OFFICIAL DOCUMENTS CREDIT NUMBER 6060-VC Financing Agreement (Human Development Service Delivery Project) between SAINT VINCENT AND THE GRENADINES and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated June 15, 2017 CREDIT NUMBER 6060-VC FINANCING AGREEMENT AGREEMENT dated June 15, 2017, entered into between SAINT VINCENT AND THE GRENADINES ("Recipient") and INTERNATIONAL DEVELOPMENT ASSOCIATION ("Association"). The Recipient and the Association hereby agree as follows: ARTICLE I - GENERAL CONDITIONS; DEFINITIONS 1.01. The General Conditions (as defined in the Appendix to this Agreement) constitute an integral part of this Agreement. 1.02. Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the General Conditions or in the Appendix to this Agreement. ARTICLE H - FINANCING 2.01. The Association agrees to extend to the Recipient, on the terms and conditions set forth or referred to in this Agreement, a credit in an amount equivalent to ten million seven hundred thousand Dollars ($10,700,000) (variously, "Credit" and "Financing") to assist in financing the project described in Schedule 1 to this Agreement ("Project). 2.02. The Recipient may withdraw the proceeds of the Financing in accordance with Section IV of Schedule 2 to this Agreement. 2.03. The Maximum Commitment Charge Rate payable by the Recipient on the Unwithdrawn Financing Balance shall be one-half of one percent (1/2 of 1%) per annum. 2.04. The Service Charge payable by the Recipient on the Withdrawn Credit Balance shall be equal to the greater of: (a) the sum of three-fourths of one percent (3/4 of 1%) per annum plus the Basis Adjustment to the Service Charge; and (b) three- fourths of one percent (3/4 of 1%) per annum. 2.05. The Payment Dates are January 15 and July 15 in each year. -2- 2.06. The principal amount of the Credit shall be repaid in accordance with the repayment schedule set forth in Schedule 3 to this Agreement. 2.07. The Payment Currency is Dollar. ARTICLE IHl - PROJECT 3.01. The Recipient declares its commitment to the objectives of the Project. To this end, the Recipient shall carry out the Project, through MoEP in accordance with the provisions of Article IV of the General Conditions. 3.02. Without limitation upon the provisions of Section 3.01 of this Agreement, and except as the Recipient and the Association shall otherwise agree, the Recipient shall ensure that the Project is carried out in accordance with the provisions of Schedule 2 to this Agreement. ARTICLE IV - EFFECTIVENESS; TERMINATION 4.01. The Effectiveness Deadline is the date ninety (90) days after the date of this Agreement. 4.02. For purposes of Section 8.05 (b) of the General Conditions, the date on which the obligations of the Recipient under this Agreement (other than those providing for payment obligations) shall terminate is twenty (20) years after the date of this Agreement. ARTICLE V - REPRESENTATIVE; ADDRESSES 5.01. The Recipient's Representative is the Recipient's Minister responsible for finance. 5.02. The Recipient's Address is: Office of the Prime Minister Administrative Centre Kingstown Saint Vincent and the Grenadines Facsimile: (784) 457 2152 -3- 5.03. The Association's Address is: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Telex: Facsimile: 248423 (MCI) 1-202-477-6391 AGREED at Kingstown, St Vincent and the Grenadines, as of the day and year first above written. SAINT VINCENT AND THE GRENADINES By Authorized Representative Name: Dr. The Honorable Ralph E. Gonsalves Title: Prime Minister and Minister of Finance, National Security, Legal Affairs, Grenadines Affairs and Energy of Saint Vincent and the Grenadines INTERNATIONAL DEVELOPMENT ASSOCIATION By Authorized Representative Name: Tahseen Saved Khan Title: Country Director, Caribbean Country Management Unit, Latin America and the Caribbean Repion -4- SCHEDULE 1 Project Description The objectives of the Project are to strengthen the quality of service delivery in education, to improve efficiency of social protection systems, and to improve effectiveness of labor market systems in the Recipient's territory. The Project consists of the following parts: Part A: Strengthening Pedagogy for Basic and Special Needs Education Strengthen the capacity of teachers to deliver, and of school leaders to support, high quality classroom instruction. 1: Strengthening teaching capacity by: (i) adapting the OECS teaching and learning standards developed at the regional level to the Recipient's context; (ii) disseminating the adapted teaching and learning standards to all teachers through cascading training sessions and printing and distribution of teacher's manuals and guidelines on the new learning standards, using formative assessments, and effective pedagogical practices; (iii) upgrading the skills of selected teachers through targeted training modalities; (iv) carrying out annual monitoring of teacher classroom practices, through the use of classroom observation instruments; (v) carrying out a pilot remedial program to be delivered through both teachers and after-school tutors; and (vi) strengthening special education, through materials, teacher training, and training for parents of children with autism and spectrum and behavioral disorders. 2: Developing capacity of school leaders to support teachers in improving pedagogy and help build a pipeline of effective future school leaders by: (i) providing training for new principals and senior teachers;(ii) printing and distributing handbooks on school management; (iii) developing a performance appraisal tool for principals; and (iv) carrying out a mentoring program for new principals. Part B: Building Responsive Social Protection Service Delivery Systems Improve social protection service delivery instruments to support a household approach to providing safety net benefits; strengthen human resource capacity for provision of social protection programs and services; enhance institutional mechanisms and strategy for more efficient, coordinated, and transparent social protection service delivery, and improve communication and education strategies for safety net beneficiaries, as follows: 1. Supporting the Completion of an Enhanced Country Poverty Assessment by carrying out a Living Conditions Survey (LCS) and a Household Budget Survey (HBS) and related data collection, data processing, and analysis to inform safety net program design and poverty reduction strategies and policies. -5- 2: Strengthening the Social Protection System by supporting MoNM to improve its service delivery instruments, processes and capacity to enhance efficiency and reduce duplication in public assistance programs, carry out an institutional assessment, capacity building, knowledge exchange and training to MoNM staff, strengthen operational procedures, better monitoring and evaluation, and improve public communication and beneficiary education. Part C: Strengthening Labor Market Systems and Improving Skills Training of Poor and Vulnerable Populations Support the Recipient's efforts to improve labor market outcomes by strengthening skill certification frameworks and providing training that is responsive to market needs. 1: Strengthening the Certification Framework through the provision of technical assistance, training, equipment and the carrying out of non-consulting services and Works to fill remaining gaps in service delivery, including: (i) expanding access to training for poor and vulnerable youth and adults, and (ii) enhancing the system's capacity for TVET delivery by improving the learning environment and TVET delivery in selected secondary schools, and improving human resource capacity for TVET training and administration. 2: Strengthening Labor Legislative Framework, through the provision of technical assistance to: (i) Labour Department to update its labor legislative framework and receive training on the latest research and practices in labor market intervention; and (ii) the Statistical Office to carry out a labor force survey and labor demand surveys. Part D: Project Implementation, Monitoring and Evaluation Support the Recipient to carry out activities related to the management of the Project to ensure its effective and efficient administration and implementation, and develop and establish an adequate monitoring system. -6- SCHEDULE 2 Project Execution Section I. Implementation Arrangements A. Institutional Arrangements 1. Project Steering Committee (a) The Recipient shall create no later than one month after the Effective Date, in form and substance satisfactory to the Association and thereafter operate and maintain at all times during Project implementation, a Project Steering Committee, with a composition, resources and mandate satisfactory to the Association, as further detailed in the Operations Manual. (b) Without limitation to sub-paragraph (a) immediately above, the Recipient shall ensure that the Project Steering Committee will be responsible for providing policy guidance to ensure prompt and efficient implementation of the Project, including, inter alia: (i) reviewing progress made towards achieving the Project's objectives; (ii) facilitating the coordination of Project activities, and making recommendations for removal of any obstacles to the implementation of the Project; and (iii) providing comments on reports and reviews prepared by the Project Coordinator under the Project, all in accordance with the Operations Manual. 2. Project Coordinator, Social Assistance Officer, TVET Officer and SAMIS Officers (a) The Recipient shall appoint or hire no later than one (1) month after the Effective Date in form and substance satisfactory to the Association and thereafter maintain, at all times during the implementation of the Project, the Project Coordinator within MoEP, the Social Assistance Officer within MoNM and the TVET Officer within MoE, all with functions, qualifications, terms of reference and resources satisfactory to the Association, as further detailed in the Operations Manual. (b) Without limitation to the provisions of Section I.A. 1 of this Schedule, the Recipient shall ensure that the Project Coordinator shall be in charge of the overall management, supervision and implementation of the Project, including the convening of meetings with the Line Ministries Focal Points, the PSIPMU, and other implementing entities and stakeholders as needed, all in accordance with the Operations Manual. -7- (c) Without limitation to the provisions of Section I.A.1 of this Schedule, the Recipient shall ensure that the Social Assistance Officer and the TVET Officer shall provide support and assistance to the Line Ministries Focal Points, respectively, in MoNM and in MoE in the implementation of Parts B and C or the Project, respectively, all in accordance with the Operations Manual. (d) The Recipient shall appoint or hire no later than eighteen (18) months after the Effective Date, in form and substance satisfactory to the Association, and thereafter maintain, at all times during the implementation of the Project, the SAMIS Officers within respectively MoNM and ITSD, all with functions, qualifications, terms of reference and resources satisfactory to the Association, as further detailed in the Operations Manual. (e) Without limitation to the provisions of Section I.A. 1 of this Schedule, the Recipient shall ensure that SAMIS Officers shall provide support and assistance to, respectively, MoNM and ITSD in the design, development and deployment of SAMIS, all in accordance with the Operations Manual. 3. Public Sector Investment Programme Management Unit (a) The Recipient shall operate and maintain, at all times during the implementation of the Project, the Public Sector Investment Programme Management Unit (PSIPMU) within MoEP with functions, staffing and resources satisfactory to the Association, as further detailed in the Operations Manual. (b) Without limitation to the provisions of Section I.A. 1 of this Schedule, the Recipient shall ensure that the Public Sector Investment Programme Management Unit shall be responsible for the day-to-day administration, overall planning, coordination, fiduciary (procurement, disbursement and financial management), monitoring evaluation reporting and communication of the activities under the Project; as further detailed in the Operations Manual. 4. Line Ministries Focal Points (a) The Recipient shall appoint no later than one month after the Effective Date, in form and substance satisfactory to the Association, and thereafter maintain at all times during the implementation of the Project, the Line Ministries Focal Points in the Line Ministries, with functions, qualifications, terms of reference and resources satisfactory to the Association, as further detailed in the Operations Manual. -8- (b) Without limitation to the provisions of Section I.A.1 of this Schedule, the Recipient shall ensure that the Line Ministries Focal Points shall be responsible for ensuring implementation of activities under their administrative jurisdiction in their sector, and keeping management in their respective Line Ministries updated on Project implementation; all in accordance with the provisions of the Operations Manual. B. Operations Manual 1 . The Recipient shall carry out the Project in accordance with the provisions of the Operations Manual, which shall include, inter alia: (a) the detailed description of roles and responsibilities for the Project Steering Committee, the Project Coordinator, the Public Sector Investment Programme Management Unit, and the Line Ministries Focal Points and other agencies and stakeholders involved in the Project implementation; and (b) the detailed arrangements and procedures for: (i) institutional coordination and day-to-day execution of the Project; (ii) Project budgeting, disbursement and financial management; (iii) procurement; (iv) monitoring, evaluation, reporting and communication, including performance indicators; (v) grievance mechanisms and procedures; and (vi) such other administrative, financial, technical and organizational arrangements and procedures as shall be required for the Project. 2. The Recipient shall not amend, abrogate, waive or fail to enforce any provision of the Operations Manual without the prior written agreement of the Association; provided, however, that in case of any conflict between the arrangements and procedures set out in the Operations Manual and the provisions of this Agreement, the provisions of this Agreement shall prevail. C. TVET Operations Manual 1. The Recipient shall carry out Part C.1 of the Project in accordance with the provisions of the TVET Operations Manual, which shall include, inter alia: (a) the detailed description of eligible poor youth and vulnerable adults to benefit from the TVET programs; (b) the roles and responsibilities for the implementation of the TVET programs; (c) the detailed definition and calculation for the Stipends; (d) the detailed arrangements and procedures for: (i) institutional coordination and day-to-day execution of Part C.1 of the Project; (ii) procurement; (iii) payment of the Stipends; (iv) description and screening of Works to be carried out under Part C.1 the Project (v) monitoring, evaluation, reporting and communication, including performance indicators; (vi) grievance mechanisms procedures; and (vii) such other administrative, financial, technical and organizational arrangements and procedures as shall be required for Part C. 1 of the Project. 2. The Recipient shall not amend, abrogate, waive or fail to enforce any provision of the TVET Operations Manual without the prior written agreement of the -9- Association; provided, however, that in case of any conflict between the arrangements and procedures set out in the TVET Operations Manual and the provisions of this Agreement, the provisions of this Agreement shall prevail. D. Anti-Corruption The Recipient shall ensure that the Project is carried out in accordance with the provisions of the Anti-Corruption Guidelines. Section H. Project Monitoring. Reporting and Evaluation A. Project Reports 1. The Recipient shall monitor and evaluate the progress of the Project and prepare Project Reports in accordance with the provisions of Section 4.08 of the General Conditions and on the basis of indicators set forth in the Operations Manual and in the TVET Operations Manual and acceptable to the Association. The Recipient shall ensure that: (a) during the first two (2) years of Project implementation, each Project Report shall cover the period of one calendar quarter; (b) for the final three (3) years of Project implementation the Project Report shall cover the period of half a year; and (c) all Project Reports shall all be furnished to the Association not later than forty-five (45) days after the end of the period covered by each such report. B. Financial Management, Financial Reports and Audits 1 . The Recipient shall maintain or cause to be maintained a financial management system in accordance with the provisions of Section 4.09 of the General Conditions. 2. Without limitation to the provisions of Part A of this Section, the Recipient shall prepare and furnish to the Association not later than forty-five days after the end of each calendar quarter, interim unaudited financial reports for the Project covering the quarter, in form and substance satisfactory to the Association. 3. The Recipient shall have its Financial Statements for the Project audited in accordance with the provisions of Section 4.09 (b) of the General Conditions. Each audit of the Financial Statements for the Project shall cover the period of one (1) fiscal year of the Recipient. The audited Financial Statements for each such period shall be furnished to the Association not later than six (6) months after the end of such period. -10- Section I. Procurement All goods, works, non-consulting services and consulting services required for the Project and to be financed out of the proceeds of the Credit shall be procured in accordance with the requirements set forth or referred to in the Procurement Regulations and the provisions of the Procurement Plan. Section IV. Withdrawal of Loan Proceeds A. General 1. The Recipient may withdraw the proceeds of the Financing in accordance with the provisions of Article II of the General Conditions, this Section, and such additional instructions as the Association shall specify by notice to the Recipient (including the "Disbursement Guidelines for Investment Project Financing" dated February 2017, as revised from time to time by the Association and as made applicable to this Agreement pursuant to such instructions), to finance Eligible Expenditures as set forth in the table in paragraph 2 below. 2. The following table specifies the categories of Eligible Expenditures that may be financed out of the proceeds of the Financing ("Category"), the allocations of the amounts of the Financing to each Category, and the percentage of expenditures to be financed for Eligible Expenditures in each Category: Percentage of Amount of the Credit Expenditures to be Allocated Financed Category (expressed in Dollars) (inclusive of Taxes) (1) Goods, Non-Consulting Services, Consulting Services, and 2,160,000 100% Training under Part A of the Project (2) Goods, Non-Consulting Services, Consulting Services, and 3,460,000 100% Training under Part B of Project (3) Goods, Works, Non-Consulting Services, Consulting Services, Training, Operating Costs, and 3,320,000 100% Stipends under Part C.1 of Project (4) Goods, Non-Consulting 520,000 100% Services, Consulting Services, and -11- Training under Part C2 of the Project (5) Goods, Non-Consulting Services, Consulting Services, Training and Operating Costs under 1,240,000 100% Part D of the Project TOTAL AMOUNT 10,700,000 B. Withdrawal Conditions; Withdrawal Period 1. Notwithstanding the provisions of Part A of this Section, no withdrawal shall be made for payments made prior to the date of this Agreement: (a) except that withdrawals up to an aggregate amount not to exceed $2,140,000 may be made for payments made up to twelve months prior to this date for Eligible Expenditures under Categories (1), (2), (4) and (5); and (b) for expenditures under Category (3), unless and until the Recipient has approved the TVET Operations Manual in form and substance satisfactory to the Association. 2. The Closing Date is July 31, 2022. Section V. Other Undertakings 1 . Without limitation to the provisions of Section 4.08 (b) of the General Conditions and Section II A of this Schedule, by September 30, 2019, or such other date as the Association shall agree upon, the Recipient through the Public Sector Investment Programme Management Unit shall: (i) carry out jointly with the Association, a mid-term review of the implementation of the Project, which shall cover the progress achieved in the implementation of the Project as of said date; and (ii) following such mid-term review, act promptly and diligently to take any corrective action as shall be agreed by the Association. -12- SCHEDULE 3 Repayment Schedule Date Payment Due Principal Amount of the Credit repayable (expressed as a percentage) * On each January 15 and July 15: commencing July 15, 2027 to and including 1% January 15, 2037 commencing July 15, 2037 to and including 2% January 15, 2057 * The percentages represent the percentage of the principal amount of the Credit to be repaid, except as the Association may otherwise specify pursuant to Section 3.03 (b) of the General Conditions. -13- APPENDIX Definitions 1. "Anti-Corruption Guidelines" means the "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and revised in January 2011. 2. "Basis Adjustment to the Service Charge" means the Association's standard basis adjustment to the Service Charge for credits in the currency of denomination of the Credit, in effect at 12:01 a.m. Washington, D.C. time, on the date on which the Credit is approved by the Executive Directors of the Association, and expressed either as a positive or negative percentage per annum. 3. "Category" means a category set forth in the table in Section IV of Schedule 2 to this Agreement. 4. "General Conditions" means the "International Development Association General Conditions for Credits and Grants", dated July 31, 2010. 5. "ITSD" means the Information Technology Services Division of MoEP, or any successor thereto, acceptable to the Association. 6. "Labour Department" means the Recipient's labor department of MoEP, or any successor thereto, acceptable to the Association. 7. "Line Ministries" means MoE, MoEP, and MoNM, or any successor thereto, acceptable to the Association. 8. "Line Ministries Focal Points" means the coordinators appointed by the Recipient under the Project, as referred to in Section I.A.4 of Schedule 2 to this agreement and as further detailed in the Operations Manual. 9. "MoE" means the Recipient's Ministry of Education, National Reconciliation and Ecclesiastical Affairs, or any successor thereto, acceptable to the Association. 10. "MoEP" means the Recipient's Ministry of Economic Planning, Sustainable Development, Industry, Information and Labour, or any successor thereto, acceptable to the Association. 11. "MoNM" means the Recipient's Ministry of National Mobilization, Social Development, the Family, Gender Affairs, Persons with Disabilities and Youth, or any successor thereto, acceptable to the Association. -14- 12. "OECS" means "Organisation of Eastern Caribbean States", a regional inter- governmental organization established and operating under the 1981 Treaty of Basseterre as revised in 2010 and including the following members States: Antigua and Barbuda, Commonwealth of Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia, and the Recipient. 13. "Operating Costs" means the incremental expenses incurred on account of Project management, including office equipment and supplies, vehicle operation and maintenance, communication and insurance costs, office administration costs, utilities, travel and per diem, Technical Institutes' staff additional compensation for extra hours (as further detailed in the TVET Operations Manual) and related insurance, excluding the regular salaries of the Recipient's civil service. 14. "Operations Manual" means the manual for the implementation of the Project as referred to in Section I.B.1. of Schedule 2 to this Agreement, dated April 6, 2017, acceptable to the Association, as may be amended from time to time with the Association's prior and written approval. 15. "Procurement Plan" means the Recipient's procurement plan for the Project, dated April 6, 2017 and provided for under Section IV of the Procurement Regulations, as the same shall be updated from time to time in agreement with the Association. 16. "Procurement Regulations" means the "World Bank Procurement Regulations for Borrowers under Investment Project Financing", dated July 1, 2016. 17. Operations Manual "Project Coordinator" means the coordinator appointed by the Recipient under the Project in charge of the overall management, supervision and implementation of the Project, as referred to in Section I.A.2 (a) of Schedule 2 to this Agreement and as further detailed in the Operations Manual. 18. "Project Steering Committee" means the committee referred to in Section I.A. 1(a) of Schedule 2 to this Agreement. 19. "Public Sector Investment Programme Management Unit" or "PSIPMU" means the unit established by the Recipient within MoEP and referred to in Section I.A.3 of Schedule 2 to this agreement and as further detailed in the Operations Manual. 20. "SAMIS" means the social assistance management information system within MoNM. 21. "SAMIS Officers" means the professionals hired or appointed by the Recipient and referred to under Section I.A.2(d) of Schedule 2 to this Agreement. 22. "Social Assistance Officer" means the professional hired or appointed by the Recipient in form and substance satisfactory to the Association in order to provide -15- support to the Line Ministry Focal Point in MoNM, as referred to under Section IA.2(a) of Schedule 2 to this Agreement. 23. "Statistical Office" means the Recipient's statistical office as created and operating under the Recipient's Act No. 24 of 1983. or any successor thereto, acceptable to the Association. 24. "Steering Committee" means the committee referred to in paragraph I.A.1 of Schedule 2 to this Agreement and whose functions and composition are further detailed in the Operations Manual. 25. "Stipends" means a grant made out of the proceeds of the Credit to eligible poor and vulnerable youth and adults to finance expenses (such as, inter alia, transportation and child care) incurred by said eligible poor and vulnerable youth and adults in connection with their participation in the TVET activities under Part C.1 of the Project, all in accordance and within the limits set forth in the TVET Operations Manual. 26. "Technical Institutes" means the training institutes created and operating under MoE in charge of TVET under Part C.1 of the Project. 27. "Training" means the cost associated with the training and workshops approved by the Association for reasonable expenditures (other than expenditures for consulting services), including: (i) travel, room, board and per diem expenditures incurred by trainers and trainees in connection with training activities; (ii) course fees; (iii) training facility rentals; and (iv) training material preparation, acquisition, reproduction and distribution expenses, including those related to TVET and acquired by the Technical Institutes, all under the Project. 28. "TVET" means technical and vocational education and training. 29. "TVET Officer" means the professional hired or appointed by the Recipient in form and substance satisfactory to the Association in order to provide support to the Line Ministry Focal Point in MoE, as referred to under Section I.A.2(a) of Schedule 2 to this Agreement. 30. "TVET Operations Manual" means the manual acceptable to the Association for the implementation of Part C.1 of the Project as referred to in Section I.C of Schedule 2 to this Agreement; as may be amended from time to time with the Association's prior and written approval. 31. "Works" means small retrofitting and minor repairs for MoE under Part C.1 of the Project.