WORLDBANKGROUP. Public Disclosure Authorized. July 2, Public Disclosure Authorized. Public Disclosure Authorized. Public Disclosure Authorized

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1 Public Disclosure Authorized OFFICIAL TDOCUMENTS 4 The World Bank 1818 H Street N.W. (202) INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washincton, D.C. Z433 Cable Address: INTBAFRAD INTERNATIONAL DEVELOPMENT ASSOCIATION ~U.S.A. Cable Address: INDEVAS July 2, 2014 Dear Mr. Lantz and Ms. Erickson, Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized The purpose of this letter is to inform you of the Bank's intention to continue to improve its current cost recovery framework for Trust Funds and to provide additional clarifications with respect to the sent by Sandra Bloemenkamp, Acting Director, Concessional Finance and Global Partnerships on March 7, In March, we informed you of changes in our internal charging processes that formed part of the implementation of the trust fund management reform endorsed by the Bank's Board in July Underlying the trust fund reforms is the aim of significantly improving cost recovery, as recognized in the new planning and budgeting framework endorsed by the Board in June As described in our March 2014 communication, in order to move towards full cost recovery, the Bank will now seek to recover the indirect costs related to Bank Short Term Consultants and Temporaries (STCs/STTs) as we do for Bank staff and Extended Term Consultants. This recognizes the fact that indirect costs are incurred for all categories of Bank personnel, As a result of introducing an indirect rate for STCs/STTs, the rate for staff and ETCs/ETTs was reduced, thereby achieving a more equitable treatment across all categories of Bank personnel. In reviewing your trust fund portfolio, it was noted that the Administration Agreements for the trust funds listed in the attached document provide for STCs/STTs as an eligible category of expenditure. However, these agreements are mostly silent with respect to indirect costs for STTs/STCs. In the interest of clarity, this letter seeks your written consent to apply the rate for indirect costs to STCs/STTs (as described in the March ). In addition, as the Bank introduced this change in methodology on February 16, 2014, we would also request that you authorize the Bank to apply indirect costs to STCs/STTs as of that date. Doing so would support the Bank's efforts to move towards full cost recovery and would be consistent with the trust fund management reforms. Kindly let us know in writing, as soon as possible and no later than July 31, 2014 if, with respect to the trust funds listed in the attachment, you agree to the approach outlined in the paragraph above by countersigning the attached document listing the affected trust funds. Sincerely, Jaehyang So Director, Trust Funds and Partnerships (DFPTF) Development Finance T +1 (202) M +1 (202) Ejso@worldbank.org W WORLDBANKGROUP

2 -2- July 2, 2014 The Administration Agreements for the trust funds listed below are amended to specifically allow for the charging of indirect costs on STCs/STTs with effect from February 16, TF N b Number Trust Fund Name Fund Type Agency Name TFO21945 Brazilian Rain Forest Trust Fund Multi Canada - Department of Foreign TF Prototype Carbon Fund Multi Canada - Department of Foreign TF Cities Alliance Multi Donor Trust Fund Multi Canada - Department of Foreign TF Nile Basin Initiative Trust Fund Multi Canada - Department of Foreign TF Afghanistan Reconstruction Trust Fund Multi Canada - Department of Foreign TF Afghanistan Reconstruction Trust Fund Multi Canada - Department of Foreign TF Multi Donor Trust Fund for Financing Multi Canada - Department of Foreign of the Global Gas Flaring Reduction Partnership TF Community Development Carbon Fund Multi Canada - Department of Foreign TFO51055 BioCarbon Fund Multi Canada - Department of Foreign TFO51061 Education for All Fast Track Initiative Multi Canada - Department of Foreign Catalytic Trust Fund (EFA-FTI Catalytic Trust Fund) TF World Bank Iraq Trust Fund (World Multi Canada - Department of Foreign Bank ITF) TF Public-Private Infrastructure Advisory Multi Canada - Department of Foreign Facility Trust Fund II TF Multi Donor Trust Fund for the Multi Canada - Department of Foreign Republic of the Philippines' Mindanao Reconstruction and Development Program TF Multi Donor Trust fund for Education Multi Canada - Department of Foreign for All-Fast Tract Initiative Education Program Development Fund (EPDF)

3 -3- July 2, 2014 TF The Cities Alliance Multi Donor Trust Multi Canada - Department of Foreign Fund TF Multi Donor Trust Fund for Statistical Multi Canada - Department of Foreign Capacity Building - III TF Mainstreaming Disaster Reduction Multi Canada - Department of Foreign Initiative of the Global Facility for Disaster Reduction and Recovery TF Multi Donor Trust Fund for Low- Multi Canada - Department of Foreign Income Countries for the Financial Sector Reform and Strengthening Initiative (FIRST) TF Multi Donor Trust Fund for Middle- Multi Canada - Department of Foreign Income Countries for the Financial Sector Reform and Strengthening Initiative (FIRST) TF Multi Donor Trust Fund for the Multi Canada - Department of Foreign Agriculture Markets and Agribusiness Development Project in Senegal TF Multi Donor Trust Fund for Ethiopia Multi Canada - Department of Foreign Public Sector Capacity Building Program Support Facility TF Multi Donor Trust Fund to Support Multi Canada - Department of Foreign Analytical Work within the Context of the Zimbabwe IDA's Interim Strategy Note FYO8-09 TFO71074 The Multi Donor Trust Fund for Food Multi Canada - Department of Foreign Price Crisis Response Core - FPCR Core TF Readiness Fund ofthe Forest Carbon Multi Canada - Department of Foreign Partnership Facility TF Car-bon Fund of the Forest Carbon Multi Canada - Department of Foreign Partnership Facility TF Multi Donor Trust Fund to Support Multi Canada - Department of Foreign Public Financial Management Modernization in Vietnam TF Support to the Association for Multi Canada - Department of Foreign Strengthening Agricultural Research in Eastern and Central AfDica (ASARECA) TF Multi Donor Trust Fund for Co- Multi Canada - Department of Foreign financing of the Ethiopia Protection of Basic Services Program (Phase II) Project (Health MDG Support TF Multi Donor Trust Fund for Multi Canada - Department of Foreign Strengthening Public Expenditure Management Program (SPEMP)

4 -4- July 2, 2014 TFO71192 Multi Donor Trust Fund for support to Multi Canada - Department of Foreign the Forum for Agricultural Research in Africa (FARA) TF Multi Donor Trust Fund for the Debt Multi Canada - Department of Foreign Management Facility for Low-Income Countries TF Multi Donor Trust Fund for the Ethiopia Multi Canada - Department of Foreign Joint Governance Assessment and Measurement Initiative TF Multi Donor Trust Fund for the Trade Multi Canada - Department of Foreign Facilitation Facility TFO71265 Multi Donor Trust Fund for the Multi Canada - Department of Foreign Extractive Industries Technical Advisory Facility (EI-TAF) TFO71295 Multi Donor Trust Fund for Forced Multi Canada - Department of Foreign Displacement TFO71329 Learning for Equality, Access and Multi Canada - Department of Foreign Peace (LEAP) Program 'FF Support to Public Financial Multi Canada - Department of Foreign Management and Revenue Administration in Indonesia TF Philippines Decentralization and Local Multi Canada - Department of Foreign Government (DIALOG) Reforms Multi Donor Trust Fund TF Trust Fund for Support to the West and Multi Canada - Department of Foreign Central African Council for Agricultural Research and Development TFO71468 Ethiopia Productive Safety Net APLIII Multi Canada - Department of Foreign Project TFO71579 Multi-Donor Trust Fund Supporting Multi Canada - Department of Foreign Economic Management in the Caribbean TFO71599 African Capacity Building Foundation- Multi Canada - Department of Foreign Partnership for Capacity Building in Africa-Strategic Medium Term Plan 2 TFO71619 Support for Entrepreneurship Program Multi Canada - Department of Foreign for Innovation in the Caribbean Multi- Donor Trust Fund TF Bangladesh Health Sector Development Multi Canada - Department of Foreign Program Multi-Donor Trust Fund TFO71823 Middle East and North Africa - Micro, Multi Canada - Department of Foreign Small and Medium Enterprises (MSME) Regional Facility

5 -5- July 2, 2014 TF Support for Nutrition Activities and Multi Canada - Department of Foreign Policies in Malawi TFO71884 Strengthening the Investment Climate in Multi Canada - Department of Foreign Latin America and Caribbean (LAC) TFO71919 Multidonor Umbrella Facility for Multi Canada - Department of Foreign Capacity Development (MFCD) TF Support for the Bangladesh Skills and Multi Canada - Department of Foreign Training Enhancement Project TF Energy Sector Capacity Building Single Canada - Department of Foreign Project (ESCBP) TF Multi-Donor Trust Fund for the Women Multi Canada - Department of Foreign Entrepreneurship Development TF Supporting the Implementation, Multi Canada - Department of Foreign Sustainability and Outreach of the Extractive Industries Transparency Initiative in Indonesia TF Jordan Emergency Services and Social Multi Canada - Department of Foreign Resilience Project Trust Fund TF Economic Management and Multi Canada - Department of Foreign Competitiveness Credit Multi-Donor Trust Fund TF Legislative Reform and Combatting the Single Canada - Department of Foreign Financing of Terrorism in Southeast Asia TFM20992 Water and Sanitation Programme Multi Canada - Department of Foreign (WSP) Global Program Management TFM29008 Global Environment Facility (GEF) Multi Canada - Department of Foreign Voluntary Fund TFM52033 Biocarbon Technical Assistance Trust Multi Canada - Department of Foreign Fund TFM53195 Consultative Group to Assist the Poor Multi Canada - Department of Foreign (CGAP)

6 -6- July 2, 2014 By: Name: Title: M Date: Fax: +1 (202)