OFFICIAL DOCUMENTS THE WORLD BANK I *IDAI WORLDANKGROUP May 11, 2017 Hon. Tevita Lavemaau Minister of Finance and National Planning Ministry of Finance and National Planning Vuna Road PO Box 87 Nuku'alofa TONGA Dear Minister. Kingdom of Tonga: Advance Agreement for Preparation of Proposed E-Government Support Project Project Preparation Advance No. IDA V081 In response to the request for financial assistance made on behalf of the Kingdom of Tonga ("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 five hundred thousand Dollars ($500,000) ("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 of a proposed project designed to build the Recipient's capacity for e-government implementation and facilitate increased efficiency and accountability in public service delivery ("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 IBRD or 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 1818 HA Street NW * Washington. DC 20433 USA Hon. Tevita Lavemaau -2- May 11, 2017 shall be deemed withdrawn if the World Bank has not received this countersigned copy within ninety (90) days after the date of signature of this Agreement by the World Bank, unless the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 Michel Kerf Country Director Timor-Leste, Papua New Guinea & Pacific Islands East Asia and Pacific Region AGREED: KINGDOM OF TONGA By: /uthorized Representative, Name: -Tev - bAv F L A Am 1 L4 Title: \AIAj Wil't p2 lljT~U/L. ~ / Date: I J NE 9 T Enclosures: (1) "Standard Conditions for Advances Made by the World Bank under its Project Preparation Facility~, dated July 31, 2010; and (2) Disbursement Letter of the same date as this Agreement, together with Disbursement Guidelines for Investment Project Financing, dated February 2017. Hon. Tevita Lavemaau -3- May 11, 2017 PPA No. IDA V081 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 July 31. 2010 ("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 (including the cover letter to this Agreement and this Section) as follows: (a) "Operating Costs" means reasonable expenditures directly related to the Activities, incurred by the Recipient (which expenditures would not have been incurred absent the Activities), including consumable materials and supplies, advertising expenditures, communications services (postage, telephone and internet), media and printing services and bank charges required for the Activities. (b) "Ministry of Finance and National Planning" means the Recipient's Ministry of Finance and National Planning, or any successor thereto. (c) "Ministry of Meteorology, Energy, Information, Disaster Management, Environment, Climate Change and Communication" means the Recipient's Ministry of Meteorology, Energy, Information, Disaster Management, Environment, Climate Change and Communication, or any successor thereto. (d) "World Bank's Safeguard Policies" means the World Bank's operational policies and procedures set forth in the World Bank's Operational Manual under OP/BPs 4.01, 4.04, 4.09, 4.10, 4.11, 4.12, 4.36. 4.37, 7.50 and 7.60 published at www.worldbank.org/opmanual. 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: (a) Supporting the preparation of the Recipient's e-government masterplan and its implementation roadmap. (b) Supporting the preparation of functional and technical design specifications for the proposed Recipient's government digital platform (back end information systems) and government portal (front end transactional website). Hon. Tevita Lavemaau -4- May 11, 2017 (c) Undertaking reviews of the Recipient's existing legal and regulatory framework relevant to e-government, and preparation of reports outlining the findings of such reviews and identifying recommendations for strengthening the legal and regulatory framework. (d) Carrying out activities to engage and consult with relevant stakeholders in the Recipient's government and the private sector on the scope and design of the proposed Project. 2.02. Execution of the Activities Generally. The Recipient declares its commitment to the objectives of the Activities. To this end, the Recipient shall carry out the Activities through its Ministry of Meteorology, Energy, Information, Disaster Management, Environment, Climate Change and Communication in accordance with the provisions of: (a) Article II of the Standard Conditions; (b) this Article 11; 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 and revised in January 2011 and as of July 1, 2016. 2.03. Safeguards. The Recipient shall ensure that: (a) the terms of reference for any consultancies related to technical assistance and capacity building or the preparation of plans, strategies, reports, consultations and reviews under this Agreement shall be satisfactory to the World Bank following its review thereof and, to that end, such terms of reference shall duly incorporate the requirements of the World Bank's Safeguard Policies then in force, as applied to the advice conveyed through such technical assistance and capacity building, plans, strategies, reports, consultations and reviews; and (b) in drafting any regulations, guidelines or procedures and carrying out capacity building activities under the Activities, due attention is given to said policies and relevant laws. 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 semester, covering the semester, 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. Each audit of the Financial Statements shall cover the period of one (1) fiscal year of the Recipient, commencing with the fiscal year in which the first withdrawal under the Advance was Hon. Tevita Lavemaau -5- May 11, 2017 made. The audited Financial Statements for such period shall be furnished to the World Bank not later than six (6) months after the end of such period. 2.06. Procurement All non-consulting services and consulting 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 the "World Bank Procurement Regulations for Borrowers under Investment Project Financing" dated July 1, 2016 ("Procurement Regulations") and the provisions of the Recipient's procurement plan for the Activities dated April 24, 2017 ("Procurement Plan") provided for under Section IV of the Procurement Regulations, as the same may be updated from time to time in agreement with the World Bank. Article III Withdrawal of the Advance 3.01. Eligible Expenditures. The Recipient may withdraw the proceeds of the Advance in accordance with the provisions of: (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 -Disbursement Guidelines for Investment Project Financing" dated February 2017, 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 consulting services and Operating Costs under the Activities inclusive of Taxes. 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 April 30, 2018. 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 Hon. Tevita Lavemaau -6- May 11, 2017 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: (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) (the "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 the minister at the time responsible for finance. 5.02. Recipient's Address. The Recipient's Address referred to in Section 9.01 of the Standard Conditions is: Ministry of Finance and National Planning PO Box 87 Nuku'alofa Kingdom of Tonga Phone Facsimile +67623066 +67626011 Hon. Tevita Lavemaau -7- May 11, 2017 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 Telex: Facsimile: 248423 (MCI) or (1)-202-477-6391 64145 (MCI) s ¥ & 5 a -1 s , 3 s C s 1 s , 3 ? x