Page 1 The World Bank 1818 H Street N.W. (202) 477-1234 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 20433 Cable Address: INTBAFRAD I NTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A. Cable Address: INDEVAS CONFORMED COPY July 20, 2010 H.E. Veaceslav Negruta Minister of Finance Ministry of Finance 7, Cosmonautilor Str Chisinau Republic of Moldova Re: Moldova: Advance Agreement for Preparation of Proposed Moldova Governance e-Transformation Project Project Preparation Advance No. Q-729 Excellency: In response to the request for financial assistance made on behalf of Republic of Moldova (“Recipient”), I am pleased to inform you that the International Development Association (“World Bank”) proposes to extend to the Recipient an advance out of the World Bank’s Project Preparation Facility in an amount not to exceed two million Dollars ($2,000,000) (“Advance”) on the terms and conditions set forth or referred to in this letter agreement (“Agreement”), which includes the attached Annex, to assist in financing the activities described in the Annex (“Activities”). The objective of the Activities is to facilitate the preparation and pilot implementation of most urgent activities under a proposed Governance e-Transformation project (“Project”), in support of which the Recipient has requested the World Bank’s financial assistance. The Recipient represents, by confirming its agreement below, that: (a) it understands that the provision of the Advance does not constitute or imply any commitment on the part of IDA to assist in financing the Project; and (b) it is authorized to enter into this Agreement and to carry out the Activities, repay the Advance and perform its other obligations under this Agreement, all in accordance with the provisions of this Agreement. 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effective as of the date of the countersignature; provided, however, that the offer of this Agreement shall be deemed withdrawn if the World Bank has not received this Page 2 2 countersigned copy within ninety days after the date of signature of this Agreement by the World Bank, unless the World Bank has established a later date for such purpose. Very truly yours, INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Connie Luff Acting Country Director Ukraine, Belarus, Moldova AGREED: REPUBLIC OF MOLDOVA By /s/ Veaceslav Negruta Minister of Finance Date: August 9, 2010 Enclosures: (1) “Standard Conditions for Advances Made by the World Bank under its Project Preparation Facility”, dated January 15, 2008; (2) “Guidelines on Preventing and Combating Fraud and Corruption in projects Financed by IBRD Loans and IDA Credits and Grants”, dated October 15, 2006; (3) “Guidelines: Procurement under IBRD Loans and IDA Credits”, published by the World Bank in May 2004, Revised October 1, 2006 and May 1, 2010; (4) “Guidelines: Selection and Employment of Consultants by World Bank Borrowers”, published by the World Bank in May 2004, Revised October 1, 2006 and May 1, 2010; and (5) Disbursement Letter for the Advance, together with “World Bank Disbursement Guidelines for Projects”, dated May 1, 2006. Page 3 3 PPA No. Q-729 ANNEX Article I Standard Conditions; Definitions 1.01. Standard Conditions. The Standard Conditions for Advances Made by the World Bank under its Project Preparation Facility dated January 15, 2008 (“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. Article II Execution of the Activities 2.01. Description of the Activities. The Activities for which the Advance is provided consist of the following parts: 1. Provision of goods, works, consultant’s services and training for: (i) supporting the set up and operation of the e-Governance Center ; (ii) training for e-Leaders, chief information officers within the ministries and civil servants from various public institutions; (iii) developing policy, strategy and program development specifically for e-Government/e- Transformation, broadband and IT/ITES industry; (iv) supporting the adoption of legal and technical frameworks, including interoperability, e-security and Open Data Frameworks; and (v) strategic communications and partnerships. 2. Provision of goods and consultant’s services for supporting the development of Shared Infrastructure and e-Services, including: (i) “M-Cloud” Shared Infrastructure; (ii) “M-Points” services; (iii) “e-Procurement” services and (iv) “Quick Win” e-services. 3. Provision of goods, works, consultants’ services and operating costs in carrying out project implementation, including procurement, financial management, disbursement, and monitoring and evaluation. 2.02. Execution of the Activities Generally. (a) The Recipient declares its commitment to the objectives of the Activities. To this end, the Recipient shall carry out the Activities through the State Chancellery, Ministry of Information Technology and Communication and Project Implementation Unit (PIU) in accordance with the provisions of: (a) Article II of the Standard Conditions; (b) this Article II; and (c) the “Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants”, dated October 15, 2006, with the modifications set forth in the Appendix to this Agreement. (b) The Recipient shall maintain the PIU with resources, functions and responsibilities acceptable to the World Bank and with staff, whose qualifications, experience and terms of reference shall be satisfactory to the World Bank. Page 4 4 2.03. Institutional and Other Arrangements. (a) The Recipient’s State Chancellery shall be responsible for the overall Project coordination and implementation. (b) High-level management of the Project shall be carried out by a Project Steering Committee (PSC), comprising representatives from all the agencies involved in the project. Day- to-day management of technical aspects of the Activities shall belong to the E-Governance Center in close cooperation with the Ministry of Information Technology and Communications. The Project Implementation Unit (PIU) temporarily placed within the existing PIU for Government`s Central Public Administration Reform (CPAR) (Trust Fund TF56601, dated November 7, 2006) shall be responsible for fiduciary aspects of the Project implementation, including disbursement , financial management, procurement, monitoring and reporting 2.04. Monitoring, Reporting and Evaluation of the Activities. The Recipient shall monitor and evaluate the progress of the Activities in accordance with the provisions of Section 2.08 of the Standard Conditions. 2.05. Financial Management. (a) The Recipient shall ensure that a financial management system is maintained in accordance with the provisions of Section 2.09 of the Standard Conditions. (b) The Recipient shall ensure that interim un-audited financial reports for the Activities are prepared and furnished to the World Bank 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 Sections 2.09 (b) of the Standard Conditions. Such audit of the Financial Statements shall cover the entire period of the Advance implementation, commencing with the fiscal year in which the first withdrawal under the Advance was made. The Recipient shall ensure that the audited Financial Statements for such period shall be: (i) furnished to the Bank not later than six months after the end of such period; and (ii) made publicly available in a timely fashion and in a manner acceptable to the World Bank. 2.06. Procurement (a) General . All goods, works and services required for the Activities and to be financed out of the proceeds of the Advance shall be procured in accordance with the requirements set forth or referred to in: (i) Section I of the “Guidelines for Procurement under IBRD Loans and IDA Credits” published by the World Bank in May 2004 and revised in October 2006 and May 2010 (“Procurement Guidelines”), in the case of goods and works; (ii) Sections I and IV of the “Guidelines: Selection and Employment of Consultants by World Bank Borrowers” published by the World Bank in Page 5 5 May 2004 and revised in October 2006 and May 2010 ( “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 Activities in accordance with paragraph 1.16 of the Procurement Guidelines and paragraph 1.24 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 the Procurement Guidelines, or the Consultant Guidelines, as the case may be. (c) Particular Methods of Procurement of Goods and Works The following methods may be used for procurement of goods and works for those contracts which are specified in the Procurement Plan: (A) Shopping; and (B) Direct Contracting. (d) Particular Methods of Procurement of Consultants’ Services (i) Except as otherwise provided in sub-paragraph (ii) below, consultants’ services shall be procured under contracts awarded on the basis of Quality- and Cost-based Selection. (ii) The following methods, other than Quality- and Cost-based Selection, may be used for the procurement of consultants’ services for those assignments which are specified in the Procurement Plan: (A) Selection based on Consultants’ Qualifications; (B) Single-source Selection; (C) Selection of Individual Consultants; and (D) Sole 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. Except as the World Bank shall otherwise determine by notice to the Recipient, the following contracts shall be subject to Prior Review by the World Bank: (a) the first contract to be awarded in accordance with the each procurement method and all Terms of Reference (ToRs) for selection of consultants (individual and firms); (b) each contract for goods and works estimated to cost the equivalent of $100,000 or more; (c) each contract for consultants’ services provided by a firm estimated to cost the equivalent of $100,000 or more and each contract for consultants’ services provided by individual estimated to cost the equivalent of $50,000 or more. All other contracts shall be subject to Post Review by the World Bank. Article III Withdrawal of the Advance Page 6 6 3.01. Eligible Expenditures. The Recipient may withdraw the proceeds of the Advance in accordance with the provisions o: (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 100% of Eligible Expenditures consisting of goods, works, consultants’ services, training and operating costs exclusive of Taxes. For the purpose of this paragraph: (i) the term “Training” means expenses incurred for training for e-Leaders, chief information officers and civil servants of various public institutions in the areas of e-government and e-transformation; and (ii) the term “Operating Costs” means the incremental expenses incurred by the State Chancellery, the Ministry of Information Technology and Communication and PIU on account of the Project implementation, including transportation costs, car rental and fuel costs, costs of office rental and maintenance, moving expenses, equipment maintenance and repair, translation, communication and advertising, printing and publications, materials and supplies, bank charges, and local travel costs (including lodging and diems) and any other expenditures that may be agreed upon by the Association. 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. Refinancing Date. The Refinancing Date is March 31, 2011. Article IV Terms of the Advance 4.01. Service Charge . The Recipient shall pay a service charge on the Withdrawn Advance Balance at the rate of three-fourths of one percent (3/4 of 1%) per annum. The service charge shall accrue from the respective dates on which amounts of the Advance are withdrawn and shall be paid in arrears in accordance with the provisions of Section 4.02 of this Agreement. Service charges shall be computed on the basis of a 360-day year of twelve 30-day months. 4.02. Repayment. The Withdrawn Advance Balance shall be repaid by the Recipient to the World Bank (together with any service charges accrued thereon) in accordance with the provisions of Article IV of the Standard Conditions and the following provisions: (a) Refinancing under the Refinancing Agreement: If, on or before the Refinancing Date, a Refinancing Agreement has been executed by all of its parties, then the full amount of the Withdrawn Advance Balance shall be repaid to the World Bank (together with any service charges accrued on the Advance to the date of repayment) as soon as the Refinancing Agreement becomes effective, by means of a withdrawal by the World Bank of an amount of the Refinancing Proceeds equivalent to the Withdrawn Advance Balance plus such service charges, in accordance with the provisions of the Refinancing Agreement. (b) Repayment in the absence of a Refinancing Agreement: If, on or before the Refinancing Date, no Refinancing Agreement has been executed by all of its parties, or if, by such date or at any time thereafter, it has been so executed but terminates without becoming effective, then: Page 7 7 (i) if the amount of the Withdrawn Advance Balance does not exceed $50,000, it shall be repaid by the Recipient to the World Bank (together with service charges accrued on the Withdrawn Advance Balance to the date of repayment) on such date as the World Bank shall specify in a notice to the Recipient, which shall in no event be earlier than 60 days following the date of dispatch of such notice; and (ii) if the amount of the Withdrawn Advance Balance exceeds $50,000, it (together with service charges accrued on the Withdrawn Advance Balance to the Notice Date) (t he “Aggregate Balance”) shall be paid by the Recipient to the World Bank in ten approximately equal semiannual installments, in the amounts and on the dates (“Payment Dates”) which the World Bank shall specify in a notice to the Recipient. In no event shall the first Payment Date be set earlier than 60 days following the date (“Notice Date”) of dispatch of such notice. The Recipient shall pay a service charge on the Aggregate Balance at the rate of three-fourths of one percent (3/4 of 1%) per annum, payable in arrears on each Payment Date. The service charge shall be computed on the basis of a 360-day year of twelve 30-day months. Article V Recipient’s Representative; Addresses 5.01. Recipient’s Representative . The Recipient’s Representative referred to in Section 9.02 of the Standard Conditions is Minister of Finance. 5.02. Recipient’s Address . The Recipient’s Address referred to in Section 9.01 of the Standard Conditions is: Ministry of Finance 7, Cosmonautilor Street Chisinau 2005 Republic of Moldova Telex: Facsimile: (3732) 22810 (3732) 221 307 5.03. World Bank ’s Address . The World Bank ’s Address referred to in Section 9.01 of the Standard Conditions is: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable: Telex: Facsimile: INDEVAS Page 8 8 INTBAFRAD 248423 (MCI) or 1-202-477-6391 Washington, D.C. 64145 (MCI) Page 9 9 APPENDIX Modifications to the Anti-Corruption Guidelines The modifications to the Anti-Corruption Guidelines are as follows: 1. Section 5 is re-numbered as Section 5(a) and a new Section 5(b) is added to read as follows: “…(b) These Guidelines also provide for the sanctions and related actions to be imposed by the Bank on Borrowers (other than the Member Country) and all other individuals or entities who are recipients of Loan proceeds, in the event that the Borrower or the individual or entity has been debarred by another financier as a result of a determination by such financier that the Borrower or the individual or entity has engaged in fraudulent, corrupt, coercive or collusive practices in connection with the use of the proceeds of a financing made by such financier.” 2. Section 11(a) is modified to read as follows: “… (a) sanction in accordance with prevailing Bank’s sanctions policies and procedures (fn13) a Borrower (other than a Member Country) ( fn 14) or an individual or entity, including (but not limited to) declaring such Borrower, individual or entity ineligible publicly, either indefinitely or for a stated period of time: (i) to be awarded a Bank- financed contract; (ii) to benefit from a Bank-financed contract, financially or otherwise, for example as a sub-contractor; and (iii) to otherwise participate in the preparation or implementation of the project or any other project financed, in whole or in part, by the Bank, if at any time the Bank determines (fn 15) that such Borrower, individual or entity has engaged in corrupt, fraudulent, collusive, coercive or obstructive practices in connection with the use of loan proceeds, or if another financier with which the Bank has entered into an agreement for the mutual enforcement of debarment decisions has declared such person or entity ineligible to receive proceeds of financings made by such financier or otherwise to participate in the preparation or implementation of any project financed in whole or in part by such financier as a result of a determination by such financier that the Borrower or the individual or entity has engaged in fraudulent, corrupt, coercive or collusive practices in connection with the use of the proceeds of a financing made by such financier.” Footnotes: “13. An individual or entity may be declared ineligible to be awarded a Bank financed contract upon completion of sanctions proceedings pursuant to the Bank’s sanctions policies and procedures, or under the procedures of temporary suspension or early temporary suspension in connection with an ongoing sanctions proceeding, or following a sanction by another financier with whom the Bank has entered into a cross debarment agreement, as a result of a determination by such financier that the firm or individual has engaged in fraudulent, corrupt, coercive or collusive practices in connection with the use of the proceeds of a financing made by such financier.” Page 10 10 “14. Member Country includes officials and employees of the national government or of any of its political or administrative subdivisions, and government owned enterprises and agencies that are not eligible to bid under paragraph 1.8(b) of the Procurement Guidelines or participate under paragraph 1.11(c) of the Consultant Guidelines.” “15. The Bank has established a Sanctions Board, and related procedures, for the purpose of making such determinations. The procedures of the Sanctions Board sets forth the full set of sanctions available to the Bank. In addition, the Bank has adopted an internal protocol outlining the process to be followed in implementing debarments by other financiers, and explaining how cross-debarments will be posted on the Bank’s website and otherwise be made known to staff and other stakeholders.”