The World Bank OFF)A et N. (42)473-1000 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELO ENT Id,D.C 120433 Cable Address: INTBAFRAD INTERNATIONAL DEVELOPMENT ASSOCIATION 0 CUR NTS Cable Address: INDEVAS January 13, 2014 His Excellency Mr. Anatol Arapu Minister of Finance Ministry of Finance 7, Cosmonautilor Street MD-2005, Chisinau Republic of Moldova Excellency, Re: IDA Credit 5196- MD (Moldova Education Reform Project) Additional Instructions: Disbursement First Restatement I refer to the Financing Agreement between the International Development Association (the "Association") and the Republic of Moldova (the "Recipient") for the above-referenced project, dated February 7, 2013. The Agreement provides that the Association may issue additional instructions regarding the withdrawal of the proceeds of financing IDA Credit 5196- MD ("Financing"). This letter ("Disbursement Letter"), as revised from time to time, constitutes the additional instructions. This letter constitutes the first restatement of the Disbursement Letter dated February 7, 2013 for the Credit, restating (a) Section II (iii), (iv), as well as annex 4 "Use ofSecure Identification Credentials " to introduce updated electronic delivery means, and (b) Bullet three of Section II(vi) to change the name of the Financial Institution at which the Designated Account will be opened, and will accordingly replace the Disbursement Letter dated February 7, 2013 in its entirety. The attached World Bank Disbursement Guidelines for Projects, dated May 1, 2006, ("Disbursement Guidelines") (Attachment 1), are an integral part of the Disbursement Letter. The manner in which the provisions in the Disbursement Guidelines apply to the Financing is specified below. Sections and subsections in parentheses below refer to the relevant sections and subsections in the Disbursement Guidelines and, unless otherwise defined in this letter, the capitalized terms used have the meanings ascribed to them in the Disbursement Guidelines. I. Disbursement Arrangements (i) Disbursement Methods (section 2). The following Disbursement Methods may be used under the Financing: * Reimbursement - mandatory for Disbursement Category 1. * Advance * Direct Payment * Special Commitment Please note that Reimbursement, Advance, Direct Payment and Special Commitment disbursement methods shall be allowed for Category 2. For Category 1 only Reimbursement method shall be allowed. (ii) Disbursement Deadline Date (subsection 3.7). The Disbursement Deadline Date is 4 months after the Closing Date specified in the Financing Agreement. Any changes to this date will be notified by the Association. (iii) Disbursement Conditions (subsection 3.8). Please refer to the Disbursement Conditions in Section IV. B. 1. and 2. of schedule 2 to the Financing Agreement. II. Withdrawal of Financing Proceeds (i) Authorized Signatures (subsection 3.1). An authorized signatory letter in the Form attached (Attachment 2) should be furnished to the Association at the address indicated below providing the name(s) and specimen signature(s) of the official(s) authorized to sign Applications: The World Bank 1818 H Street, N.W. Washington, D.C. 20433 United States of America Attention: Qimiao Fan - Country Director (ii) Applications (subsections 3.2 - 3.3). Please provide completed and signed (a) applications for withdrawal, together with supporting documents, and (b) applications for special commitments, together with a copy of the commercial bank letter of credit, to the address indicated below: The World Bank Radnicka cesta 80, 9th floor, Zagreb, HR - 10 000, Croatia Attention: Loan Department (iii) Electronic Delivery (subsection 3.4) The Association may permit the Recipient to electronically deliver to the Association Applications (with supporting documents) through the Association's Client Connection, web-based portal. The option to deliver Applications to the Association by electronic means may be effected if: (a) the Recipient has designated in writing, pursuant to the terms of subparagraph (i) of this Section, its officials who are authorized to sign and deliver Applications and to receive secure identification credentials ("SIDC") from the Association for the purpose of delivering such Applications by electronic means; and (b) all such officials designated by the Recipient have registered as users of Client Connection. If the Association agrees, the Association will provide the Recipient with SIDC for the designated officials. Following which, the designated officials may deliver Applications electronically by completing Form 2380, which is accessible through Client Connection (https://clientconnection.worldbank.org). The Recipient may continue to exercise the option of preparing and delivering Applications in paper form. The Association reserves the right and may, in its sole discretion, temporarily or permanently disallow the electronic delivery of Applications by the Recipient. (iv) Terms and Conditions of Use of SIDC to Process Applications. By designating officials to use SIDC and by choosing to deliver the Applications electronically, the Recipient confirms through the authorized signatory letter its agreement to: (a) abide by the Terms and Conditions of Use of Secure Identification Credentials in connection with Use ofElectronic Means to Process Applications and Supporting Documentation ("Terms and Conditions of Use of Secure Identification Credentials") provided in Attachment [3]; and (b) to cause such official to abide by those terms and conditions. (v) Minimum Value ofApplications (subsection 3.5). The Minimum Value of Applications for direct payment and issuance of Special Commitments is US$75,000 equivalent (for Category 2 expenditures only). (vi) Advances (sections 5 and 6) shall only be used to finance expenditures under Category 2. * Type of Designated Account (subsection 5.3): Segregated * Currency of Designated Account (subsection 5.4): United States dollars (US$) * Financial Institution at which the Designated Account Will Be Opened (subsection 5.5): Treasury will open a Designated Account in the National Bank of Moldova. * Ceiling (subsection 6.1): US$300,000 III. Reporting on Use of Financing Proceeds (i) Supporting Documentation (section 4). Supporting documentation should be provided with each application for withdrawal as set out below: * For requests for Reimbursement: For Category 1 only: o Interim Financial Reports, in local currency, in the form attached (Attachment 6) for Category 1 expenditures only and evidence that the relevant(s) DLI(s) have been achieved, as provided by the Association's Task Team, must be submitted to the Association with the withdrawal application For Category 2 only: o List of payments against contracts that are subject to the Association's prior review, in the form attached (Attachment 4) o Records evidencing eligible expenditures (e.g., copies of receipts, supplier invoices) for payments for goods against contracts valued at US$200,000 equivalent or more; for consultant services against contracts valued at US$100,000 equivalent or more for firms and at US$50,000 equivalent or more for individual consultants. o Statement of Expenditures in the form attached (Attachment 5) for all other expenditures / contracts. * For reporting eligible expenditures paid from the Designated Account (for Category 2 only): o List of payments against contracts that are subject to the Association's prior review, in the form attached (Attachment 4); o Records evidencing eligible expenditures (e.g., copies of receipts, supplier invoices) for payments for goods against contracts valued at US$200,000 equivalent or more; for consultant services against contracts valued at US$100,000 equivalent or more for firms and at US$50,000 equivalent or more for individual consultants; o Statement of Expenditures in the form attached (Attachment 5) for all other expenditures / contracts. * For requests for Direct Payment: records evidencing eligible expenditures, e.g., copies of receipts, supplier invoices. (ii) Frequency of Reporting Eligible Expenditures Paid from the Designated Account (subsection 6.3): Replenishment applications should be submitted quarterly. The replenishment application must include reconciled bank statements as well as other appropriate supporting documents. IV. Other Disbursement Instructions: (i) No designated account will be established for expenditure made under Category 1. Disbursements for Parts A and B of the project, i.e. disbursement Category 1 in the Financing Agreement, will be on reimbursement basis only. Applications for Withdrawal will be submitted on a quarterly basis or whenever the government may so request and disbursements will be made directly to the Government Account. For purposes of reimbursement from Disbursement Category 1 - Teacher Salaries under the EEPS under Parts A and B of the Project, evidence that the relevant(s) DLI(s) have been achieved, as provided by the Association's Task Team, must be submitted to the Association with the withdrawal application (ii) Disbursement for Part C of the project, i.e. disbursement Category 2 in the Financing Agreement, Reimbursement, Advance, Direct Payment and Special Commitment methods will be utilized and credit proceeds will be made upon receipt by the Association of a withdrawal application also to the Government Account. V. Other Important Information For additional information on disbursement arrangements, please refer to the Disbursement Handbook available on the Association's public website at https://www.worldbank.org and its secure website "Client Connection" at https://clientconnection.worldbank.org. Print copies are available upon request. From the Client Connection website, you will be able to prepare and deliver Applications, monitor the near real-time status of the Financing, and retrieve related policy, financial, and procurement information. If you have not already done so, the Association recommends that you register as a user of the Client Connection website (https://clientconnection.worldbank.org). From this website you will be able to prepare and deliver Applications, monitor the near real-time status of the Financing, and retrieve related policy, financial, and procurement information. All Recipient officials authorized to sign and deliver Applications by electronic means are required to register with Client Connection before electronic delivery can be effected. For more information about the website and registration arrangements, please contact the Association by email at . If you have any queries in relation to the above, please contact Ms.Maiada Kassem, Finance Officer at loa-ecagworldbank.org using the above reference. Yours sincerely, Maiada Kassem Finance Officer Loan Department Attachments \1. World Bank Disbursement Guidelines for Projects, dated May 1, 2006 2. Form for Authorized Signatures 3. Terms and Conditions of Use ofSecure Identification Credentials in connection with Use of Electronic Means to Process Applications and Supporting Documentation, dated March 1, 2013 4. Form of Payments Against Contracts Subject to the Bank's Prior Review 5. Form of Statement of Expenditure -6. Form of Interim Unaudited Financial Reports. Prepared by: Jasna Mestnik, Finance Officer, CTRLA Cleared with and cc: Elena Segura, Country Lawyer Andrea C. Guedes, Task Team Leader Attachment 2 Form of Authorized Signatory Letter [Letterhead] Ministry of Finance [Street address] [DATE] The World Bank 1818 H Street, N.W. Washington, D.C. 20433 United States of America Attention: [Country Director] Re: Financing No. 5196-MD (Moldova Education Project) I refer to the Financing Agreement ("Agreement") between the International Development Association (the "Association") and the Republic of Moldova (the "Recipient"), dated February 7, 2013, providing the above Financing. For the purposes of Section 2.03 of the General Conditions as defined in the Agreement, any '[one] of the persons whose authenticated specimen signatures appear below is authorized on behalf of the Recipient to sign applications for withdrawal [and applications for a special commitment] under this Financing. For the purpose of delivering Applications to the Association, 2[each] of the persons whose authenticated specimen signatures appears below is authorized on behalf of the Recipient, acting 3[individually] 4[jointly], to deliver Applications, and evidence in support thereof on the terms and conditions specified by the Association. 5[This confirms that the Recipient is authorizing such persons to accept Tokens and to deliver the Applications and supporting documents to the Association by electronic means. In full recognition that the Association shall rely upon such representations and warranties, including without limitation, the representations and warranties contained in the Terms and Conditions of Use of Secure Identification Devices in connection with Use of Electronic Means to Process Applications and Supporting Documentation ("Terms and Conditions of Use of Tokens"), the ' Instruction to the Recipient: Stipulate if more than one person needs to sign Applications, and how many or which positions, and if any thresholds apply. Please delete this footnote in final letter that is sent to the Association. 2 Instruction to the Recipient: Stipulate if more than one person needs to jointly sign Applications, if so, please indicate the actual number. Please delete this footnote in final letter that is sent to the Association. 3 Instruction to the Recipient: Use this bracket if any one of the authorized persons may sign; if this is not applicable, please delete. Please delete this footnote in final letter that is sent to the Association. 4 Instruction to the Recipient: Use this bracket only if several individuals must jointly sign each Application; if this is not applicable, please delete. Please delete this footnote in final letter that is sent to the Association. Instruction to the Recipient: Add this paragraph if the Recipient wishes to authorize the listed persons to accept Tokens and to deliver Applications by electronic means; if this is not applicable, please delete the paragraph. Please delete this footnote in final letter that is sent to the Association. Recipient represents and warrants to the Association that it will deliver to each such person a copy of the Terms and Conditions of Use of Tokens and will cause such persons to abide by those terms and conditions.] This Authorization replaces and supersedes any Authorization currently in the Association records with respect to this Agreement. [Name], [position] Specimen Signature: [Name], [position] Specimen Signature: [Name], [position] Specimen Signature: Yours truly, / signed / [Position] Attachment 3 Terms and Conditions of Use of Secure Identification Credentials in connection with Use of Electronic Means to Process Applications and Supporting Documentation March 1, 2013 The World Bank (Bank)' will provide secure identification credentials (SIDC) to permit the Borrower2 to deliver applications for withdrawal and applications for special commitments under the Agreement(s) and supporting documentation (such applications and supporting documentation together referred to in these Terms and Conditions of Use as Applications) to the Bank electronically, on the terms and conditions of use specified herein. SIDC can be either: (a) hardware-based (Physical Token), or (b) software-based (Soft Token). The Bank reserves the right to determine which type of SIDC is most appropriate. A. Identification of Users. 1. The Borrower will be required to identify in a completed Authorized Signatory Letter (ASL) duly delivered to and received by the Bank each person who will be authorized to deliver Applications. The Bank will provide SIDC to each person identified in the ASL (Signatory), as provided below. The Borrower shall also immediately notify the Bank if a Signatory is no longer authorized by the Borrower to act as a Signatory. 2. Each Signatory must register as a user on the Bank's Client Connection (CC) website (https://clientconnection.worldbank.or) prior to receipt of his/her SIDC. Registration on CC will require that the Signatory establish a CC password (CC Password). The Signatory shall not reveal his/her CC Password to anyone or store or record the CC Password in written or other form. Upon registration as a CC user, the Signatory will be assigned a unique identifying account name. B. Initialization of SIDC. 1. Prior to initialization of SIDC by a Signatory, the Signatory will acknowledge having read, understood and agreed to be bound by these Terms and Conditions of Use. "Bank" includes IBRD and IDA. 2 "Borrower" includes the borrower of an IBRD loan, IDA credit, or Project Preparation Facility advance and the recipient of a grant. 2. Where a Physical Token is to be used, promptly upon receipt of the Physical Token, the Signatory will access CC using his/her account name and CC Password and register his/her Physical Token and set a personal identification number (PIN) to be used in connection with the use of his/her Physical Token, after which the Physical Token will be initialized for use by the Signatory exclusively for purposes of delivering Applications. Where a Soft Token is to be used, the Signatory will access CC using his/her account name and CC Password and set a personal identification number (PIN) to be used in connection with the use of his/her Soft Token, after which the Soft Token will be initialized for use by the Signatory exclusively for purposes of delivering Applications. Upon initialization of the SIDC, the Signatory will be a "SIDC User". The Bank will maintain in its database a user account (Account) for each SIDC User for purposes of managing the SIDC of the SIDC User. Neither the Borrower nor the SIDC User will have any access to the Account. 3. Prior to first use of the SIDC by the SIDC User, the Borrower shall ensure that the SIDC User has received training materials provided by the Bank in use of the SIDC. C. Use of SIDC. 1. Use of the SIDC is strictly limited to use in the delivery of Applications by the SIDC User in the manner prescribed by the Bank in the Agreement(s) and these Terms and Conditions. Any other use of the SIDC is prohibited. 2. The Bank assumes no responsibility or liability whatsoever for any misuse of the SIDC by the SIDC User, other representatives of the Borrower, or third parties. 3. The Borrower undertakes to ensure, and represents and warrants to the Bank (such representation and warranty being expressly relied upon by the Bank in granting SIDC) that each SIDC User understands and will abide by, these Terms and Conditions of Use, including without limitation the following: 4. Security 4.1. The SIDC User shall not reveal his/her PIN to anyone or store or record the PIN in written or other form. 4.2. The SIDC User shall not allow anyone else to utilize his/her SIDC to deliver an Application to the Bank. 4.3. The SIDC User shall always logout from CC when not using the system. Failure to logout properly can create a route into the system that is unprotected. 4.4. If the SIDC User believes a third party has learned his/her PIN or has lost his/her Physical Token he/she shall immediately notify clientconnectiongworldbank.org. 4.5. The Borrower shall immediately notify the Bank at clientconnectiongworldbank.org of any lost, stolen or compromised SIDC, and take other reasonable steps to ensure such SIDC are disabled immediately. 5. Reservation of Right to Disable SIDC 5.1. The Borrower shall reserve the right to revoke the authorization of a SIDC User to use a SIDC for any reason. 5.2. The Bank reserves the right, in its sole discretion, to temporarily or permanently disable a SIDC, de-activate a SIDC User's Account or both. 6. Care of Physical Tokens 6.1. Physical Tokens will remain the property of the Bank. 6.2. The Bank will physically deliver a Physical Token to each Signatory designated to receive one in a manner to be determined by and satisfactory to the Bank. 6.3. Physical Tokens contain delicate and sophisticated instrumentation and therefore should be handled with due care, and should not be immersed in liquids, exposed to extreme temperatures, crushed or bent. Also, Physical Tokens should be kept more than five (5) cm from devices that generate electromagnetic radiation (EMR), such as mobile phones, phone-enabled PDAs, smart phones and other similar devices. Physical Tokens should be carried and stored separate from any EMR device. At close range (less than 5 cm), these devices can output high levels of EMR that can interfere with the proper operation of electronic equipment, including the Physical Token. 6.4. Without derogating from these Terms and Conditions of Use, other technical instructions on the proper use and care of Physical Tokens are available at http://www.rsa.com. 7. Replacement 7.1. Lost, damaged, compromised (in terms of 4.5, above) or destroyed Physical Tokens will be replaced at the expense of the Borrower. 7.2. The Bank reserves the right, in its sole discretion, not to replace any Physical Token in the case of misuse, or not to reactivate a SIDC User's Account. Attachment 4 Payments Made during Reporting Period Against Contracts Subject to the Association's Prior Review Date of WB's Share or WB's Non Amount Paid to Amt Paid to Contract Contract Contract Objection Supplier during Supplier during Number Supplier Date Amount to Contract Period Period Attachment 5 STATEMENT OF EXPENDITRE(SOE) Payments made during the period from To Date: For* Expenditures under contracts below SOE documentation thresholds - please refer to the Disbursement Letter for SOE thresholds (no supporting documentation required) Application No.: Loan/Credit/Grant No.: SOESheetNo.: 1 2 3 4 5 6 7 8 9 10 11 12 13 6 Nan~of Total invoice . Naeo amont cvred Currency and USEqialn z SupplierContractor or Total Amount ofContract BriefDescription of(Goods, Works byuthis Currence an paid fromR Consultant, Contract (Include all currencies) or Services appyctin (nelid a7)ont Desginated e S application (net paid (7))~(8) Dsiae reference and date. U to Account- Uof retention) X TOTALS $ Supporting documents for this SOE retained at: Note: (*) Items should be grouped by category; or alternatively, a separate SOE form may be used for each category. (**) If this application is not for replenishment of the Designated Account, leave columns 10 and 12 blank.