruption, as the same may be amended from time to time. 1.3 Recognizing the obligations (f the Bank member countries under the various United Nations Security Cour cil Rese luti )ns t ) take measures to prevent financing of terrorists, the Bank undertakes to use reasonable efforts, consistent with the Bank's Articles of Agreement and policies, including these pertaining to zombating financing of terrorists, to ensure that the funds provided under any Administr itio i Ag reement/Arrangement are used for their intended purposes and are not diverted to terrorisi s ai d th,!ir agents. 2. Commingling. Exchan DeLnd I ivestment of the Contributions 2.1. The Contribulion func:s srall >e accounted for as a single trust fund and shall be kept separate and apart from the fuiids of th- Bank. The Contribution funds may be commingled with other trust fund assets maintaitied :y tl e Bank. -11- February 11, 2013 2.2. The Contribution funis nay >e freely exchanged by the Bank into other currencies as may facilitate their disbursement. 2 3 The Bank shall invest and reii vest the Contribution funds pending their disbursement in accordance with the Bank':, plici .s and procedures for the investment of trust funds administered by the [lank. The .3ank shall credit all income from such investment to the trust fund established under this Agreeme it to be used for the same purposes as the Contribution funds. 3. Administrative Cost R ecovery 3. In order to assist in 1he iefr yment of the costs of administration and other expenses ircurred by the Bank under this Agreement, the Bank may, following deposit of the Contribution by the Donor, deduct from t e total Contribution of the Donor and retain for the Bank's own account an amount equal to one perc.nt (1%) of the Contribution. In addition, staff costs for program management and sup,.rvision up to a maximum of three hundred thousand United States Dollars (US$300,000) per yeai- wi A1 be zharged and allocated pro-rata to all donors contributing to the Trust Fund on an actual ba:;is. 4. Employment of Consu Itarts 4.1 The employment and supervision of consultants financed by the Contributions shall be the responsibility solely of the Bnk .nd shall be carried out in accordance with its applicable policies and procedures. 5. Accounting ar.d Finanial Rep qting 5.1. The Bank shall maiitaii secarate records and ledger accounts in respect of the Contributions deposited in the i:rus t fun I account and disbursements made therefrom. 5.2. The Bank shall fumiih o th. Donor current financial information in United States Dollars relating to the Trust Fund va the World Bank's Trust Funds Donor Center secure website. Within six (5) mont is after ill commitments and liabilities under this trust fund have been satisfied and the trust fund has b en closed, the final financial information in United States Dollars relating to the Trust Fund will 1he made available to the Donor via the World Bank's Trust Fuids Donor Center secure we:site. 5.3. The Bank sha 1 provic e tco the Donors, within six (6) months following the end of each Bank fiscal year, a management ,sserl ion together with an attestation from the Bank's external auditors concerning the adequ; cy of in :ernal control over cash-based financial reporting for trust funds as a whole. The cost of ;uct atte ftations shall be borne by the Bank. -12- February 11, 2013 5.4. If a Donor wishes to ieqt est, n an exceptional basis, a financial statement audit by the Bank's external auditors of tf e tiust .ind established under this Agreement, the Donor and the Bank shall first consult as to whethei such an external audit is necessary. The Bank and the Donor shall agree on the most appropr ate scope and terms of reference of such audit. Following acceptance on the sccpe and ernis of reference, the Bank shall arrange for such external audit. The costs of any such audit, iicludin the internal costs of the Bank with respect to such audit, shall be paid by the Donor. 6 Coordination and Projei,ct Rep rting 6.1. Within four (4) monihs follc wing the end of each Bank fiscal year, the Bank shall provide the Donors with ai. annua report on the progress of activities financed by the Contributions. Within six (61 months of the final disbursement date specified in paragraph 7.1, the Bank shall furnish to the Eonc.rs a inal report on the Project activities. 7 Disbursement Deadlir e; Canci llation, Refund 7.1. It is expected that the Contribution funds will be fully disbursed by the Bank in accordance with the provisions of this Agreement by April 30, 2016. The Bank shall only disburse Contribution funds f:)r t ie purposes of this Agreement after such date with the written approval of the Donots. 7.2. Any Donor or the Bank nay, upon three (3) months' prior written notice, cancel all or part of the Donor's pro rata s iarc of z ny remaining balance of the Contribution funds that is not committed pursuant to any agreement: entered into between the Bank and any consultants and/or other third parties for the pur ose; of 1 his Agreement prior to the receipt of such notice, including th Grant AgreementE. 7.3. Upon the final disbursement late specified in paragraph 7.1, the Bank shall return any remaining balance of the Coitrilutio i funds to the Donors on a pro rata basis based upon the ratio of each Donor's paid-in Con tribu :ions to the sum of all Donors' paid-in Contributions. In the event of a cancellation of an ii idiN idua Donor's pro rata share of uncommitted Contribution funds in accordance with paragraph 7., the Bank shall return such cancelled balance to the Donor on the same pro rata basis. 8. Disclosure 8.1 The Bank may disclose this / greement and information on this trust fund in accordance with the Bank's policy on disi:losire cf information.