International Bank for Reconstruction and Development International Development Association FOR OFFICIAL USE ONLY SecM95-742 IDA/SecM95-298 FROM: The Deputy Secretary July 19, 1995 COFINANCING AND TECHNICAL ASSISTANCE FRAMEWORK AGREEMENT between THE GOVERNMENT OF THE KINGDOM OF NORWAY and THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND THE INTERNATIONAL DEVELOPMENT ASSOCIATION Attached for information is a Cofinancing and Technical Assistance Framework Agreement dated March 9, 1994, between The Government of the Kingdom of Norway and the International Bank for Reconstruction and Development and the International Development Association. (ext. 80624). Questions on this document may be referred to Mr. Rolando Arrivillaga Distribution Executive Directors and Alternates Office of the President Senior Management, Bank, IFC and MIGA This document has a restricted distribution and may be used by recipients only in the perfornmance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
COFINANCING AND TECHNICAL ASSISTANCE FRAMEWORK AGREEMENT between THE GOVERNMENT OF THE KINGDOM OF NORWAY and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and INTERNATIONAL DEVELOPMENT ASSOCIATION
AGREEMENT, dated March 9, 1994, between the GOVERNMENT of THE KINGDOM OF NORWAY (hereinafter referred to as Norway), INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter referred to as the "IBRD") and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter referred to as the "Association"; IBRD and the Association being hereinafter referred to collectively as the "Bank"). WHEREAS Norway and the Bank have cooperated in the financing of development projects and other activities of common interest in accordance with the terms of an Agreement dated October 2, 1986 between Norway and the Bank; WHEREAS Norway and the Bank intend to continue their cooperation in the financing of development projects and programs (hereinafter referred to as projects) in member countries of the Bank on the terms and conditions set forth in this Agreement; WHEREAS Norway wishes to make available development aid funds for the cofinancing of projects which the Bank assists in financing in countries and social and economic sectors which Norway considers to have a high developmental priority; WHEREAS Norway further wishes to make available development aid funds to provide financing on a grant basis to the Bank and to recipient countries for the preparation of projects to be financed by the Bank and for such other activities as are agreed between Norway and the Bank; WHEREAS the Bank is prepared to accept such financing, including the administration of the development funds, on the terms and conditions hereinafter set forth;
-2 - NOW THEREFORE the parties hereto have agreed as follows: Article I Definitions In respect of each instance where Norway makes cofinancing available pursuant to this Agreement in connection with an Association credit, the term "Bank" shall mean the Association and the term "loan" shall mean an Association credit wherever such terms are used in the following provisions of this Agreement. Article II Competent Authorities In matters concerning the implementation of this Agreement the Norwegian Ministry of Foreign Affairs or any other authority designated by it for the purpose, shall be competent to represent Norway. Article III Scope of Agreement 1. The financing to be provided by Norway pursuant to this Agreement may be for:.(a) The cofinancing of a project which the Bank is assisting in financing (hereinafter referred to as cofinancing grants);
-3 - (b) The financing of technical assistance to a recipient country to cover the costs of technical assistance to such recipient (including consultants engaged by such recipient) for the preparation of projects of mutual interest to Norway and the Bank (hereinafter referred to as technical assistance grants); or (c) Financing the costs to the Bank for such activities as are mutually agreed between Norway and the Bank from time to time (hereinafter referred to as grants to the Bank). 2. The financing to be provided by Norway pursuant to this Agreement may be: (a) In the form of grants to be administered by the Bank; or (b) In the form of grants made directly from Norway to the recipient country. The proceeds of cofinancing grants made either in the form described in paragraph (a) or (b) may be used to finance a share of the costs of goods or services partly financed out of the proceeds of the Bank loan or to finance different goods or services. Article IV Project Selection 1. Each development project and activity to be financed by Norway pursuant to this Agreement will be selected by Norway from a list of projects and activities prepared and periodically updated by the Bank and transmitted to Norway for this purpose.
- 4-2. Norway intends that the financing provided by it pursuant to this Agreement shall be applied mainly to development projects in countries which are recipients of Association credits. 3. Each party may bring to the attention of the other party other projects and activities which the party considers may be of interest and provide suggestions concerning the possible extent of participation of both parties in such projects and activities. 4. Projects and activities will be selected by Norway by informing the Bank in writing thereof and of the terms and conditions on which Norway intends to assist in the financing, including the amount that it plans to make available. In the case of cofinancing grants, the decision as to the inclusion of Norway's cofinancing proposal in the financing plan for a project will be made by the intended recipient in consultation with the Bank and Norway. Article V Administration of Development Aid Funds I1. Development aid funds to be administered by the Bank (a) The Bank and Norway shall enter into specific agreements for each project and activity Norway selects to finance in accordance with Article IV hereof through the provision of development aid funds to be administered by the Bank. (b) In the case of cofinancing grants and technical assistance grants, the Bank shall, as administrator on behalf of Norway, enter into an agreement with the recipient country regarding the provision of the development aid
- 5 - funds to the recipient. In such cases, the Bank shall be solely responsible for such administration and shall carry out such administration in accordance with its normal practices and standards, with the same degree of care as it uses in the administration of its own loans. A copy of each such Agreement shall be furnished to Norway by the Bank. (c) Except as the parties may otherwise agree, Norway will deposit the funds to be administered by the Bank pursuant to the terms of paragraph l(a) of this Article V in an amount required to meet the estimated expenditures over a period of not less than six months for agreed services and supplies, as well as for agreed local costs, in an account maintained with Norges Bank in the name of the Association (hereinafter referred to as the T-Account). The funds may be commingled with other trust fund assets maintained in the T-Account. The funds deposited in the T-Account will be kept separate and apart from the funds of the Bank. The Bank will disburse, or arrange for the disbursement of, the funds in the T-Account to pay for goods or services eligible for payment and, for this purpose, the Bank may exchange the funds in the T-Account for other currencies. (d) The Bank shall maintain separate sub-accounts in respect of the funds deposited in the T-Account and disbursed by the Bank for each project or activity for which development aid funds are provided under this Agreement. However, in order to secure an efficient utilization of the funds, any amount deposited by Norway, but not fully utilized as provided, may, subject to the parties' consent, be transferred from one sub-account to another. The Bank shall furnish to Norway at the end of each of the Bank's fiscal years a statement of account on the sub-accounts. _V,.
- 6 - (e) Except as the parties may otherwise agree, the financial reporting and auditing on the projects and activities under this Agreement shall be carried out in accordance with the Bank's normal practices and standards. The Bank shall furnish copies of such financial reports together with any applicable auditors' reports to Norway within a reasonable time. (f) In order to assist in the defrayment of the costs of administration and other expenses incurred by the Bank under paragraph 1(a) under this Article V, the Bank may, unless the parties otherwise agree, invest and reinvest the funds in the T-Account pending their disbursement, and may retain for its own account the income from any such investment in an amount equal to (i) two percent of the amounts deposited by Norway in the T-Account under this Agreement for cofinancing grants and for technical assistance grants implemented by the recipient and (ii) ten percent of the amounts deposited by Norway in the T-Account under this Agreement for technical assistance grants implemented by the Bank. The amount of investment income to be retained by the Bank for its own account for grants to the Bank referred to under paragraph l(c) of Article III hereof will be determined by Norway and the Bank on a case-by-case basis at the time such grants are agreed. The balance of the income from any such investment shall be credited to a separate account and may be used for such purposes as the Bank and Norway agree. The Bank will exercise the same care in investing the funds in the T-Account as it does for its own account. (g) If, upon the completion or termination of the project or activity for which development aid funds are provided, there remains an unused balance I7~ C
- 7 - of such funds, the Bank shall return the balance due to Norway or shall apply the balance for such other purposes as may be mutually agreed upon in writing between Norway and the Bank. 2. Development aid funds to be provided directly from Norway to the recipient country In the event that Norway decides to provide a cofinancing grant or a technical assistance grant selected in accordance with Article IV hereof through the provision of development aid funds directly to the recipient country, such financing may be made on terms and conditions as may be agreed upon among Norway and the recipient country. A copy of such Agreement shall be furnished to the Bank by Norway. Article VI Procurement 1. In the case of development aid funds to be administered by the Bank, such funds shall be used to finance expenditures for goods and services, as the case may be, from sources eligible under the Bank's guidelines for procurement and the use of consultants, and procured or employed, as the case may be, in accordance with procedures and practices consistent therewith. 2. In the case of cofinancing grants to be provided directly to the recipient country, Norway will cooperate with the Bank in order to ensure that: 1T r
- 8 - (a) the procurement procedures to be used will fulfill the recipient's obligation to cause the project to be carried out diligently and efficiently, and that the goods and works to be procured: (i) (ii) (iii) are of satisfactory quality and are compatible with the balance of the project; will be delivered or completed in timely fashion; and are competitively priced so as to support the economic and financial viability of the project; and (b) in the case of consultant services, the experience and capability of the consultants and the terms and conditions of employment, including the terms of reference, are appropriate to the assignment. All other activities in respect of Norway's development aid funds, including other procurement activities such as bid evaluation or contract award decisions, shall be the responsibility of the recipient and/or Norway, on such terms and conditions as they mutually agree. Article VII Cooperation and Consultation I1. The identification, preparation, appraisal and supervision of the projects and/or activities which Norway assists in financing pursuant to this Agreement will be done by the Bank in accordance with its normal policies and procedures.
- 9-2. The Bank shall furnish to Norway findings of completion reports on projects assisted by Norway under this Agreement. 3. The Bank shall provide Norway with information on the progress and results of technical assistance grants and grants to the Bank provided by Norway under this Agreement and will keep Norway informed of the progress of the projects assisted by Norway under this Agreement as part of the normal ongoing consultative process. Representatives of Norway shall be invited to participate in missions relating to projects assisted by Norway under this Agreement as the Bank, Norway and the recipient country may deem appropriate. The Bank will keep Norway informed of the findings of such missions and provide Norway on a regular basis with summaries of any supervision reports resulting from such missions. 4. The Bank and Norway shall inform each other promptly of any significant modification of the terms of its cofinancing and of any contractual remedy that is applied in respect of its respective financing of such project or activity. To the extent practicable, each party shall afford the other a reasonable opportunity to exchange views before effecting any such modification or exercising any such contractual remedy. 5. Subject to the agreement of the recipient, the agreements of Norway and the Bank concluded in connection with a project to be cofinanced under this Agreement will, when deemed appropriate by Norway and the Bank, include customary cross-effectiveness provisions and optional cross-default clauses. Whenever Norway wishes to cofinance a project for which a Bank loan has already been arranged, the Bank shall request the other parties to its loan T I
-10- docume ntation to agree to amendments, if any, required in that docume=tation to reflect the cofinancing. 6. The Bank and Norway shall consult with each other from time to time on all matters arising out of this Agreement. In order to promote a regular exchange of information, Norway and the Bank shall hold consultative meetings, from time to time, normally once a year. Article VIII Miscellaneous 1. This Agreement shall enter into force on the date of its signature and shall supersede the Agreement dated October 2, 1986 between the parties hereto. 2. This Agreement shall remain in effect unless terminated by either of the parties upon six months' prior notice to that effect to the party; provided, however, that, unless otherwise mutually agreed, the activities to be carried out by the parties under this Agreement in relation to on-going projects and activities for which Norway is providing financing shall not be affected by such termination. 3. Subject to the foregoing, upon termination of this Agreement, unless the parties hereto agree on another course of action, any agreement entered into by the Bank, as administrator of funds made available by Norway under this Agreement, shall be transferred to Norway, any funds or other property of Norway held hereunder by the Bank shall be returned to Norway and the Bank's functions pursuant hereto shall be considered terminated.
4. Subject to the foregoing, promptly after termination of this Agreement, the Bank shall furnish to Norway a final report and a financial statement on the T-Account, together with a report of the Bank's external auditors on such statement. 5. Except as otherwise provided pursuant to Article II hereof, all written communications required or permitted by this Agreement shall be directed to the following addresses: For Norway: Royal Ministry of Foreign Affairs P. 0. Box 8114 Dep. 0032 Oslo, Norway Telex: 71004 NOREG N ATTENTION: Director General Department of Multilateral Development Cooperation For the Bank: International Bank for Reconstruction and Development International Development Association 1818 H Street, N.W. Washington, D.C. 20433 U. S. A. ATTENTION: Manager, Official Cofinancing Group Cofinancing and Financial Advisory Services Department Telex: 82987 (FTCC) 248423 (RCA) 64145 (TRT) 197688 (TRT) - r-~~
- 12-6. This Agreement may be amended only by written agreement of the parties hereto. Done in two copies, one for each of the parties, in the District of Columbia, United States of America, on the day and year first above written. GOVERNMENT OF THE KINGDOM OF NORWAY By Kjell Halvorsen Director General Department of Multilateral Development Cooperation Royal Ministry of Foreign Affairs INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION By Inder Sud Acting Vice President Cofinancing and Financial Advisory Services