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September 19, 2001
H.E. Yacin Elmi Bouh
Minister of Economy, Finance
  and Planning
Ministry of Economy, Finance
  and Planning
Djibouti, Republic of Djibouti
Re:
PHRD Grant for the Preparation of the National
AIDS Control Project
Grant No. TF026825                                            
Excellency:
I am writing on behalf of the International Development Association (the 
Association) to indicate the Association’s agreement, as administrator of grant funds 
provided by Japan, to make a grant in an amount not exceeding two hundred seventy one 
thousand United States dollars (US$271,000) (the Grant) to the Republic of Djibouti 
(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 the Association 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/ Mahmood A. Ayub
Country Director for Djibouti, Egypt and Yemen
Middle East and North Africa Region
AGREED:
REPUBLIC OF DJIBOUTI
By /s/ H.E. Yacin Elmi Bouh
Date:
November 4, 2001
ANNEX
Purposes, Terms, and Conditions of the Grant
1.
Purposes and Activities
1.1.
The purpose of this Grant is to assist in the preparation of the National AIDS 
Control Project which has as its main objective increasing access to programs of 
HIV/AIDS prevention, care and treatment with emphasis on high risk and vulnerable 
groups. The activities (the Activities) for which the Grant is given are as follows:
(a)
Development of a National HIV/AIDS Program. Assist the Government in the 
preparation of a National HIV/AIDS Coordination Program through: (i) the support of 
international and national consultants who will assist the National Coordination Unit 
in developing a National AIDS Coordination Plan with broad-based support; and (ii) 
technical assistance to assist in organizing and mediating the workshops which will 
bring together all stakeholders involved in the fight against AIDS. This component is 
estimated to cost US$92,250 equivalent.
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(b)
Community Mobilization. Assist the National Coordination Unit in 
promoting and coordinating efforts to build community programs dealing with HIV/AIDS 
issues. The technical assistance will focus on developing awareness within communities 
on the risk of HIV/AIDS, how to counsel community members in dealing with the 
pandemic, and closer at home, how to take care of those suffering from the disease. 
Information, Education and Communication (IEC) materials will be provided during the 
workshops organized through consultancy services to that effect. This component is 
estimated to cost US$131,000 equivalent.
(c)
Monitoring and Evaluation. Develop a monitoring and evaluation system for 
the HIV/AIDS program within the National AIDS Coordination Unit which can be linked to 
the Ministry of Health's system, and which can provide timely information and data to 
all stakeholders involved in the fight against HIV/AIDS. This component is estimated 
to cost US$42,750 equivalent.
(d)
Audit. Grant audit, through the services of an auditing firm who will 
carry out the financial audit for the grant. This component is estimated to cost 
US$5,000 equivalent.
2.
Implementation Generally
2.1.
The Recipient shall, through the Ministry of Health: (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 
Association shall reasonably request; (d) from time to time exchange views with the 
Association’s representatives on the progress and results of the Activities; and (e) 
take all necessary measures required to enable the Association to visit the territory 
of Djibouti for purposes related to the Grant.  Without limitation on the foregoing, 
the Recipient shall, if the Association shall so request, prepare and furnish to the 
Association promptly upon completion of the Activities a report, in form and substance 
satisfactory to the Association, on the results and impact of the Activities.
3.
Procurement
3.1.
Except as the Association 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 the 
Association 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 item 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
Item
(In US Dollars)
to be Financed
Consultants’ services
271,000
100%
TOTAL
271,000
4.3.
Notwithstanding the provisions of paragraph 4.2 above:
(a)
No withdrawals shall be made from the Grant Account: (i) for payments 
made for expenditures prior to the date of signature of this Letter Agreement by the 
Association; (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 the Association or for services supplied from such 
territories; or (iv) for the purpose of any payment to persons or entities if such 
payment, to the Association’s knowledge, is prohibited by a decision of the United 
Nations Security Council taken under Chapter VII of the Charter of the United Nations; 
and
(b)
No withdrawals shall be made from the Grant Account after May 20, 2003 or 
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such later date that the Association shall establish by 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 the Association’s approval of financing 
for the Project. However, withdrawals may be made after the Closing Date for 
expenditures incurred prior to the Closing Date if the corresponding withdrawal 
application is received by the Association within four (4) months after the Closing 
Date, after which time any amount of the Grant remaining unwithdrawn from the Grant 
Account shall be canceled.
4.4.
When the Recipient shall desire to withdraw any amount from the Grant Account, 
it shall deliver to the Association a written application for withdrawal of such 
amount in the form specified by the Association. Withdrawal applications shall be: (a) 
signed on behalf of the Recipient by the Minister of Economy, Finance and Planning or 
such other person as he or she shall have authorized in writing; and (b) accompanied 
by such evidence in support of the application as the Association 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 satisfy the 
Association 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. The 
Association shall pay the amounts withdrawn by the Recipient from the Grant Account 
only to or on the order of the Recipient.
4.5.
The Association may require withdrawals from the Grant Account to be made on the 
basis of statements of expenditure for expenditures under contracts for: (a) services 
of consulting firms costing less than US$50,000 equivalent; and (b) services of 
individual consultants costing less than US$25,000 equivalent, all under such terms 
and conditions as the Association 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.  The Association, 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 the Association.
4.7.
To facilitate the carrying out of the Activities, the Recipient may open and 
maintain in dollars a special deposit account (the Special Account) in its Central 
Bank on terms and conditions satisfactory to the Association. 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 a financial 
management system, including records and accounts, and prepare financial statements in 
a format acceptable to the Association, 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 Association, consistently applied, by independent auditors 
acceptable to the Association; (ii) furnish to the Association as soon as available, 
but in any case not later than six (6) 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 Association shall have reasonably requested; and (iii) furnish to the 
Association such other information concerning said records and accounts and the audit 
thereof, and concerning said auditors, as the Association 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 (1) year after 
the Association 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, 
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bills, receipts and other documents) evidencing such expenditures; (iii) enable the 
Association’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.
The Association 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, or any other entity to which the International Bank for Reconstruction and 
Development (the IBRD) has made a loan with the guarantee of the Republic of Djibouti, 
to make withdrawals under any loan agreement with the IBRD or any development credit 
agreement with the Association shall have been suspended.
6.2.
The Association 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 the Association, within 
six (6) months after the effective date hereof, to carry out the Activities; or (c) if 
the Association 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 Association’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 this Attachment.
Part B:
Quality- and Cost-based Selection
1.
Except as otherwise provided in Part C of this Section, consultants’ services 
shall be procured under contracts awarded in accordance with the provisions of Section 
II of the Consultant Guidelines, paragraph 3 of Appendix 1 thereto, Appendix 2 
thereto, and the provisions of paragraphs 3.13 through 3.18 thereof applicable to 
quality- and cost-based selection of consultants.
2.
The following provisions shall apply to consultants’ services to be procured 
under contracts awarded in accordance with the provisions of the preceding paragraph.  
The short list of consultants for services estimated to cost less than $50,000 
equivalent per contract, may comprise entirely national consultants in accordance with 
the provisions of paragraph 2.7 of the Consultant Guidelines.
Part C:
Other Procedures for the Selection of Consultants
1.
Selection Based on Consultants’ Qualifications
Services estimated to cost less than $50,000 equivalent per contract may be 
procured under contracts awarded in accordance with the provisions of paragraphs 3.1 
and 3.7 of the Consultant Guidelines.
2.
Single Source Selection
Services estimated to cost less than $25,000 equivalent per contract, may, with 
the Association’s prior agreement, be procured in accordance with the provisions of 
paragraphs 3.8 through 3.11 of the Consultant Guidelines.
3.
Individual Consultants
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Services for tasks that meet the requirements set forth in paragraph 5.01 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 D:
Review by the Association 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 
Association 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 agreed with the Association, 
and with the provisions of said paragraph 1.
2.
Prior Review
(a)
With respect to each contract for the employment of consulting firms 
estimated to cost the equivalent of $50,000 or more, the procedures set forth in 
paragraphs 1, 2 (other than the third 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 individual 
consultants estimated to cost the equivalent of $25,000 or more, the qualifications, 
experience, terms of reference and terms of employment of the consultants shall be 
furnished to the Association 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 1 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.
3.
After the Association 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 Association 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, the Association 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 Association requests for deposits into the Special 
Account at such intervals as the Association shall specify.
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(ii)
Prior to or at the time of each such request, the Recipient shall 
furnish to the Association 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 Association 
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 Association 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 the Association shall reasonably request, furnish to the 
Association 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 
Association shall not be required to make further deposits into the Special Account:
(a)
if, at any time, the Association 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 Association, 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 Association 
pursuant to said paragraph in respect of the audit of the records and accounts for the 
Special Account;
(c)
if, at any time, the Association 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 the Association shall specify by notice to 
the Recipient.  Such further withdrawals shall be made only after and to the extent 
that the Association 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 Association 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 Association, the Recipient shall, promptly upon notice from the 
Association: (A) provide such additional evidence as the Association may request; or 
(B) deposit into the Special Account (or, if the Association shall so request, refund 
to the Association) an amount equal to the amount of such payment or the portion 
thereof not so eligible or justified.  Unless the Association shall otherwise agree, 
no further deposit by the Association 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 Association 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 Association, 
refund to the Association such outstanding amount.