OFFMICAL OWUMEws~ GRANT NUMBER TF011205 Federation Project Agreement (Technical Assistance for Improving Investment Climate and Institutional Strengthening) between IN TERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and FEDERATION OF BOSNIA AND HERZEGOVINA Dal:ed 4-ele-it, Zcf),2012 PROJECT AGREEMENT Agreement dated -Ae, fr e- tt , 2012 entered into between the INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ("World Bank"), acting as Administrator of the Swedish International Development Cooperation Agency (SIDA) Trust Fund Grant No. TFOI 1205, and the FEDERATION OF BOSNIA AND HERZEGOVINA ("Project Implementing Entity") ("Project Agreement") in connection w ith the SIDA Trust Fund Grant Agreement between Bosnia and Herzegovina ithe "Recipient") and the World Bank (the "Grant Agreement"). The World Bank and the Project Implementing Entity hereby agree as follows: ARTICLE I - STANDARD CONDITIONS; DEFINITIONS 1.01. The Standard Conditions for Grants Made by the World Bank Out of Various Funds, dated February 15, 2012 (as defined in the Grant Agreement) constitute an integrel part of thi; Agreement. 1.02. Unless the context reqiires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the Grant Agreement or the Standard Conditions. ARTICLE II - PROJECT 2.01. The Project Implemeiting Entity declares its commitment to the objectives of the Project. To this eid, the Project Implementing Entity shall carry out its respective Part of the Project in accordance with (a) the provisions of Article 11 of the Standard Conditions; (b) the "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated Octoter 15, 2006 and revised in January 2011 ("Anti-Corruption Guidelines"); (c) Article II of the Grant Agreement, and (d) the Operations Manual. The Project Implementing Entity shall provide promptly as needed, the funds, facilities, services and other resources required the Project. 2.02. Without limitation u)on the provisions of Section 2.01 of this Agreement, and except as the World Bank and the Project Implementing Entity shall otherwise agree, the Project Irr plernenting Entity shall carry out its respective Part of the Project in accordance with the provisions of the Schedule to this Agreement. -2- ARTICLE III - REPRESENTATIVE; ADDRESSES 3.01. The Project Impleme lting Entity's Representative is its Minister of Finance. 3.02. The Bank's Address s: International Bank for Reconstruction and Development 1818 H Street, NW Washington, DC 20433 United States of Anrica Cable: Telex: Facsimile: INTBAFRAD 248423(MCI) or 1-202-477-6391 Washington, D.C. 64145(MCI) 3.03. The Project Impleme iting Entity's Address is: Federal Ministry of Finance Mehmeda Spahe 5 71000 Sarajevo Bosnia ard Herzegox ina Facsimile: 387 33 203 152 -3- AGREED at Sarajevc, Bosnia and Herzegovina, as of the day and year first above written, INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVEL PMENT By thorized Representative Name: /v4&1A- +P/ 4 Title: oo /*'y 4 /2F/ FEDERATION OF BOSNI HERZEGOV By Authorized Representative Name: Title: -4- SCHEDULE Executioin of the Project Implementing Entity's Respective Part of the Project Section I. Implementa:ion Arrangements A. Institutional Arrangements The Project Implerrentirg Entity's Respective Part of the Project shall be implemerted by the Federation Inspectorate, which shall be responsible for Project management, including procurement and financial management, in the Federatioi. B. Implementation Covenants and Safeguards 1. The Proje,ct lmplementing Entity shall maintain the PMU in the Federation Inspectorate at all tiries during Project implementation, with terms of reference and resources satisfictory to the World Bank, and with competent staff in adequate numbers. 2. The Project Impleme lting Entity shall: (a) dily perfornr all obligations under the Operational Manual in a timely manner and in accordance with their respective terms, and apply and implement, as the case may be, the actions, criteria, policies, procedures aid arrangenents therein set forth; and (b) nt amend oi waive, or permit to be amended or waived the Operational Manual or any provisions of any one thereof, except with the prior written apprcval of the World Bank. 3. The Proj.ct Implementing Entity shall ensure that no private land shall be affected )y the Project and that no land acquisition or resettlement shall be required. 4. The Proj,e-ct Implemting Entity shall ensure that the Project will not cause substantial and irreversible environmental damages, whilst ensuring all of the local env ronmental legal requirements have been met. In cases of activities that may cause changes .o the surrounding environment, the Project Implementing Entity will notify both the local environmental authorities and the World Bank task team. 5. The Project Implementing Entity, through the Federation PMU, shall, by October 31 of each year durirg the implementation of the Project, furnish to the Bank the -5- annual implementation work programs for the Project for the next calendar year, including procurement and financing plans, and by November 30 each year review these plans w th the Bank before implementing them. 6. The Project Implementing Entity shall enter into a Subsidiary Grant Agreement with the ?ecipient f.r the purpose of receiving funds necessary for carrying out Part I of the Project, ("Federation Subsidiary Grant Agreement"); and under terms anJ conditions approved by the World Bank and including the Anti- Corruptic n Guidelines. 7. The Project Implementing Entity shall duly perform all its obligations under the Federation Subsidiay Grant Agreement. Except as the World Bank shall otherwise agree, the Project Implementing Entity shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Federation Subsidiary Grant Agreement or any provision thereof. 8. The Project Implerr enting Entity shall, at the request of the World Bank, exchange views with the World Bank with regard to the progress of the Project, the performance of 'ts obligations under this Agreement, under the Federation Subsidiary Grant Agreement, and other matters relating to the purposes of the Grant Agreement. 9. The Project Implemtnting Entity shall promptly inform the World Bank of any condition which interferes or threatens to interfere with the progress of the Project, the accomp ishment of the purposes of the Grant Agreement, or the performa-ce by the Project Implementing Entity of its obligations under this Agreeme -t or under 1he Federation Subsidiary Grant Agreement. C. Anti-Corruption The Project Implementing Entity shall ensure that the Project is carried out in accordance with the provisions of the Anti-Corruption Guidelines. Section II. Project Mor itoring, Reporting and Evaluation. A. Project Reports 1. The Project Implementing Entity shall monitor and evaluate the progress of the Project aid prepare :roject Reports on the basis of indicators acceptable to the World Bank. Each such Project Report shall cover the period of one calendar semester and shall be furnished to the Recipient not later than one month after the end of the period covered by such report for incorporation and forwarding by the Recipieni to the Wor d Bank of the overall Project Report. B. Financial Management, Financial Reports and Audits -6- 1. The Project Implemcnting Entity shall maintain a financial management system and prepare financ al statements in accordance with consistently applied accounting standards acceptable to the World Bank, both in a manner adequate to reflec t the operations resources and expenditures related to the Project. 2. The PMU shall have its financial statements referred to above audited by independent auditor, acceptable to the World Bank, in accordance with consisten.ly applied uditing standards acceptable to the World Bank. Each audit of these financial statements shall cover the period of one fiscal year of the Project Implementing Entity. The Project Implementing Entity shall ensure that the audited financial statements for each period shall be: (a) furnished to the Recipient and the World Bank not later than six months after the end of the period; a.d (b) made publicly available in a timely fashion and in a manner acceptable to the Wo -ld Bank. Section III. Frocurement All goods, works and services required for the Project and to be financed out of the proceeds of 1he Grant s'all be procured in accordance with the provisions of the Grant Agreement