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October 28, 1999
Anvarsho Muzafarov
Minister of Finance
Ministry of Finance
3, Kuibyshev Street
Dushanbe, 734025
Republic of Tajikistan
Re:
Japanese Grant for Structural Adjustment Credit II Project
Grant No. TF025815
Excellency:
I am writing on behalf of the International Development Association (IDA) to 
indicate IDA's agreement, as administrator of grant funds provided by Japan, to make a 
grant in an amount not exceeding four hundred and seventy five thousand United States 
dollars (US$475,000) (the Grant) to Republic of Tajikistan (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 Annex 
to 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 IDA 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 DEVELOPMENT ASSOCIATION
By /s/ Ishrat Husain
Country Director for Azerbaijan, Tajikistan and Uzbekistan 
Europe and Central Asia Region
AGREED:
REPUBLIC OF TAJIKISTAN
By /s/ Anvarsho Muzafarov
Authorized Representative
Date: October 25, 1999
ANNEX
Purposes, Terms, and Conditions of the Grant
1.
Purposes and Activities
1.1.
The purpose of the Grant is to assist in the preparation of the proposed 
Structural Adjustment Credit II Project, which has as main objective support of the 
Recipient’s public sector reform. The activities (the Activities) for which the Grant 
is given are as follows:
Provision of consultants’ services and training to:
(a)
assist the Recipient in the preparation of reform of public 
administration, through (i) reviewing the overall structure of the public sector, and 
(ii) developing proposals for reform and mechanisms of their implementation; 
(b)
 strengthen budget management systems, through (i) supporting Ministry of 
Finance of the Recipient in its overall management of the budget cycle; and (ii) 
assisting the Budget Department of the Ministry of Finance with introduction of a 
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Medium-Term Budget Framework (MTBF); and 
(c)
assist the State Property Committee of the Recipient to complete the 
preparation of the remaining targeted enterprises for privatization and to develop 
legal and regulatory system for private sector development.
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 IDA shall reasonably request; (d) from time to 
time exchange views with IDA's representatives on the progress and results of the 
Activities; and (e) take all necessary measures required to enable IDA to visit the 
territory of Republic of Tajikistan for purposes related to the Grant.  Without 
limitation on the foregoing, the Recipient shall, if IDA shall so request, prepare and 
furnish to IDA promptly upon completion of the Activities a report, in form and 
substance satisfactory to IDA, on the results and impact of the Activities.
3.
Procurement
Except as IDA shall otherwise agree, procurement of the consultants’ services 
required for the carrying out of the Activities and to be financed out of the proceeds 
of the Grant shall be governed by the provisions of Attachment I to this Annex.
4.
Withdrawal of Grant Proceeds
4.1.
The amount of the Grant shall be credited to an account opened by IDA on its 
books in the name of the Recipient (the Grant Account), and may be withdrawn therefrom 
by the Recipient in accordance with the provisions of this Section 4, for expenditures 
in respect of the reasonable cost of  services required for the Activities and to be 
financed out of the proceeds of the Grant.
4.2.
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 Grant
   % of
Allocated (in United
Expenditures
Item
  States dollars)
to be Financed
(1)
Consultants' Services
475,000
100%
TOTAL
475,000
4.3.
Notwithstanding the provisions of paragraph 4.2 above: (a) no withdrawals shall 
be made: (i) for payments made for expenditures prior to the date of signature of this 
Letter Agreement by IDA; (ii) on account of payments for any taxes levied by or in the 
territory of the Recipient; (iii) on account of expenditures in the territories of any 
country which is not a member of IDA or for services supplied from such territories; 
(iv) for the purpose of any payment to persons or entities if such payment, to IDA’s 
knowledge, is prohibited by a decision of the United Nations Security Council taken 
under Chapter VII of the Charter of the United Nations; or (v) after February 28, 2001 
or such later date as IDA shall establish by written notice to the Recipient (the 
Closing Date), except that withdrawals may be made for expenditures incurred prior to 
the Closing Date if the corresponding application is received by IDA within four 
months after the Closing Date, after which time any amount of the Grant remaining 
unwithdrawn from the Grant Account shall be canceled; and (b) if, in IDA’s opinion, an 
amount of the Grant allocated to any of the items in the table in paragraph 4.2 above 
will be insufficient to finance the expenditures for such item, IDA may, by written 
notice to the Recipient, reallocate to such item an amount of the Grant then allocated 
to another item which, in IDA’s opinion, will not be necessary to meet other 
expenditures.
4.4.
When the Recipient shall desire to withdraw any amount from the Grant Account, 
it shall deliver to IDA a written application for withdrawal of such amount in the 
form specified by IDA.  Withdrawal applications shall be: (a) signed on behalf of the 
Recipient by an authorized official or such other person as he or she shall have 
authorized in writing; and (b) be accompanied by such evidence in support of the 
application as IDA shall reasonably request.  Authenticated specimen signatures of the 
person authorized to sign withdrawal applications shall be provided with the first 
application bearing his or her signature.  Each withdrawal application for an amount 
of the Grant and its supporting evidence must be sufficient in form and substance to 
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satisfy IDA that the Recipient is entitled to withdraw such amount from the Grant 
Account and that such amount is to be used in the carrying out of the Activities.  IDA 
shall pay the amounts withdrawn by the Recipient from the Grant Account only to or on 
the order of the Recipient.
4.5.
IDA may require withdrawals from the Grant Account to be made on the basis of 
statements of expenditure for expenditures for services of individual consultants 
costing less than $50,000 equivalent per contract, under such terms and conditions as 
IDA shall specify by notice to the Recipient. 
4.6.
Withdrawals of the proceeds of the Grant shall be made in the currency of the 
Grant.  IDA, at the Recipient’s request and acting as an agent of the Recipient, shall 
purchase with the currency of the Grant withdrawn from the Grant Account such 
currencies as shall be required to pay for expenditures to be financed out of the 
proceeds of the Grant.  Whenever it shall be necessary, for the purposes of this 
Letter Agreement, to determine the value of one currency in terms of another, such 
value shall be as reasonably determined by IDA.
4.7.
To facilitate the carrying out of the Activities, the Recipient may open and 
maintain in United States dollars a special deposit account (the Special Account) in a 
commercial bank on terms and conditions satisfactory to IDA, 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 
II to this Annex.
5.
Accounts and Audits
5.1.
(a)
The Recipient shall maintain or cause to be maintained records and 
accounts adequate to reflect in accordance with sound accounting practices the 
operations, resources and expenditures in respect of the Activities of the departments 
or agencies of the Recipient responsible for carrying out the Activities or any part 
thereof.
(b)
The Recipient shall: (i) have the records and accounts referred to in 
subparagraph (a) above and the records and accounts for the Special Account for each 
fiscal year audited, in accordance with appropriate auditing principles consistently 
applied, by independent auditors acceptable to IDA; (ii) furnish to IDA as soon as 
available, but in any case not later than six months after the end of each such year, 
the report of such audit by said auditors, of such scope and in such detail as IDA 
shall have reasonably requested; and (iii) furnish to IDA such other information 
concerning said records and accounts and the audit thereof as IDA 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 
IDA 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 IDA’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.
6.
Suspension and Cancellation
6.1.
IDA may at any time, by notice to the Recipient, suspend the right of the 
Recipient to make further withdrawals from the Grant Account if any of the following 
events has occurred and is continuing: (a) the Recipient has failed to comply with any 
of its obligations herein specified; or (b) the right of the Recipient to make 
withdrawals under any loan agreement with IDA or any development credit agreement with 
the International Bank for Reconstruction and Development (IBRD) shall have been 
suspended. 
6.2.
IDA 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 6.1 above; or (b) if the Recipient 
shall have failed to take action, satisfactory to IDA, within six months after the 
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effective date hereof, to carry out the Activities; or (c) if IDA 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 IDA’s assistance in financing the 
Project.
Attachment I 
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 Section I of this Schedule.
Part B:
Procurement Procedures
Individual Consultants
Services for tasks that meet the requirements set forth in paragraph 5.1 of the 
Consultant Guidelines 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.
Part C:
Review by IDA 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 IDA 
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 
IDA, and with the provisions of said paragraph 1.
2.
Prior Review
With respect to each contract for the employment of individual 
consultants estimated to cost the equivalent of $50,000 or more, the qualifications, 
experience, terms of reference and terms of employment of the consultants shall be 
furnished to IDA 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.
Attachment II
Special Account
1.
For the purposes of this Attachment:
(a)
the term "eligible item" means the item set forth in the table in 
paragraph 4.2 of the Annex to this Letter Agreement;
(b)
the term "eligible expenditures" means expenditures in respect of the 
reasonable cost of 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.
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3.
After IDA 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 IDA 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 basis of such request or requests, IDA 
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 IDA requests for deposits into the Special Account at 
such intervals as IDA shall specify.
(ii)
Prior to or at the time of each such request, the Recipient shall 
furnish to IDA 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, IDA 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 IDA from the Grant Account under the 
eligible item, 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 IDA shall reasonably request, furnish to the IDA 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, IDA shall not 
be required to make further deposits into the Special Account:
(a)
if, at any time, IDA 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 IDA, 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 IDA pursuant to said paragraph in 
respect of the audit of the records and accounts for the Special Account;
(c)
if, at any time, IDA shall have notified the Recipient of its intention 
to suspend in whole or in part the right of 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 IDA shall specify by notice to the 
Recipient.  Such further withdrawals shall be made only after and to the extent that 
IDA 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 IDA 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 IDA, the Recipient shall, promptly upon notice from IDA: (A) provide such 
additional evidence as IDA may request; or (B) deposit into the Special Account (or, 
if IDA shall so request, refund to IDA) an amount equal to the amount of such payment 
or the portion thereof not so eligible or justified.  Unless IDA shall otherwise 
agree, no further deposit by IDA 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 IDA shall have determined at any time that any amount outstanding in 
the Special Account will not be required to cover further payments for eligible 
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expenditures, the Recipient shall, promptly upon notice from IDA, refund to IDA such 
outstanding amount.