OFFICIAL Administration Agreement betwQneQUJMTsa on behalf of the European Union and the International Bank for Reconstruction and Development concerning the Part H Europe 2020 Programmatic Single-Donor Trust Fund (No. TFO 73144) (EC Contract No: IPA/2018/400-324) This Administration Agreement is concluded under Direct Management in the context of the Framework Agreement between the World Bank Group and the European Commission dated April 15, 2016 (the "Framework Agreement"), which sets the general conditions for this Agreement. The Framework Agreement shall be applicable and form an integral part of the Administration Agreement for the Trust Fund. 1. The International Bank for Reconstruction and Development (the "Bank") acknowledges that the European Commission (the "Donor", and together with the Bank, the "Parties" and each a "Party") agrees to provide the sum of five hundred thousand Euro (C 500,000) (the "Contribution") for the Part H Europe 2020 Programmatic Single-Donor Trust Fund, TF073144 (the "Trust Fund") in accordance with the terms of this Administration Agreement. The estimated total budget of the Trust Fund is five hundred thousand Euro (C 500,000). The indicative budget set out in Annex 5 shall be used for monitoring purpose only and shall not be binding. 2. The Contribution shall be used to finance the activities set forth in the "Part H Europe 2020 Programmatic Single-Donor Trust Fund Description" attached hereto as Annex 1, and shall be administered by the Bank on behalf of the Donor in accordance with the terms of this Administration Agreement, including the "Standard Provisions" attached hereto as Annex 2 and "Governance" attached hereto as Annex 3. Expected results of the Trust Fund and corresponding indicators (including baselines, result goals and sources of data) are set out in Annex 4. The Implementation period will start on the date following that on which the last of the two parties sign. 3. The Donor shall deposit the Contribution in accordance with the following schedule and in the currency specified in Section 1 above ("Contribution Currency") into such bank account designated by the Bank (each amount deposited hereinafter referred to as an "Instalment") upon submission of a payment request by the Bank: (A) Promptly following countersignature - I 300,000 (B) E 200,000 intermediate payment and subject to the disbursement of 70% of the preceding instalment. The period for payment of further instalments shall be 60 days. The period for payment of the balance shall be 90 days. 4. When making any deposit, the Donor shall instruct its bank to include in its deposit details information (remittance advice) field of its SWIFT deposit message, information indicating: the amount deposited, that the deposit is made by the Donor for TF073144 (the Part H Europe 2020 Programmatic Single-Donor Trust Fund), the Commission internal reference number and the date of the Administration Agreement, the name of the project for which the funds are intended, the name of the Commission department responsible for the Trust Fund and the date of the deposit (the "Deposit Instructions"). In addition, the Donor shall provide a copy of the Deposit Instructions to the Bank's Accounting Trust Funds Division by e-mail sent to tfremitadvice@worldbank.org or by fax sent to +1 (202) 614-1315. 5. Except with respect to the Deposit Instructions, any notice, request or other communication to be given or made under this Administration Agreement shall be in writing and delivered by mail, fax or e-mail to the respective Party's address specified below or at such other address as such Party notifies in writing to the other Party from time to time: For the Bank (the "Bank Contact"): Marco Mantovanelli Country Manager World Bank Group 34 Aminta Treti 1000 Skopje, The former Yugoslav Republic of Macedonia Tel: +389-2-55 15 230 Email: mmantovanelli@worldbank.org For the Donor (the "Donor Contact"): Nicola Bertolini Head of Cooperation Delegation of the European Union Sv. Kiril i Metodij 52b 1000 Skopje, The former Yugoslav Republic of Macedonia Tel: +389-2-3248 500 Email: nicola.bertolini@eeas.europa.eu 6. In the event any amounts are to be returned to the Donor under this Administration Agreement, the Bank shall transfer such amounts to the Donor, unless otherwise agreed with the Bank. 7. All annexes hereto and the Framework Agreement between the World Bank Group and the European Commission constitute an integral part of this Administration Agreement, whose terms taken together shall constitute the entire agreement and understanding between the Donor and the Bank. In the event of any inconsistency, the Framework Agreement prevails over the Administration Agreement and the Administration Agreement prevails over its Annexes. Unless otherwise specified in an annex hereto, this Administration Agreement may be amended only by written amendment between the Bank and the Donor. 8. The measures taken to identify the EU as a source of financing shall be in accordance with Attachment 4 of the Framework Agreement. 9. Each of the Parties represents, by confirming its agreement below, that it is authorized to enter into this Administration Agreement and act in accordance with these terms and conditions. The Parties are requested to sign and date this Administration Agreement, and upon possession by the Bank of this fully signed Administration Agreement, this Administration Agreement shall become effective as of the date of the last signature. 2 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By:. Na e: Marc antovanelli tle: C ntry Manager for Kosovo and Macedonia Date:_______ EUROPEAN UNION represented by the EUROPEAN COMMISSION e:'Kicola Bertln Title: Head of Cooperation Date: cO 3 ANNEX 1 PART II EUROPE 2020 PROGRAMMATIC SINGLE-DONOR TRUST FUND DESCRIPTION This Annex shall be applicable to and form an integral part of the Administration Agreement for the Trust Fund between the Bank and the Donor. 1. Objective The European Commission and the Bank share a common objective of building competitive and sustainable economies and reducing poverty and social exclusion - goals of the Europe 2020 Agenda which is built on three pillars of smart, sustainable and inclusive growth. The European Commission and the Bank concur that direct interaction is beneficial to both institutions and through them to the beneficiary countries. This applies particularly to the provision of analytical, advisory and knowledge services and technical assistance. The European Commission has expressed an interest in ensuring that the Bank continues to provide technical assistance in the framework of the Trust Fund in furtherance of the common objective set forth above. The specific-objectives and description of activities are: Within the framework of the assistance under the EU Integration of IPA II 2014, the European Commission requested the Bank to carry out a "Functional Review of the Ministry for Agriculture, Forestry and Water Economy (MAFWE)" in the former Yugoslav Republic of Macedonia (Beneficiary Country). The organizational structure and responsibilities of the MAFWE have not fully kept up with the development of new legislation and strategic policy directions in recent years. This was noted in several consecutive EU country progress reports.' In addition, with the European Commission's pledge for an EU accession in 20252, the functions of MAFWE need to be reviewed and consequently addressed. Thus, the specific objective of this Trust Fund is to support the strengthening of the effectiveness and efficiency of the public administration in agriculture institutions, to support the improvement of its services to the public and to help better align with and manage the opportunities and challenges related to the EU approximation agenda in the sector. 1 Last published report in 2018: http://ec.europa.eu/neighborhood- enlargement/sites/near/files/20180417-the-former-yugoslav-republic-of-macedonia-report.pdf 2 "Strategy for the Western Balkans: EU sets new flagship initiatives and support for the reform-driven region" http://ec.europa.eu/rapid/press-release IP-18-561 en.htm 4 2. Scope Regarding the scope, the assessment will include functional reviews of MAFWE (and its territorial units) and for selected specialized bodies such as the Phyto Directorate, Phyto lab, Seed and seedlings Directorate and State Agriculture Inspectorate, the National Extension Agency (NEA) (and its territorial units). On a MAFWE-level, the functional review will also consider relevant EU regulations for CAP and those rural development provisions pertaining to forestry, land improvements and irrigation. For policy and strategy formulation and management under Part A, the functional review will focus on the programming, management and monitoring of policy measures within MAFWE and the Agency for Financial Support of Agriculture and Rural Development (AFSARD). The functional review will focus on the following: (i) In terms of organization/units, the functional review of the agricultural administration in the Beneficiary Country would focus primarily on MAFWE and will include the specialized bodies: (1) the Phytosanitary Directorate; (2) the State Phytosanitary Laboratory; (3) the Seed and Seedlings Authority; and (4) the State Agricultural Inspectorate. The Agency for Agricultural Development (i.e. National Extension Agency) will also be fully included in the analysis. However, the following organizational units will be excluded: (1) registration and management of agricultural land; (2) agricultural land consolidation; and (3) forestry and hunting. The MAFWE organizational units or other specialized bodies, agencies or public entities, which are not subject to the present functional review, shall in any case be considered in relation how they interface with the rest of the agriculture administration. The functional review will not include the national food safety and veterinary administration through Food and Veterinary Agency (FVA). (ii) In terms of business lines, and consistently with the point above, all areas under the purview of the agricultural administration will be addressed, while forestry, land, and water management, including the public enterprises; fisheries and aquaculture, and food safety and veterinary services will only be covered where relevant for the assessment of functions as they interface with agricultural administration. (iii) In terms of territorial structures, these will be covered, but only to the extent that they belong to the organizations/units identified under point (i). (iv) In terms of functions, the review will include all three categories, namely strategic, operational and general support services. The vertical review will not cover general public administration issues (such as status of civil servants) that may be outside the purview of MAFWE, although it may signal issues that might impact the effectiveness of the agricultural administration. Also, it will discuss general trends, principles and issues affecting institutional performance but will not assess the individual performance of various units/agencies/bodies' staff. 5 3. Activities The overall aim of this Trust Fund is to support the MAFWE in the Beneficiary Country through providing proposed reform options to strengthen the effectiveness and efficiency of agriculture and rural development administration in the Beneficiary Country. With the goal to set public institutions dealing with the agriculture and rural development sector on a sustainable path towards improving their performance, the functional review will analyze the key determinants that promote and/or limit the effectiveness and efficiency of the agricultural and rural development delivery. It aims at providing practical recommendations on: * Enhancing strategic coordination of policies and programs in the agricultural and rural development domain; * Realizing the full potential of the MAFWE and its specialized bodies through better delineation of functions, improved coordination, and better delegation of responsibilities within and among the relevant institutions; * Approaches to improving the quality of public service delivery to beneficiaries of the Beneficiary Country's agricultural and rural development programs; and * Improving management of agriculture support measures with the view of effective absorption of EU (IPARD) funds. To this end the functional review of the MAFWE will examine the following: (i) whether the policy goals and strategic objectives of the MAFWE are clearly defined in measurable and achievable terms; (ii) whether the management systems, policies, staffing, budgetary allocations, and the internal organizational structure of the agricultural administration are appropriate to meet the defined policies and strategic objectives; (iii) whether there are factors that are external to the agriculture administration that may impede their ability to meet these objectives fully; and (iv) propose a clear and coherent organizational structure of MAFWE and of its specialized bodies as listed in 2 (i) above, for a modern service delivery that steers and coordinates policies in agriculture and rural development in line with European integration requirements and priorities. Taking into account the above scope and functions to be reviewed, the Bank will carry out the functional review through three structured activities: Part A. Policy and Strategy Formulation and Management Under Part A, the Bank will provide technical advisory services in policy and strategy formulation and management, including carrying out an assessment of adequacy of budgetary resources used by MAFWE and its specialized bodies at the national and local levels; including assessment of the objectives laid out in key MAFWE strategic documents are matched by budgetary resources; and review all relevant experience of the recently acceded EU member states. A.1. Policy objectives As a preparatory activity for the functional review, the Bank will review the scope of MAFWE's mandate and if the policy objectives falling under its purview are clearly defined and aligned with sector needs. This review will also assess, if these strategic 6 objectives of MAFWE are measurable and achievable, and appropriate for the pre- accession process. This review of policies and strategies will be complemented by lessons from new member states on their experiences in aligning their national policies with EU requirements. A.1. Outputs: (i) assessment of the policy mandate of MAFWE and its specialized bodies; and of measurability and achievability of MAFWE strategic objectives and adequacy in the pre-accession process; A.2. Formulation and management Review the soundness of policy and strategy formulation and management process by assessing if (i) the vision and sector strategy are clearly elaborated, and (ii) the policies are linked to budget and performance assessment indicators, and are monitored and evaluated. The Bank will further assess the effectiveness and efficiency of the policy coordination, strategic planning, monitoring and evaluation, and the decision-making process within the domain of the agriculture and rural development administration of MAFWE. Assess if decision-making powers are allocated at the appropriate levels while focusing on the overall planning and priority- setting architecture, the existing horizontal and vertical alignments and overlaps, including the intra- and inter-ministerial coordination of strategic initiatives. This activity will be supported by extensive data analysis and structured interviews with the senior staff of MAFWE and its specialized bodies. As to draw from experiences from other countries, the Bank will also include an assessment of their respective policy and strategy formulation processes. A.2. Outputs: (i) assessment of the policy and strategy formulation process and recommendation to improve it based on results from assessment of procedural arrangements for strategic management and policy coordination within MAFWE; review of selected business processes; lessons of relevant international and EU examples for strategic management arrangements; (ii) proposed options and recommendations for the institutionalization of the strategic management function within MAFWE; and (iii) a workshop to discuss proposed options on improved strategic management and policy coordination with MAFWE. Part B: Organization Effectiveness Under Part B, the Bank will carry out an assessment of the organizational structure and the core functions of the MAFWE and of its specialized bodies as listed in 2 (i) above to fulfill its mandate and lead the sector through the transition towards full EU membership. Within this remit, the Bank will review the organization of the agricultural administration against modem principles of institutional efficiency and effectiveness. This perspective calls for a sequencing of analytical efforts, from global aspects related to strategic coordination between institutions and units, potential overlapping and irrelevant mandates and organizational structures, and other general organizational and functional failures. The review will take into consideration the following four primary goals in facilitating increased effectiveness in the administrative performance: (i) eliminating redundant functions and business lines; (ii) reducing duplication between and within institutions; (iii) rationalizing the distribution of functions; and (iv) adding missing functions. The support of the Bank will include the following activities: 7 B. 1. Organizational structures and systems The Bank will analyze the functions of those organizational units falling under the defined business lines within MAFWE and the selected specialized bodies. By carrying out structured interviews with the political and senior technical staff of MAFWE, the Bank will assess, if the organizational set-up of the agricultural administration is suited to meet its mandate and policy objectives. Also, the Bank will screen the roles and responsibilities assigned among various administrative units of the sector, both at national and local level. The Bank will review the organizational structure and assess the bottlenecks that limit the efficiency and effectiveness of the delivery of policies falling under the mandate of MAFWE, and will provide practical recommendations on how to address constraints by using best-practices of comparable administrations within the EU. B.1. Outputs: (i) assessment of the organizational structures and systems through mapping of all functions of MAFWE and of its specialized bodies as listed in 2 (i); identification of functions that reveal overlaps, are redundant, or require to be added, in order to improve effectiveness; propose functions to be added to the organization in order to support the implementation of the EU acquis and a set of reform options on restructuring MAFWE's organization using international comparisons on an issue-by- issue basis; (ii) proposed Action Plan with specific short-, medium- and long-term actions for the implementation of the proposed reform options; and (iii) a workshop to discuss the reform options towards a more effective and efficient agricultural administration following the preparation of the preliminary report. B.2. Interfaces with the agricultural administration The Bank will carry out the functional review on public institutions and other entities that lie outside the purview of the MAFWE administration, but relate to functions that interface with the agriculture administration. The Bank will assess through structured interviews in other ministries and entities, if transferring functions could improve the effectiveness and efficiency of the overall agricultural administration. B.2. Outputs: (i) mapping of key responsibilities and functions between MAFWE and other ministries pertaining to agriculture; and (ii) identifying functions that are currently mapped outside the agricultural administration, but could improve the effectiveness and efficiency of policy and service delivery of MAFWE. Part C. Resource Management Under Part C, the Bank will assess, if MAFWE has adequate resources to carry out its policy mandate, by focusing on the technical capacity of MAFWE and its specialized bodies. Carrying out assessment of several of the administrative support functions that are necessary for smooth operation of an effective agricultural administration. Besides financial management, accounting and procurement, the Bank will also assess the IT service and legal functions. The support of the Bank will include the following activities: C. 1. Financial management and administration supporting functions The Bank will assess if budgeting and reporting functions effectively support policy and service delivery within MAFWE. The Bank will analyze how policy priorities of MAFWE are integrated in the budgetary planning process and if reporting on budget 8 execution is monitored effectively to ensure accountability for effective resource use and to identify potential policy changes. The Bank will also review the IT-function and how it supports the overall administration. CJ. Outputs: (i) assessment of budgeting and reporting functions through mapping of budget allocations to policy mandate; identifying impediments to more effective integration of annual budgeting and medium-term planning; and review of the monitoring and evaluation framework; and (ii) proposed reform options for more effective strategic financial planning and budgeting. C.2. Human resource management The Bank will assess human resources management by applying a mix of data analysis, survey with the staff and structured interviews with senior management, whether (i) the policies and procedures of MAFWE ensure effective use of human resources, (ii) the composition of staff - in terms of their skills and level of expertise - seem appropriate for the tasks performed, (iii) institutions face challenges to recruit, retain and motivate staff with required skills and why; (iv) systems are in place for rewarding performance and establishing accountability of poor performance, (v) senior level management of MAFWE has appropriate authority, managerial flexibility and institutional support to deliver their competencies, and (vi) continuation of work following changes of the political system. The assessment will also include, whether the level of managerial autonomy is well-balanced with the level of accountability. C2. Outputs: (i) assessment of departments by respective functions based on results of the closed-question staff survey that will be anonymized and confidential; and (ii) a set of reform options to improve the effective use of human resources. 9 Indicative Tineline3 of Milestones and Outputs MONTHS MONTHS MONTHS MONTHS MONTHS I 1-2 3-4 5-6 7-8 9-10 11-12 1. PREPARATORY WORK Establishment of Working Group within MAFWEforfacilitating with the functional review Workshop to agree on timeline and joint work method Drafting of inception report Data and documents collection Outline ofstructured interviews Inventory of current/planned technical assistance/capacity building programs A.1. Policy objectives A.2. Formulation and Management B.e. Organizational structuressystems B.2. Interfaces with MAFWE C1. Financial management C2. Human resource management Drafting ofpreliminarty report Discuss preliminaryfindings with stakeholders Revise and inalize report Presentation offinal report Discuss next steps OUTPUTSMONTHS MONTHS MONTHS MONTHS MONTHS MONTHS 1-2 3-4 5-6 7-8 9-10 11-12 Kick-off Workshop with MIAFWE Inception report Draft final report Presentation of preliminary results/recommendations/action plan Final report Dissemination conference 3 The timeline for milestones and outputs can only be met provided the Beneficiary Country delivers all relevant information identified by the Bank for each areas of activity in a timely manner 10 4. Eli2ible Expenditures For Bank-executed activities, the Trust Fund funds may be used to finance: (a) Staff and individual consultant services; (b) Cost of travel; (c) Cost of training and workshops; and (d) Other services including translation. 5. Taxes The foregoing activities and categories of expenditures may include the financing of taxes in accordance with the Bank's applicable policies and procedures. 6. Program Criteria Activities are to be financed in accordance with the following program criteria: The Trust Fund is established to enable the European Commission and the Bank to continue to collaborate and exchange experience and expertise on a number of themes under all three pillars of the Europe 2020 Agenda of smart, sustainable and inclusive growth. The express purpose of this Trust Fund is to allow the European Commission to avail itself of the Bank's technical assistance and analytical and policy capacity for the purpose of pursuing the goals of Europe 2020. The three pillars of Europe 2020 are broadly in line with the objectives and strategies adopted in the Europe and Central Asia Region of the World Bank Group. All activities that are in pursuance of these three pillars are eligible to be financed and implemented under this Trust Fund. z