OFF CIAL 6 L. October 15, H. E. Phouphet Khamphounvong Minister of Finance Ministry of Finance Vientiane Lao People's Democratic Republic

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1 Public Disclosure Authorized OFF CIAL 6 L The World Bank 30th F I Telephone: (66) INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 989 R ntl 1 FATS Facsimile: (66) INTERNATIONAL DEVELOPMENT ASSOCIATION Bangk k 10330, Thailand October 15, 2013 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized H. E. Phouphet Khamphounvong Minister of Finance Ministry of Finance Vientiane Lao People's Democratic Republic Excellency: Re: Lao PDR: Khammouane Development Project (Grant Number H404-LA and H756-LA) Amendment to the Financing Agreement We refer to the Financing Agreement Amending and Restating Financing Agreement and Providing Additional Financing for the Khammouane Development Project dated February 29, 2012 ("Financing Agreement") between the Lao People's Democratic Republic ("Recipient") and the International Development Association ("Association"). We further refer to your letter dated January 17, 2013, requesting certain modifications to the Financing Agreement. We are pleased to inform you that, after due consideration, the Association concurs with the request and to give effect to such request agrees to amend the Financing Agreement as set forth below. 1. The Table in Section IV.A.2 of Schedule 2 to the Financing Agreement is replaced by the Table in Attachment 1 of this Letter of Amendment. 2. Annex 1 to Schedule 2 of the Financing Agreement is replaced by Annex 1 in Attachment 2 of this Letter of Amendment. Except as specifically amended herein, all other provisions of the Financing Agreement remain in full force and effect.

2 H.E. Mr. Phouphet Khamphounvong October 15, 2013 Please confirm your agreement with these amendments by countersigning, dating, and returning to us the enclosed copy of this Letter of Amendment. Upon receipt by the Association of the countersigned copy of this Letter of Amendment, this Letter of Amendment shall become effective as of the date of the countersignature. Very truly yours, INTERNATIONAL DEVELOPMENT ASSOCIATION By Co stant osi Acting Country ector, South East Asia (Cambodia, Laos PDR, Malaysia, Myanmar, Thailand) East Asia and Pacific Region AGREED: LAO PEOPLE'S DEMOCRATIC REPUBLIC By: Name: Phouphet KHAMPHOUVOISO Title: Date: fl8nov 2013

3 H.E. Mr. Phouphet Khamphounvong October 15, 2013 Attachment 1 to the Letter of Amendment Amount of the Amount of the Percentage of Original Additional Expenditures to be Financing Financing Financed Allocated Allocated (inclusive of Taxes) Category (expressed (expressed SDR) in SDR) (1) Sub-grants under the District Development Fund: (a) Basic Block Grants 1,222,000 2,300,000 90% (b) Agriculture and Livelihood Grants 170, % (2) Sub-grants under the Provincial Development Fund 890, % (3) Goods, works, non-consultant consultants' services and Incremental Operating Costs for Parts A.2 (a) and 914, , % (b), and A.3 of the Project (4) Goods, works, non-consultant 724, % consultants' services and Incremental Operating Costs for Parts B. I and B.2 of the Project (5) Goods, works, non-consultant 1,476,000 1,300, % consultants' services and Incremental Operating Costs for Parts B.3, B.4 ad B.5 of the Project (6) Sub-grants under Agriculture Grant Program: (a) Agriculture and Livelihood Grant 0 290, % (b) Agriculture Entrepreneur Grant 0 180,000 (7) Goods, works, non-consultant consultants' services and Incremental 203,000 1,310, % Operating Costs for Parts C.2 and C.3 of the Project TOTAL AMOUNT 5,600,000 5,600,000

4 H.E. Mr. Phouphet Khamphounvong October 15, 2013 Attachment 2 to the Letter of Amendment ANNEX 1 to SCHEDULE 2 Amended Performance Outcome Indicators Target Values Additional PDO Level Results Indicators Unit Original Project Financing Improved community water points constructed or rehabilitated under the Number project Primary/Secondary schools constructed or rehabilitated under the Number project Health facilities constructed, Number rehabilitated, or equipped 4. Roads rehabilitated Km Adoption of the new budget Text Not adopted Adopted Adopted procedures similar to DDF and PDF 6. Agreement between the Government, NTPC and donors on Agreement sustainable approach for utilization of Text No agreement on NT2 downstream water and irrigation Downstream rehabilitation along Xe Bang Fai Irrigation River 7. Area provided with irrigation and drainage services Hectare 0 3,000 3, Clients who have adopted an improved agricultural technology Number promoted by the project ecbeneficiaries 9. Project Beneficiaries Number 0 32,850 66,000 Number 10. Project Beneficiaries of which at 0 16,425 33,000 least 50% are female

5 H.E. Mr. Phouphet Khamphounvong October 15, 2013 Intermediate Result Indicators Target Values Additional Intermediate Result Indicators Unit Original Project Aitina Financing Intermediate Result 1: Local Development and Provincial Capacity Building 11. Target villages selected under DDF representing areas relatively Number 450 1,000 underserved in terms of public 0 investment 12. PDF investments reflecting priorities expressed through consultation process among 6 key Number sectors: Health, Education, Public Work and Transport, Commerce, Tourism, Agriculture and Forestry. 13. Number of PDF investments for which recurrent costs are included in Number the provincial budget. 14. The number of targeted districts Number using PIP planning format. 15. Annual provincial budget plan Fully Fully includes priorities identified through Text Not included included included PDF and DDF planning process. Budget 16. Comprehensive and timely reo budget execution report by the not provincial and District Planning Text com Complied Complied Teams (DPT) for DDF and Provincial Planning Team (PPT) for PDF. subitd timely 17. District and provincial officials by gender trained on DDF and PDF procedures covering financial Number management, procurement, safeguards, and consultation. 18. Including number of female staff Number

6 H.E. Mr. Phouphet Khamphounvong October 15, 2013 Intermediate Result 2: Improving Access to Irrigation 19. Operational water user associations created and/or Number strengthened 20. Strategic plan for irrigation completed considering technical, Report economic, social and environmental issued aspects 21. Assessment with stakeholders of Assesspilot experience with rehabilitated Text No No ment for pump facilities pilot Intermediate Result 3: Improved Rural Livelihood 22. Households receiving ALG grant Number AEG grant recipients able to run and sustain their small scale % businesses supported by the project 24. PAFO and DAFO staff by gender trained by the agriculture extension Number center 25. Including number of female staff Number