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September 5, 2000
His Excellency
Vasiliy Rogovyi
Acting Minister of Economy
Ministry of Economy
Kyiv
Ukraine
Re:
Japanese Grant for 
Preparation of Tuberculosis/AIDs Control 
Project
Grant No. TF026294
Dear Mr. Rogovyi:
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 four hundred sixteen thousand 
nine hundred fifteen Unites States dollars 
(US$416,915) (the Grant) to Ukraine (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 Framework Grant 
Agreement between Ukraine and the Bank, dated 
January 14, 1998, and in the Annex to this 
Letter Agreement, which forms an integral part 
of 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 
   RECONSTRUCTION AND DEVELOPMENT
By /s/ Luca Barbone
Country Director,
Ukraine & Belarus Country Unit
Europe and Central Asia
AGREED:
UKRAINE
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By /s/ Vasiliy Rogovyi
Minister of Economy
Authorized Representative
Date:
31/10/2000
Annex to the Letter Agreement
For Grant Number TF026294
Purposes, Terms, and Conditions of the Grant
1.
Activities
The purpose of the Grant is to finance 
technical assistance for the preparation of 
the Tuberculosis/AIDS Control Project 
(Project), which has as its main objective the 
development and implementation of effective 
and financially-sustainable national programs 
to control TB and HIV infection in Ukraine. 
1.1.
The activities (the Activities) for 
which the Grant is given are as follows:
(a)
support for the development of a 
national strategy for tuberculosis control and 
treatment, which is estimated to cost about 
US$104,000 equivalent;
(b)
support for the development of 
strategy for AIDS control and treatment, 
including education and training of health 
professionals in modern protocols of care and 
public education activities, which is 
estimated to cost US$143,915 equivalent;
(c)
social and institutional 
assessment, which is estimated to cost 
US$24,050 equivalent; 
(d)
economic and financial analysis, 
which is estimated to cost US$21,050 
equivalent;
(e)
project management, supervision, 
and evaluation, which is estimated to cost 
US$113,900 equivalent; and
(f)
audit of the Grant, which is 
estimated to cost US$10,000 equivalent.
2.
Implementation Generally
The Recipient shall: (a) carry out the 
Activities with due diligence and efficiency; 
(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 
Ukraine for purposes related to the Grant.  
Without limitation on the foregoing, the 
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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.
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
   % of
Grant 
Allocated
Expenditures
Items
(in US 
Dollars)
to be Financed
(1)
Consultants' services,
   398,375
100%
including audit
(2)
Training
    18,540
100%
TOTAL
   416,915
4.
Notwithstanding the provisions of 
paragraph 3 above, no withdrawals shall be 
made: (i) for payments made for expenditures 
prior to the date of this Letter Agreement; or 
(ii) after May 15, 2001 or such later date as 
the Bank shall establish by written notice to 
the Recipient (the Closing Date), provided 
that, except in special circumstances, the 
Closing Date shall not be extended beyond the 
expected date of Bank approval of financing 
for the Project , and except that withdrawals 
may be made for expenditures incurred prior to 
the Closing Date and received by the Bank 
within four months after the Closing Date, 
after which time any amount of Grant remaining 
unwithdrawn from the Grant Account shall be 
cancelled. 
5.
The Bank may require withdrawals from 
the Grant Account to be made on the basis of 
statements of expenditure for expenditures 
for: (a) services of consulting firms costing 
less than US$100,000 equivalent; (b) services 
of individual consultants costing less than 
US$50,000 equivalent, and (c) training, all 
under such terms and conditions as the Bank 
shall specify by notice to the Recipient.
6.
To facilitate the carrying out of the 
Activities, the Recipient may open and 
maintain in dollars a special deposit account 
(the Special Account) in a commercial bank 
acceptable to the Bank, on terms and 
conditions satisfactory to the Bank, including 
appropriate protection against set-off, 
seizure or attachment.  Deposits into, and 
payments out of, the Special Account shall be 
made in accordance with the provisions of 
Attachment I to this Annex.
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7.
Accounts and Audits
(a)
The Recipient shall maintain or 
cause to be maintained a financial management 
system, including records and accounts, and 
prepare financial statements in a format 
acceptable to the Bank, adequate to reflect in 
accordance with sound accounting practices the 
operations, resources and expenditures related 
to the Activities.
(b)
The Recipient shall: (i) have the 
records, accounts and financial statements 
referred to in subparagraph (a) above and the 
records and accounts for the Special Account 
for each fiscal year audited, in accordance 
with auditing standards acceptable to the 
Bank, consistently applied, by independent 
auditors acceptable to the Bank; (ii) furnish 
to the Bank as soon as available, but in any 
case not later than six months after the end 
of each such year, (A) certified copies of the 
financial statements referred to in paragraph 
(a) of this Section for such year as so 
audited, and (B) an opinion on such 
statements, records and accounts and report of 
such audit, by said auditors, of such scope 
and in such detail as the Bank shall have 
reasonably requested; and (iii) furnish to the 
Bank such other information concerning said 
records and accounts and the audit thereof, 
and concerning said auditors, as the Bank 
shall 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 statements of 
expenditure, the Recipient shall: (i) maintain 
or cause to be maintained, in accordance with 
subparagraph (a) above, records and accounts 
reflecting such expenditures; (ii) retain, 
until at least one year after the Bank has 
received the audit report for 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; (iii) 
enable the Bank’s representatives to examine 
such records; and (iv) ensure that such 
records and accounts are included in the 
annual audit referred to in subparagraph (b) 
above and that the report of such audit 
contains a separate opinion by said auditors 
as to whether the statements of expenditure 
submitted during such fiscal year, together 
with the procedures and internal controls 
involved in their preparation, can be relied 
upon to support the related withdrawals.
8.
Suspension and Cancellation
8.1.
The Bank may at any time, by notice to 
the Recipient, suspend the right of the 
Recipient to make further withdrawals from the 
Grant Account if the Recipient has failed to 
comply with any of its obligations herein 
specified.
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8.2.
The Bank may, by written notice to the 
Recipient, terminate the right of the 
Recipient to make further withdrawals from the 
Grant Account: (a) at any time after the right 
of the Recipient to make withdrawals from the 
Grant Account shall have been suspended 
pursuant to the provisions of paragraph 8.1. 
above; (b) if the Recipient shall have failed 
to take action, satisfactory to the Bank, 
within six months after the effective date 
hereof, to carry out the Activities, (c) if 
the Bank has decided, at any time after 
consultation with the Recipient, to withdraw 
its support to the Project; or (d) if the 
Recipient has withdrawn its request for the 
Bank’s assistance in financing the Project.
9.
Procurement
9.1.
Except as the Bank shall otherwise 
agree, procurement of the consultants’ 
services required for the carrying out of the 
Activities and to be financed under the 
proceeds of the Grant shall be governed by the 
provisions of Attachment II to this Annex.
Attachment I to the Annex to the 
Letter Agreement
Special Account
1.
For the purposes of this Attachment:
(a)
the term “eligible items” means 
the items set forth in the table in paragraph 
3 of the Annex to this Letter Agreement;
(b)
the term “eligible expenditures” 
means expenditures in respect of the 
reasonable cost of goods and services required 
for the Activities and to be financed out of 
the proceeds of the Grant; and
(c)
the term “Authorized Allocation” 
means an amount equivalent to US$50,000 to be 
withdrawn from the Grant Account and deposited 
into the Special Account pursuant to paragraph 
3 (a) of this Attachment.
2.
Payments out of the Special Account 
shall be made exclusively for eligible 
expenditures in accordance with the provisions 
of this Attachment.
3.
After the Bank has received evidence 
satisfactory to it that the Special Account 
has been duly opened, withdrawals of the 
Authorized Allocation and subsequent 
withdrawals to replenish the Special Account 
shall be made as follows:
(a)
The Recipient shall furnish to 
the Bank a request or requests for a deposit 
into the Special Account of an amount or 
amounts which do not exceed the aggregate 
amount of the Authorized Allocation.  On the 
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basis of such request or requests, the Bank 
shall, on behalf of the Recipient, withdraw 
from the Grant Account and deposit into the 
Special Account such amount or amounts as the 
Recipient shall have requested.
(b)
(i)
For replenishment of the 
Special Account, the Recipient shall furnish 
to the 
Bank requests for 
deposits into the Special Account at such 
intervals as the 
Bank shall 
specify.
(ii)
Prior to or at the time of 
each such request, the Recipient shall furnish 
to 
the Bank the documents and 
other evidence required pursuant to paragraph 
4 of 
this Attachment for the 
payment or payments in respect of which 
replenishment 
is requested.  
On the basis of each such request, the Bank 
shall, on behalf of 
the 
Recipient, withdraw from the Grant Account and 
deposit into the Special 
Account such amount as the Recipient shall 
have requested and as shall have 
been shown by said documents and other 
evidence to have been paid out of the 
Special Account for eligible 
expenditures. All such deposits shall be 
withdrawn by the Bank from 
the Grant Account under the eligible item(s), 
and 
in the respective 
equivalent amounts, as shall have been 
justified by said 
documents and other evidence.
4.
For each payment made by the Recipient 
out of the Special Account, the Recipient 
shall, at such time as the Bank shall 
reasonably request, furnish to the Bank such 
documents and other evidence showing that such 
payment was made exclusively for eligible 
expenditures.
5.
Notwithstanding the provisions of 
paragraph 3 of this Attachment, the Bank shall 
not be required to make further deposits into 
the Special Account:
(a)
if, at any time, the Bank shall 
have determined that all further withdrawals 
should be made by the Recipient directly from 
the Grant Account;
(b)
if the Recipient shall have 
failed to furnish to the Bank, within the 
period of time specified in paragraph 5.1 (b) 
(ii) of the Annex to this Letter Agreement, 
any of the audit reports required to be 
furnished to the Bank pursuant to said 
paragraph in respect of the audit of the 
records and accounts for the Special Account;
(c)
if, at any time, the Bank shall 
have notified the Recipient of its intention 
to suspend in whole or in part the right of 
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the Recipient to make withdrawals from the 
Grant Account pursuant to the provisions of 
paragraph 6.1 of the Annex to this Letter 
Agreement; or
(d)
once the total unwithdrawn amount 
of the Grant shall equal the equivalent of 
twice the amount of the Authorized Allocation.
Thereafter, withdrawals from the Grant Account 
of the remaining unwithdrawn amount of the 
Grant shall follow such procedures as the Bank 
shall specify by notice to the Recipient.  
Such further withdrawals shall be made only 
after and to the extent that the Bank shall 
have been satisfied that all such amounts 
remaining on deposit in the Special Account as 
of the date of such notice will be utilized in 
making payments for eligible expenditures.
6.
(a)
If the Bank shall have determined 
at any time that any payment out of the 
Special Account: (i) was made for an 
expenditure or in an amount not eligible 
pursuant to paragraph 2 of this Attachment; or 
(ii) was not justified by the evidence 
furnished to the Bank, the Recipient shall, 
promptly upon notice from the Bank: (A) 
provide such additional evidence as the Bank 
may request; or (B) deposit into the Special 
Account (or, if the Bank shall so request, 
refund to the Bank) an amount equal to the 
amount of such payment or the portion thereof 
not so eligible or justified.  Unless the Bank 
shall otherwise agree, no further deposit by 
the Bank into the Special Account shall be 
made until the Recipient has provided such 
evidence or made such deposit or refund, as 
the case may be.
(b)
If the Bank shall have determined 
at any time that any amount outstanding in the 
Special Account will not be required to cover 
further payments for eligible expenditures, 
the Recipient shall, promptly upon notice from 
the Bank, refund to the Bank such outstanding 
amount.
Attachment II to the Annex to the 
Letter Agreement
Procurement
Section I.
Consultants’ Services
Part A:
General
Consultants’ services shall be procured 
in accordance with the provisions of the 
Introduction and Section IV of the 
“Guidelines: Selection and Employment of 
Consultants by World Bank Borrowers”, 
published by the Bank in January 1997 and 
revised in September 1997 and January 1999 
(the Consultant Guidelines), and the following 
provisions of this Section I.
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Part B:
Other Procedures for the 
Selection of Consultants
1.
Individual Consultants
Services for tasks under paragraph 1.1 
(i), (ii), (iii), (v) and (vi) of the Annex 
shall be procured under contracts awarded to 
individual consultants in accordance with the 
provisions of paragraphs 5.1 through 5.3 of 
the Consultant Guidelines.
2.
Least-cost Selection
Services for auditing may be procured 
under contracts awarded in accordance with the 
provision of paragraph 3.1 and 3.6 of the 
Consultants Guidelines.
Part C:
Review by the Bank of the 
Selection of Consultants
1.
Selection Planning
Prior to the issuance to consultants of 
any requests for proposals, the proposed plan 
for the selection of consultants under the 
Activities shall be furnished to the Bank for 
its review and approval, in accordance with 
the provisions of paragraph 1 of Appendix 1 to 
the Consultant Guidelines.  Selection of all 
consultants’ services shall be undertaken in 
accordance with such selection plan as shall 
have been approved by the Bank, and with the 
provisions of said paragraph 1.
2.
Prior Review
(a)
With respect to the first two 
contracts for the employment of consulting 
firms and individual consultants, the 
procedures set forth in paragraphs 1, 2 (other 
than the second subparagraph of paragraph 2 
(a)) and 5 of Appendix 1 to the Consultant 
Guidelines shall apply. 
(b)
With respect to each contract for 
the employment of consulting forms and 
individual consultants, the qualifications, 
experience, terms of reference and terms of 
employment of the consultants shall be 
furnished to the Bank for its prior review and 
approval.  The contract shall be awarded only 
after said approval shall have been given.
3.
Post Review
With respect to each contract not 
governed by paragraph 2 of this Part, the 
procedures set forth in paragraph 4 of 
Appendix 1 to the Consultant Guidelines shall 
apply.
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