world bank document · 2018. 7. 13. · (b) the male, through the caisse des pr6ts et de soutien...

OFFICIALDOCUMENTS

LOAN NUMBER 8413 - TNLOAN NUMBER 8887 - TN

Loan Agreement

(Additional Financing for Urban Development and Local Governance Program)

between

REPUBLIC OF TUNISIA

and

INTERNATIONAL BANK FOR RECONSTRUCTIONAND DEVELOPMENT

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LOAN NUMBER 8413 - TNLOAN NUMBER 8887 - TN

LOAN AGREEMENT

AGREEMENT dated as of the Signature Date between REPUBLIC OF TUNISIA("Borrower") and INTERNATIONAL BANK FOR RECONSTRUCTION ANDDEVELOPMENT ("Bank") for the purpose of providing additional financing for activities relatedto the Original Program (as defined in the Appendix to this Agreement). The Borrower and theBank hereby agree as follows:

ARTICLE I - GENERAL CONDITIONS; DEFINITIONS

1.01. The General Conditions (as defined in the Appendix to this Agreement) apply to and formpart of this Agreement.

1.02. Unless the context requires otherwise, the capitalized terms used in this Agreement havethe meanings ascribed to them in the General Conditions or in the Appendix to thisAgreement.

ARTICLE II - LOAN

2.01. The Bank agrees to lend to the Borrower the amount of one hundred seven million fivehundred thousand Euro (EUR 107,500,000), as such amount may be converted from timeto time through a Currency Conversion ("Loan"), to assist in financing the programdescribed in Schedule I to this Agreement ("Program").

2.02. The Borrower may withdraw the proceeds of the Loan in accordance with Section IV ofSchedule 2 to this Agreement. All withdrawals from the Loan Account shall be depositedby the Bank into an account specified by the Borrower and acceptable to the Bank.

2.03. The Front-end Fee is one quarter of one percent (0.25%) of the Loan amount.

2.04. The Commitment Charge is one quarter of one percent (0.25%) per annum on theUnwithdrawn Loan Balance.

2.05. The interest rate is the Reference Rate plus the Variable Spread; or such rate as may applyfollowing a Conversion; subject to Section 3.02(e) of the General Conditions.

2.06. The Payment Dates are June 1 and December 1 in each year.

2.07. The principal amount of the Loan shall be repaid in accordance with Schedule 3 to thisAgreement.

ARTICLE III - PROGRAM

3.01. The Borrower declares its commitment to the objectives of the Program. To this end, theBorrower shall carry out the Program, through its Ministry of Finance (MoF) and Ministryof Local Affairs and Environment (MALE), in accordance with the provisions of ArticleV of the General Conditions and Schedule 2 to this Agreement.

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ARTICLE IV -TERMINATION

4.01. The Effectiveness Deadline is the date one hundred twenty (120) days after the Signature

Date.

ARTICLE V - REPRESENTATIVE; ADDRESSES

5.01. The Borrower's Representative is its Minister of Development, Investment and

International Cooperation.

5.02. For purposes of Section 10.01 of the General Conditions: (a) the Borrower's address is:

Ministry of Development, Investment and International Cooperation

Place Pasteur1002 TunisRepublic of Tunisia

Republic of Tunisia; and

(b) the Borrower's Electronic Address is:

Facsimile:

216 71 799 069

5.03. For purposes of Section 10.01 of the General Conditions: (a) the Bank's address is:

International Bank for Reconstruction and Development

1818 H Street, N.W.

Washington, D.C. 20433

United States of America; and

(b) the Bank's Electronic Address is:

Telex: Facsimile:

248423(MCI) or 1-202-477-6391

64145(MCI)

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AGREED as of the Signature Date.

REPUBLIC OF TUNISIA

By

Authorized Representative

Name: Dk 1

Title: I* OW

Date:

INTERNATIONAL BANK FORRECONSTRUCTION AND DEVELOPMENT

By

torized Represenitative

Nalme: VBaNE) JB

Title: COuAj (

Date: 2, .

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SCHEDULE 1

Program Description

The objectives of the Program are: (a) to strengthen Local Governments' performance todeliver municipal infrastructure; and (b) to improve access to services in targeted disadvantagedneighborhoods.

The Program is part of the Borrower's Urban Development and Local Governance Programdesigned to deliver Municipal Investment Projects and strengthen institutional capacity of LocalGovernments through a combination of grants and/or loans to Local Governments and the use ofLocal Government's own source revenues.

The Program consists of the Original Program, as amended hereby:

Part 1. Capital block grants for municipal infrastructure

Provision of Capital Block Grants to Local Governments for the carrying out of MunicipalInvestment Projects.

Part 2. Improving access to municipal infrastructures in disadvantaged neighborhoods

Provision of Conditional Grants to Local Governments for the carrying out of MunicipalInvestment Projects in targeted disadvantaged neighborhoods.

Part 3. Capacity support for improved local government institutional development andaccountability

(a) Provision of technical advisory services and training to Local Governments on thebasis of the Local Governments' annual Capacity Building Plan in order to, interalia, strengthen their capacity to: (i) prioritize and plan municipal investments;(ii) improve management of their own source of revenues and assets; and(iii) enhance the quality of Municipal Investment Projects, including with respectto procurement, financial management, environmental and social management.

(b) Preparation and update of the Performance Assessment Manual and design,operation and enhancement of functionalities of a new E-portal for LocalGovernments.

(c) Strengthening of Local Governments' resource management capacity through,inter alia: (i) the design and implementation of human resources reforms; (ii) thedesign and implementation of a financial incentives system to facilitate staffredeployment; and (iii) the development of human resources management tools,including an online employment mechanism.

(d) Strengthening of Local Governments' transparency and accountability through,inter alia: (i) the provision of technical advisory services for the preparation andcarrying out of audit reports benefitting from an enhanced approach as defined in

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the POM; and (ii) the development and/or strengthening of Local Governments'grievance redress mechanisms.

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SCHEDULE 2

Program Execution

Section I. Implementation Arrangements

A. Program Institutional Arrangements

1. The Borrower shall designate, at all time during the implementation of the Program, theProgram MDAs and Program LGs, pursuant to adequate implementation arrangements setforth in the Program Operations Manual, to be responsible for the implementation ofProgram activities, and shall take or cause to be taken, all actions, including, the provisionof adequate funding, personnel and other resources to enable said Program MDAs andProgram LGs, as the case may be, to perform their respective functions under the Program(including staff appointed/selected by the Caisse des Pr6ts et de Soutien des CollectivitesLocales in sufficient numbers and with adequate funding to assist the Caisse des Pr6ts etde Soutien des Collectivites Locales in the implementation of the technical advisoryservices under Part 3(a) of the Program pursuant to the Borrower's pertinent regulations).

2. Without limitation upon the provisions of paragraph (1) immediately above, the Borrowershall designate and thereafter, maintain, at all times during the implementation of theProgram:

(a) The MoF to be responsible for all transfer of funds under the Program.

(b) The MALE, through the Caisse des Pr6ts et de Soutien des Collectivits Locales

(CPSCL), to be responsible for Program implementation.

(c) The Inter-ministerial Committee with functions, staffing and resources satisfactoryto the Bank, to be responsible for sectoral coordination and for providing strategicleadership and general direction for the overall implementation of the Program.

3. Without limitation upon the provisions of paragraphs (1) and (2) of this Section, theBorrower shall designate, at all times during the implementation of the Program, theCPSCL, to be responsible, among others, for coordination of day-to-day implementationof the Program and to facilitate the timely completion of inter-dependent functions to beperformed by the Program MDAs.

B. Manuals

1 . No later than sixty (60) days after the Effective Date, the Borrower, through CPSCL, shallupdate and adopt the Program Operations Manual or POM in form and substancesatisfactory to the Bank, containing detailed institutional, administrative, financial,technical and operational guidelines and procedures for the implementation of the Program,including, inter alia:

(a) description of the Minimum Mandatory Conditions ("MMC") and associatedperformance indicators;

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(b) description of the type of investments and capacity building activities to besupported under the Program;

(c) description of LG information and data to be made available through the E-Portal;

(d) description of the methodology for achieving human resources activities foreseenunder the Program including key managerial and technical positions in LGs;

(e) description of the revised methodology for carrying out the audit reports referredto in DLI 8.b;

(f) a template for a Memorandum of Understanding (MoU), in form and substancesatisfactory to the Bank, (including fiduciary, environmental and socialmanagement systems, anti-corruption and reporting provisions) to be signedbetween each LG and the Borrower, through the CPSCL, and, when applicable,between the Program MDAs and the Borrower, that defines their respectiveresponsibilities under the Program;

(g) an environmental and social management manual containing guidelines for, interalia: assessing potential environmental and social impacts of the Program; andappropriate mitigation, management, and monitoring measures in respect of saidimpacts; and

(h) the Verification Protocol.

2. Borrower shall carry out the Program, or cause the Program to be carried out, in accordancewith the Program Operations Manual and the Performance Assessment Manual; and shallnot amend, abrogate or suspend, or permit to be amended, abrogated or suspended, anyprovision of the Program Operations Manual and the Performance Assessment Manual,without the prior written agreement of the Bank. Notwithstanding the foregoing, if anyprovision of said Manuals is inconsistent with the provisions of this Agreement, theprovisions of this Agreement shall prevail.

C. Additional Program Implementation Arrangements

The Borrower shall carry out the Action Plan, or cause the Action Plan to be carried out,in accordance with the schedule set out in said Action Plan in a manner satisfactory to theBank, and shall ensure that the Action Plan is not amended, revised, waived, voided,suspended, terminated or abrogated, without the prior written consent of the Bank.

D. Annual and Independent LG Performance Assessment

1 . The Borrower shall:

(a) through the CGSP or any other designated independent agency as may be agreedwith the Bank in writing, in each Fiscal Year ("FY") during the implementation ofthe Program, carry out or cause to be carried out, in accordance with the ProgramOperations Manual and the Performance Assessment Manual, an annual

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performance assessment ("APA") covering the previous FY to determine whetherthe target performance scores have been met; and

(b) though the CPSCL, furnish said APA, not later than nine (9) months after the endof said FY, to the Bank for review.

E. Budgetary Allocation

Throughout the Program implementation, the Borrower shall ensure that sufficient budgetis provided to CPSCL in a timely manner to enable the CPSCL to: (a) allocate and transferCapital Block Grants and Conditional Grants to LG on time; and (b) implement Programactivities related to capacity building and institutional development.

F. Verification

1. The Borrower, through CPSCL, shall:

(a) no later than June 30,2019, or such later date as agreed by the Bank, appoint/selectand thereafter maintain, throughout the implementation of the Program, an independentverification agent with qualifications and experience and under term of referenceacceptable to the Bank ("Independent Verification Agent"), to verify the data and otherevidence supporting the achievement of one or more DLIs as set forth in the table of SectionIV.A.2 of this Schedule.

(b) (i) ensure that the Independent Verification Agent carry out verification andprocess(es) in accordance with the Verification Protocol; and (ii) submit to the Bank thecorresponding verification reports in a timely manner and in form and substancesatisfactory to the Bank.

Section II. Excluded Activities

The Borrower shall ensure that the Program excludes any activities which:

A. in the opinion of the Bank, are likely to have significant adverse impacts that are sensitive,diverse, or unprecedented on the environment and/or affected people; or

B. involve the procurement of: (1) works, estimated to cost US$75 million equivalent or moreper contract; (2) goods, estimated to cost US$50 million equivalent or more per contract;(3) non-consulting services, estimated to cost US$50 million equivalent or more percontract; or (4) consultants' services, estimated to cost US$20 million equivalent or moreper contract.

Section III. Proeram Monitoring, Reporting and Evaluation

The Borrower, through the CPSCL, shall furnish to the Bank each Program Report which shallcover twelve (12) months of Program implementation between July I and June 30, not later thanforty-five (45) days after the end of each period covered by each report.

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Section IV. Withdrawal of Loan Proceeds

A. General

1. Without limitation upon the provisions of Article II of the General Conditions and inaccordance with the Disbursement and Financial Information Letter, the Borrower maywithdraw the proceeds of the Loan to pay: (a) the Front-end Fee; and (b) finance ProgramExpenditures, on the basis of the results ("Disbursement Linked Results" or "DLRs")achieved by the Borrower as measured against specific indicators ("Disbursement LinkedIndicators" or "DLIs"); all as set forth in the table in paragraph 2 of this Part A.

2. The following table specifies each category of withdrawal of the proceeds of the Loan(including the Disbursement Linked Indicators as applicable) ("Category"), theDisbursement Linked Results for each Category (as applicable), and the allocation of theamounts of the Loan to each Category:

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Amount of the LoanCategory Allocated

(including Disbursement Linked Indicator as Disbursement Linked Result (expressed in EUR)applicable) (as applicable)

(1) DLI #1: The Borrower has replaced Decree DLR #1: Decree published in the National DLR#1: 0No 97-1135 and restructured its capital grant Gazette in FY 14system accordingly

(2) DLI #2: Timely communication to LGs of DLR #2.1: Timely communication of the DLR#2.1: 0the indicative Capital Block Grants (CBGs) CBG allocation to LGs and timely transferallocation and timely transfer of CBGs to of CBGs to eligible LGs, in FY 15eligible LGs by the Borrower

DLR #2.2: Timely communication of the DLR#2.2: 0CBG allocation to LGs and timely transferof CBGs to eligible LGs, in FY 16



DLR #2.5: Timely communication of the DLR# 2.5: 0CBG allocation to LGs and timely transferof CBGs to eligible LGs, in FY 19

DLR #2.6: Timely communication of the DLR#2.6: 1,654,000CBG allocation to LGs and timely transferof CBGs to eligible LGs, in FY 20

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(3) DLI #3: Acceptable percentage of LGs have DLR #3.1: 60% in FY 15 DLR#3. 1: 0met the MMCs and received CBGs

DLR #3.2: 70% in FY 16 DLR#3.2: 0

DLR #3.3: 80% in FY 17 DLR#3.3: 0

DLR #3.4: 90% in FY 18 DLR#3.4: 0

DLR #3.5: 90% in FY 19 DLR#3.5: 0

DLR #3.6: 90% in FY 20 DLR#3.6: 2,481,000

DLR#3.7: 90% in FY 21 DLR#3.7: 2,481,000

(4) DLI #4: The Borrower has designed and DLR #4.1: PA Manual adopted by circular DLR#4. 1:0implemented an independent LG (circulaire) from the Borrower's Ministerperformance assessment (PA) system and of Interior, FY15required percentage of LGs have met thethreshold PA scores DLR # 4.2: PA is tested and implemented DLR#4.2:0

in FY 16

DLR #4.3: 50% of LGs achieved threshold DLR#4.3:0PA scores set forth in the PA Manual inFY 17

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DLR #4.4: (a) 60% of LGs achieved DLR#4.4threshold PA scores set forth in the PAManual in FY 18; and (b) the Borrower has (a) 0revised the PA system under terms and (b) 0conditions acceptable to the Bank and setforth in the Performance AssessmentManual through the issuance andpublication of a Ministerial order (arritdministriel) by December 31, 2018

DLR#4.5: 70% of LGs achieved threshold DLR#4.5:0PA scores set forth in the PA Manual inFY 19

DLR#4.6: 60% of LGs achieved the revised DLR#4.6: 9,096,000threshold PA scores in FY 20 set forth as aresult of the revision of the PA systemundertaken under DLR#4.4 (b).

DLR#4.7: 70% of LGs achieved the revised DLR#4.7: 9,096,000threshold PA scores in FY 21 set forth as aresult of the revision of the PA systemundertaken under DLR#4.4 (b).

(5) DLI #5: Required percentage of LGs have DLR #5.1: 40% in FY 15 DLR#5.1:0executed their Annual Investment Plans onschedule in terms of expenditures

DLR #5.2: 50% in FY 16 DLR#5.2:0

DLR #5.3: 60% in FY 17 DLR#5.3:0

DLR #5.4: 60% in FY 18 DLR#5.4:0

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DLR #5.5: 60% in FY 19 DLR#5.5:0

DLR #5.6: 70% in FY 20 DLR#5.6: 8,683,000

DLR #5.7: 70% in FY 21 DLR#5.7: 8,683,000

DLR #5.8: 80% in FY 22 DLR#5.8: 8,683,000

(6) DLI #6: Required percentage of LGs have DLR #6.1: 50% in FY 15 DLR#6. 1:0received capacity building support inaccordance with their annual capacity DLR #6.2: 60% in FY 16 DLR#6.2:0development plan

DLR #6.3: 70% in FY 17 DLR#6.3:0

DLR #6.4: 70% in FY 18 DLR#6.4:0

DLR#6.5: 70% in FY 19 DLR#6.5: 4,134,000

DLR#6.6: 70% in FY 20 DLR#6.6: 4,134,000

DLR#6.7: 80% in FY 21 DLR#6.7: 4,134,000

(7) DLI #7: Targeted number of people living in DLR#7.1: Eligible LGs have been selected DLR#7.1: 7,179,250targeted disadvantaged neighborhoods have pursuant to selection criteria and transparent

benefited from improved municipal and objective procedures as defined in theinfrastructure POM

DLR#7.2: Work contracts covering 500,000 DLR#7.2:0people have been tendered and completedby the end of FY 19DLR#7.3: Work contracts covering DLR#7.3: 4,961,000additional 140,000 people have beentendered by the end of FY 21DLR#7.4: Work contracts covering DLR#7.4: 4,134,000additional 140,000 people tendered under

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DLR#7.3 have been completed by the end ofFY 22

(8) DLI #8DLI#8.a: transparency and access to DLR #8.a.1: E-portal designed and DLR#8.a.1: 0information have been improved populated in FY 15

DLR#8.a.2: LGs' key information and data DLR#8.a.2: 2,480,000listed in the POM has been made publiclyavailable through E-portal in FY 19DLR#8.a.3: LGs' key information and data DLR#8.a.3: 2,480,000listed in the POM has been made publiclyavailable through E-portal in FY 20DLR#8.a.4: LGs' key information and data DLR#8.a.4: 1,654,000listed in the POM has been made publiclyavailable through E-portal in FY 21DLR#8.a.5: LGs' key information and data DLR#8.a.5: 1,240,000listed in the POM has been made publiclyavailable through E-portal in FY 22

DLI#8.b: DLR #8.b.1: At least 60% of LG annual DLR#8.b.1: 0LGs financial management and reporting have financial accounts legally received by thebeen improved Cour des Comptes are audited by

December 31 of current year in FY 16DLR #8.b.2: At least 70% of LG annual DLR#8.b.2: 0financial accounts legally received by theCour des Comptes are audited by December31 of current year in FY 17DLR #8.b.3: At least 80% of LG annual DLR#8.b.3: 0financial accounts legally received by theCour des Comptes are audited by December31 of current year in FY 18DLR#8.b.4: 100% of LGs' annual financial DLR#8.b.4: 2,067,000accounts legally received by the Cour desComptes are audited by December 31 ofcurrent year in FY 19

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DLR#8.b.5:At least 90% of LGs' annual DLR#8.b.5: 2,067,000financial accounts legally received by theCour des Comptes are audited pursuant tothe methodology defined in the POM byDecember 31 of current year in FY 20DLR#8.b.6:100% LGs' annual financial DLR#8.b.6: 827,000accounts legally received by the Cour desComptes are audited pursuant to themethodology defined in the POM byDecember 31 of current year in FY 21DLR#8.b.7:100% LGs' annual financial DLR#8.b.7: 827,000accounts legally received by the Cour desComptes are audited pursuant to themethodology defined in the POM byDecember 31 of current year in FY 22

(9) DLI#9:DLI#9.a: Improved human resource DLR#9.a.1: The Borrower has issued a DLR#9.a.1: 1,654,000management -Staffing Measure governmental decree approving financial

and non-financial incentives to facilitate theredeployment of Borrower's civil servantsto LGs, in FY 19

DLR#9.a.2: At least 50% of targeted LGs DLR#9.a.2: 2,480,000have filled at least four (4) key managerialand/or technical vacancies in FY 20; asfurther described in the POM

DLR#9.a.3 : At least 70% of targeted LGs DLR#9.a.3: 1,240,000have filled at least four (4) key managerialand/or technical vacancies in FY 21; asfurther described in the POM

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DLR#9.a.4 : At least 80% of targeted LGs DLR#9.a.4: 827,000have filled at least four (4) key managerialand/or technical vacancies in FY 22; asfurther described in the POM

DLI#9.b: Improved human resource DLR#9.b.1: The Borrower has prepared and DLR#9.b.1: 2,480,000management - human resource management validated standard job description for keytools managerial and technical positions in FY 19,

as further defined in the POM

DLR#9.b.2: The Borrower has DLR#9.b.2: 827,000operationalized an online job marketplatform to link potential candidates withvacant positions in LGs, in FY 20

DLR#9.b.3: One hundred (100) Borrower's DLR#9.b.3: 827,000civil servants have applied for LG openpositions through the online job marketplatform in FY 21

DLR#9.b.4: Two hundred (200) Borrower's DLR#9.b.4: 413,000civil servants have applied for LG openpositions through the online job marketplatform in FY 22

(10) Front-end Fee to be paid pursuant toSection 2.03 of this Agreement in accordance Not applicable 268, 750with Section 2.05 (b) of the GeneralConditions

TOTAL AMOUNT 107, 500,000

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B. Withdrawal Conditions; Withdrawal Period

1. Notwithstanding the provisions of Part A of this Section, no withdrawal shall be made:

(a) on the basis of DLRs achieved prior to the Signature Date; and

(b) for any DLR under Categories (2) to (9), until and unless the Borrower hasfurnished evidence satisfactory to the Bank that said DLR has been achieved.

2. Notwithstanding the provisions of Part B.1 (b) of this Section, the Borrower may withdrawan amount not to exceed Euro 25,000,000 as an advance; provided, however, that if theDLRs in the opinion of the Bank, are not achieved (or only partially achieved) by theClosing Date, the Borrower shall refund such advance (or portion of such advance asdetermined by the Bank in accordance with the provisions of paragraph 4 of this Part B) tothe Bank promptly upon notice thereof by the Bank. Except as otherwise agreed with theBorrower, the Bank shall cancel the amount so refunded. Any further withdrawalsrequested as an advance under any Category shall be permitted only on such terms andconditions as the Bank shall specify by notice to the Borrower.

3. Notwithstanding the provisions of Part B. 1 of this Section, if the Bank is not satisfied thatany of the DLRs under Categories (2) to (9) has been achieved, the Bank may, at any time,by notice to the Borrower, decide, in its sole discretion, to: (a) after consultation with theBorrower, reallocate all or a portion of the proceeds of the Loan then allocated to said DLRto any other DLR; and/or (b) cancel all or a portion of the proceeds of the Loan thenallocated to said DLR; all pursuant to the General Conditions.

4. For any of the DLRs under Categories (3) to (9), withdrawals shall be made in accordancewith the formula set out in Schedule 4 to this Agreement.

5. The Closing Date is June 30, 2023.

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SCHEDULE 3

The Borrower shall repay the principal amount of the Loan as follows:

Principal Payment Date Installment Share(Expressed as a Percentage)

December 1, 2024 1%June 1,2025 0%December 1, 2025 0%June 1,2026 2.00%December 1, 2026 2.00%June 1,2027 1.00%December 1, 2027 1.00%June 1,2028 2.00%December 1, 2028 2.00%June 1,2029 2.00%December 1, 2029 2.00%June 1, 2030 2.00%December 1, 2030 2.00%June 1,2031 2.00%December 1, 2031 4.00%June 1, 2032 4.00%December 1,2032 3.00%June 1,2033 4.00%December 1, 2033 2.00%June 1,2034 2.00%December 1, 2034 4.00%June 1,2035 4.00%December 1, 2035 4.00%June 1,2036 4.00%December 1, 2036 4.00%June 1, 2037 4.00%December 1, 2037 4.00%June 1,2038 2.00%December 1, 2038 2.00%June 1,2039 2.00%December 1, 2039 2.00%June 1, 2040 2.00%December 1, 2040 2.00%June 1,2041 2.00%December 1, 2041 2.00%June 1,2042 2.00%December 1, 2042 2.00%June 1,2043 2.00%December 1, 2043 2.00%June 1, 2044 2.00%December 1, 2044 2.00%

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June 1, 2045 2.00%December 1, 2045 1.00%June 1, 2046 1.00%

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SCHEDULE 4

Disbursement Linked Results Calculation Formula

Category Scalable Calculation Formula Notes(including Disbursement Linked

Indicator as applicable)(1) DLI #1: The Borrower has No N/A N/Areplaced Decree No 97-1135 andrestructured its capital grant systemaccordingly

(2) DLI #2: Timely communication to No N/A If the target is not met for a given FY, theLGs of the indicative Capital Block undisbursed amount will be redistributedGrants (CBGs) allocation and timely equally in the projected disbursement oftransfer of CBGs to eligible LGs by the following FYs.the Borrower

(3) DLI #3: Acceptable percentage of Yes D=A*(C/T)/G D= annual disbursementLGs have met the MMCs and A= annual allocationreceived CBGs C= number of LGs compliant

T= total number of LGsG= annual goal in percentage(*)= multiplied(/)= divided(>)= greater than(<) lesser than

If C/T < 0.3, D= 0If C/T > G, D=A

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If the target is not met for a given FY, theundisbursed amount will be redistributedequally in the projected disbursement ofthe following FYs.

(4) DLI #4: The Borrower has DLR 4.1 and DLR N/A If the target is not met for a given FY, thedesigned and implemented an 4.2 - No undisbursed amount will be disbursed inindependent LG performance the next FYs, when the target is met.assessment (PA) system and required DLR 4.3 and DLR D=A*(C/T)/G D- annual disbursementpercentage of LGs have met the 4.4(a) - Yes A= annual allocationthreshold PA scores C= number of LGs compliant

T= total number of LGsG= annual goal in percentage(*)= multiplied(/)= divided(>)= greater than(<)= lesser than

If C/T <0.15, D= 0If C/T > G, D=A

If the target is not met for a given FY, theundisbursed amount will be redistributedequally in the projected disbursement ofnext FYs.

DLR 4.4(b) - No N/A If the target is not met by December 31,2018, the undisbursed amount will bedisbursed in the next FYs, when the targetis met.

DLR 4.5, DLR 4.6 D=A*(C/T)/G D= annual disbursementand DLR 4.7 - Yes A= annual allocation

C= number of LGs compliantT= total number of LGsG= annual goal in percentage

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(*)= multiplied(/) divided(>)= greater than(<)= lesser than

If C/T < 0.15, D = 0If C/T > G, D=A


(5) DLI #5: Required percentage of Yes D=A*(C/T)/G D- annual disbursementLGs have implemented their annual A= annual allocationinvestment plans on schedule C= number of LGs compliant

T= total number of LGsG= annual goal in percentage(*)= multiplied(/)= divided(>)= greater than(<) lesser than

If C/T <0.15, D= 0If C/T > G, D=A

If the target is not met for a given year, theundisbursed amount will be redistributedequally in the projected disbursement ofnext years.

(6) DLI #6: Required percentage of Yes D=A*(C/T)/G D= annual disbursementLGs have received capacity building A= annual allocationsupport in accordance with their C= number of LGs compliant pursuant toannual capacity development plan the criteria established in the POM

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T= total number of LGsG= annual goal in percentage(*)= multiplied(/)= divided(>)= greater than(<)= lesser than

If C/T <0.15, D= 0If C/T > yearly target, D=A

If the target is not met for a given FY, theundisbursed amount will be redistributedequally in the projected disbursement ofnext FY.

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(7) DLI #7: Targeted number of DLR 7.1 DLR 7.1: N/A If the target is not met, the undisbursedpeople living in targeted NO amount will be disbursed in the next FYs,disadvantaged neighborhoods have when the target is met.benefited from improved municipalinfrastructure

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DLR 7.2 DLR 7.2: D= annual disbursementYes For the first evaluation Ps= Sum of population in disadvantaged

period: neighborhoods for which the contractshave been tendered

D-Ps*0.2*U+Pc*0.8*U Pc=Sum of population in disadvantagedneighborhoods for which the works have

For each subsequent been completedevaluation period: U= A/Pt

A=total allocation for DLR 7.2D-Ps*0.2*U+Pc*0.8*U Pt= total target population inless amount(s) disadvantaged neighborhoodsdisbursed from the (*)= multipliedprevious period(s) (/)= divided

(>)= greater than(<)= lesser than

If (Ps*0.2)+(Pc*0.8)<20,000,D=O

If (Ps*0.2)+(Pc*0.8)>Pt, D=A

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DLR 7.3 For the first evaluation D= annual disbursementYes period: Al= total allocation for DLR 7.3

Ps= Sum of additional population inD=Al *Ps/Pt disadvantaged neighborhoods for which

the works contracts have been tenderedFor each subsequent Pt= total target additional population inevaluation period: disadvantaged neighborhoods

(*)= multipliedD-A *Ps/Pt (/) dividedless amount(s)disbursed from theprevious period(s)

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DLR 7.4 For the first evaluation D= annual disbursementyes period: A2= total allocation for DLR 7.4

Pc= Sum of additional population inD=-A2*Pc/Pt disadvantaged neighborhoods for which

the works have been completedFor each subsequent Pt= total target additional population inevaluation period: disadvantaged neighborhoods

(*)= multipliedD=A2*Pc/Pt (/) dividedless amount(s)disbursed from theprevious period(s)

(8) DLI #8

DLI#8.a: transparency and access to DLR 8.a. 1 - NO N/A If the target is not met, the undisbursedinformation have amount will be disbursed in the next FYs,been improved when the target is met.

DLR8.a.2 D=A*(K/T) D = Annual disbursementDLR8.a.3 A= Annual allocationDLR8.a.4 K= Number of information published forDLR8.a.5 the given FY as defined in the POM

YES T= Total required number of informationto be published for the given FY as definedin the POM

DLI#8.b: LGs financial management DLR 8.b. 1, DLR D=A*(K/T)/G D = Annual disbursementand reporting have been improved 8.b.2 and DLR A= Annual allocation

8.b.3 - YES K = Number of annual Audits completedby December 31 of each FY

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T = Total Number of LG financialstatement legally submitted by LG to theCour des ComptesG = Annual goal (expressed in percentageof audits completed)(*)= multiplied(/)= divided(>)= greater than(<)= lesser than

If K/T < 0.3, D= 0If K/T > G, D=A


DLI#9DLI#9.a: Improved human resources- DLR9.a.1 N/A If the target is not met, the undisbursedStaffing Measures NO amount will be disbursed in the next FYs,

when the target is met.

DLR9.a.2; D=A*(K/T)/G D = Annual disbursementDLR9.a.3; A = Annual allocationDLR9.a.4 K = Number of LGs that have filled four

YES key positionsT = Total number of LGsG = Annual goal (expressed in percentageof LGs that have filled 4 key positions)

If K/T =0, D= 0If K/T > G, D=A

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If the target is not met for a given FY, theundisbursed amount will be redistributedequally in the projected disbursement ofnext FY

DLI#9.b: Improved human resources- DLR9.b. 1 and N/A If the target is not met, the undisbursedhuman resources management tools DLR9.b.2 amount will be disbursed in the next FYs,

NO when the target is met.

DLR9.b.3 D=A*(K/G) A = Annual allocationand DLR9.b.4 K = Number of civil servants that haveYES applied to LGs open positions through the

online platformG = Annual goal (expressed in number ofcivil servants that have applied though theonline platform in a given FY)

If K > G, D=A

If the target is not met for a given FY, theundisbursed amount will be redistributedequally in the projected disbursement ofnext FY

For the purpose of this table:"Annual disbursement" means the amount to be disbursed at the end each evaluation period.

"Annual allocation" means the amount defined for each DLR in the table in Schedule 4 to this Agreement adjusted with the undisbursed amountof the previous period if any.

"Number of LGs compliant" means the number of Local Governments that have achieved the target set forth in each DLI in the table in Schedule4 to this Agreement.

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"Annual goal in percentage" means the yearly target defined for each DLR in the table in Schedule 4 to this Agreement.

"Total allocation" means the amount defined for each DLI in the table in Schedule 4 to this Agreement.

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APPENDIX

Definitions

1. "Action Plan" means the Borrower's plan referred to in Section I.C of Schedule 2 to thisAgreement, as may be amended from time to time with the agreement of the Bank.

2. "Annual Investment Plan" means the plan prepared by each LG in accordance with theProgram Operations Manual.

3. "Anti-corruption Guidelines" means, for purposes of paragraph 5 of the Appendix to theGeneral Conditions, the Bank's "Guidelines on Preventing and Combating Fraud andCorruption in Program-for-Results Financing," dated February 1, 2012, and revisedJuly 10, 2015.

4. "Caisse des Prets et de Soutien des Collectivit6s Locales" or "CPSCL" means theBorrower's Municicpal Development Fund established pursuant to Law No. 75-37, datedMay 14, 1975, or any successor thereto acceptable to the Bank.

5. "Capacity Building Plan" means the plan prepared, or to be prepared, by each LGdescribing training and technical assistance requirements.

6. "Capital Block Grant" means an unconditional capital grant provided under Part 1 of theProgram, in accordance with the Program Operations Manual and the LG PerformanceAssessment Manual.

7. "Category" means a category set forth in the table in Section IV.A.2 of Schedule 2 to thisAgreement.

8. "Conditional Grant" means a conditional capital grant provided under Part 2 of theProgram, pursuant to a Targeted Capital Conditional Grant MoU for the financing of aMunicipal Investment Project, in accordance with the Program Operations Manual.

9. "Decree" means the Decree no. 3505-2014 replacing the Decree No 97-1135 ofJune 5, 1997, establishing the condition of granting by CPSCL to LG.

10. "Disbursement Linked Indicator" or "DLI" means in respect of a given Category, theindicator related to said Category as set forth in the table in Section IV.A.2 of Schedule 2to this Agreement.

11. "Disbursement Linked Result" or "DLR" means in respect of a given Category, the resultunder said Category as set forth in the table in Section IV.A.2 of Schedule 2 to thisAgreement, on the basis of the achievement of which, the amount of the Loan allocated tosaid result may be withdrawn in accordance with the provisions of said Section IV.

12. "Fiscal Year" or "FY" means the fiscal year of the Borrower, starting January I and endingDecember 31 of each calendar year.

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13. "General Conditions" means the "International Bank for Reconstruction and DevelopmentGeneral Conditions for IBRD Financing, Program-for-Results Financing", datedJuly 14, 2017.

14. "Independent Verification Agent" means an independent entity to be appointed/selected bythe Borrower for the purposes of certifying the achievement of the DLRs and referred to inSection I.F of Schedule 2 to this Agreement.

15. "Inter-ministerial Committee" or "IMC" means the committee referred to in SectionI.A.2(c) of Schedule 2 to this Agreement.

16. "Local Government" or "LG" or "Program LG" means each of the Borrower'smunicipalities eligible to participate in the Program and listed in the POM.

17. "Memorandum of Understanding" means the MoU for Conditional Grant and/or theCapital Block Grant.

18. "Ministry of Local Affairs and Environment" or "MALE" means the Borrower's Ministryof Local Affairs and Environment, or any successor thereto.

19. "MDICI" means the Borrower's Ministry of Development, Investment and InternationalCooperation or any successor thereto.

20. "Ministry of Finance" or "MoF" means the Borrower's Ministry of Finance, or anysuccessor thereto.

21. "MMCs" means the minimum mandatory conditions to be met by Local Governments tobenefit from a Capital Block Grant or a Conditional Grant, as set forth in the ProgramOperations Manual.

22. "Municipal Investment Project" means a specific project to be carried out by a LocalGovernment, consisting of municipal infrastructure reflected in the Local Government'sAnnual Investment Plans, in accordance with the Program Operations Manual.

23. "Original Loan Agreement" means the agreement between the Borrower and the Bankdated October 8, 2014, as amended (Loan No. 8413-TN).

24. "Original Program" means the program described in Schedule 1 to the Original LoanAgreement.

25. "Performance Assessment Manual" means the Manual referred to in Section I.B.2. ofSchedule 2 to this Agreement, that will be used to measure LG performance under theProgram, containing detailed protocols, guidelines, procedures and other arrangements forthe carrying out of annual LG Performance Assessments, including, inter alia, amethodology for calculating and implementing a score systems to measure LGperformance against a set of criteria, as the same may be updated from time to time withthe Bank's prior written consent.

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26. "Program" means specific parts of the Borrower's Urban Development and LocalGovernance program to be financed by the Bank.

27. "Program MDAs" means the Borrower's Ministries, Departments and Agencies involvedin the implementation of Program activities, including; MoF, MALE, MDICI's Directiongindrale de la coordination et du suivi de l'excution des projets publics et desprogrammes regionaux, the Centre de Formation et d' Appui a la Dicentralisation(CFAD), the Contr6le Gjndral du Service Public (CGSP), CPSCL, the Cour des Comptesand the Agence de Rinovation et Rhabilitation Urbaine (ARRU).

28. "Program Operations Manual" or "POM" means the manual referred to in paragraph B.1of Section I of Schedule 2 to this Agreement.

29. "Signature Date" means the later of the two dates on which the Borrower and the Banksigned this Agreement and such definition applies to all references to "the date of the LoanAgreement" in the General Conditions.

30. "Urban Development and Local Governance Program" means the Borrower's programdesigned to deliver Municipal Investment Projects and strengthen institutional capacity ofLocal Governments.

31. "Verification Protocol" means the Borrower's Verification Protocol, as included in theProgram Operations Manual, setting forth the detailed criteria for the achievement of DLRsand means by which the same will be verified under the Program, as such VerificationProtocol may be amended from time to time with the prior written agreement of the Bank.

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