1

                                       Document of
                                   The World Bank


                                                                                Report No: 58376




                              RESTRUCTURING PAPER

                                          ON A

                      PROPOSED PROJECT RESTRUCTURING
                                       OF
                       SCIENCE & TECHNOLOGY PROJECT
                                     LOAN
                                  July 7, 2005


                                        TO THE

                               REPUBLIC OF CROATIA


                                   December 7, 2010




This document has a restricted distribution and may be used by recipients only in the
performance of their official duties. Its contents may not otherwise be disclosed without
World Bank authorization.
                 ABBREVIATIONS AND ACRONYMS

BICRO          Business Innovation Centre in Croatia
UKF            Unity through Knowledge Fund




         Regional Vice President:     Philippe Le Houerou
                Country Director:     Peter Harrold
        Sector Manager / Director:    Lalit Raina
               Task Team Leader:      Paulo Guilherme Correa
                                                                                     Page 1
                      SCIENCE & TECHNOLOGY PROJECT

                             RESTRUCTURING PAPER

                         Reallocation of Proceeds

                   CROATIA -- SCIENCE & TECHNOLOGY PROJECT
                                     P080258
                                  LOAN 7320-HR
                                    Restructuring Paper

1.    Proceeds for Croatia, Science & Technology Project, [Loan No 7320-HR],
P080258 will be reallocated as follows:

Category of Expenditure                   Allocation            % of Financing
Current          Revised                  Current    Revised    Current
                                          EURO       EURO
Goods                Goods                 2,310,467  3,102,824 100% of foreign
                                                                      expenditures, 100% of
                                                                      local expenditures (ex
                                                                      factory) and 80% of
                                                                      local costs for other
                                                                      items procured locally
Consultants'         Consultants'             5,560,326   4,479,702 100% of foreign
Services             Services                                       expenditures, and 75%
                                                                    of local expenditures
Training             Training                  921,176      720,063 100%
Sub-financing        Sub-financing
(a) under Part B.3   (a) under Part B.3   0                        0 100% of Sub-project
    of the Project       of the Project                              amount

(b) under Part B.5   (b) under Part B.5   2,000,000        2,000,000 100% of Sub-project
    of the Project       of the Project                              amount

(c) under Part       (c) under Part       14,268,124      15,652,915 80% of Sub-project
    B.2, B.4 and         B.2, B.4 and                                amount for withdrawal
    C.2 of the           C.2 of the                                  applications received by
    Project              Project                                     the Bank before July 16,
                                                                     2009, 100% of Sub-
                                                                     project amount under
                                                                     Part B.2 of the Project
                                                                     for withdrawal
                                                                     applications received by
                                                                     the Bank on or after July
                                                                    16, 2009, and 80% of
                                                                    Sub-project amount
                                                                    under Parts B.4 and C.2
                                                                    of the Project for
                                                                    withdrawal applications
                                                                    received by the Bank on
                                                                    or after July 16, 2009
Severance             Severance                68,677        68,677 100%
Payments              Payments

Operating Costs       Operating costs       2,189,354     2,160,546 75 %

Fee                   Fee                      77,500        77,500 Amount due under
                                                                    Section 2.04 of this
                                                                    Agreement
Premia for            Premia for                     0            0 Amount due under
Interest Rate Caps    Interest Rate Caps                              Section 2.09 (c) of this
and Interest Rate     and Interest Rate                               Agreement
Collars               Collars
Innovation            Innovation            2,600,000     1,733,397 100% of the amount
Financing             Financing                                     paid
Unallocated           Unallocated                    0            0

TOTAL                 TOTAL                29,995,624    29,995,624



2. The Project has been restructured in August 2009. Since then it successfully launched
   activities that enabled the commercialization of research results and research capacity
   and increased the ability of small and medium sized companies to invest in research
   and development activities. The project rating is satisfactory.

3. The project will close on May 31, 2011, and proposed reallocation is necessary to
      optimize the use of funds until the project closing date. The percentage of financing
      under the loan expenditure categories remains the same. The funds are being
      reallocated to the sub-financing programs funded by BICRO and the Unity through
      Knowledge Fund (UKF), as follows:

         Revised allocation for the RAZUM Program amounts to EURO 6,593,124
         Revised allocation for the TechCro Program amounts to EURO 4,825,000
         Revised allocation for the UKF Program amounts to EURO 4,234,791.