DO* CUMEN T9 The World Bank 1818 H Street N.W. L- - 7-1234 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 20433 Cable Address: INTBAFRAD INTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A. Cable Address: INDEVAS Q5qJ M,kW92- 2014 H. E. Abdusalom Kurbonov Minister of Finance Ministry of Finance 3, Akademikov Rajabovikh Ave. Dushanbe, 734025 Republic of Tajikistan Re: Republic of Tajikistan: Private Sector Competitiveness Project Grant No. H771-TJ Amendment to the Financing Agreement Excellency: We refer to the Financing Agreement between the Republic of Tajikistan (the Recipient) and the International Development Association (the Association) dated June 8, 2012 (the Financing Agreement) for the above referenced Project, and to the letter from the Recipient dated June 2, 2014 requesting certain amendments to the Financing Agreement, including: (i) change in the Project Development Objective (PDO); (ii) restatement of the Project activities; (iii) change in budget reallocations; and (iv) extension of the Closing Date of the Project. We also refer to your letter dated October 30, 2013 in which you requested an amendment to the percentage of expenditures to be financed from the Grant proceeds, to include financing of all taxes. We also discussed and agreed that, as a result of the proposed amendments, it would be necessary to revise the results indicators for the Project. With regard to your request to extend the closing date of the Grant, we are pleased to inform you that the Association has established September 30, 2017 as the later date for purposes of Section IV.B.2 of Schedule 2 to the Financing Agreement. With regard to your request to amend the Financing Agreement, the Association proposes to amend the Financing Agreement as follows: 1. Schedule 1, Project Description is restated in its entirety to read as follows: "The development objective of the Project is to foster increased efficiency in key areas that influence private sector competitiveness, including business registration, infrastructure underlying access to financial services, and the mining industry. The Project consists of the following parts: Part 1 Encouraging Competitiveness and Development of the Mining Industry Developing an environment conducive to business in the mining sector through the following activities: -2- (i) supporting the preparation of revised mining sector laws and regulations through technical assistance and capacity building activities; (ii) developing a modern mining cadastre and building capacity regarding said cadastre through the provision of technical assistance, training, and equipment; (iii) modernizing the geological survey function through technical assistance, training, and equipment; (iv) providing technical assistance to stakeholders concerning development of the mining sector through workshops and training; and (v) conducting a Strategic Environmental and Social Assessment (SESA) to ensure the technical assistance recommendations conform with international standards. Part 2 Strengthening Business Registration Systems and Processes Improving the investment climate through improvements to the business registration processes and related institutions through the following activities: (i) Reviewing the structure, processes, systems, relationships, and monitoring and evaluation of business registration, as well as raising public awareness to enable the Business Registration One Stop Shop (OSS) to be effectively implemented. (ii) Supporting institutional strengthening through IT and locally-based training in appropriate methods for operating an OSS (excluding foreign learning trips). (iii) Purchasing relevant IT infrastructure (hardware and software required for the OSS to be operational, including but not limited to computers, telephones, internet connections and OSS software). Part 3 Institutional Strenithening to Support a Single Window for Construction Permits Increasing public awareness of the single window for construction permits and strengthening of capacity at the Construction Committee through the following activities: (i) Institutional strengthening of the Construction Committee of the Republic of Tajikistan through training and capacity building and procurement of specialist/technical equipment and IT systems (computers, printers, internet connections, etc.). (ii) Organizing and conducting Dushanbe City Construction Permits Single Window public awareness raising campaign, including enhancing the -3- website and promoting transparency across multiple dimensions (city master plan, processes, steps, fees, timelines, etc.). Part 4 Improvement of Financial Infrastructure Strengthening the banking regulation and supervision framework through the provision of technical assistance and information technology support for: (i) enhancement of the secured transactions and debt resolution legal and regulatory framework, and IT system, including: (a) conducting a feasibility study to identify the optimal model and location for the collateral registry; (b) procuring necessary IT capacity for moveable collateral registry; and (c) strengthening the capacity of those using the moveable collateral registry system, through technical assistance, training, and information technology support; (ii) modernization of the payment systems infrastructure, through: (a) strengthening the legal and regulatory framework governing the national payments system; (b) procuring of an Automated Transfer System (ATS) and Central Securities Depository (CSD), including relevant IT support; and (c) providing training and capacity building through the Republic of Georgia's Central Bank; and (iii) strengthening bank regulation and supervision, through: (a) review and revision of legislation and regulations of the National Bank of Tajikistan; and (b) upgrading the IT system of the National Bank of Tajikistan for bank supervision. Part 5 Project Management Support the operation of the PMU, including establishing a monitoring and evaluation framework for the Project, through the provision of technical assistance, Training, and Incremental Operating Costs, and financing the hiring of an additional procurement specialist and a Project Coordinator. 2. The table in paragraph 2 of Section IV.A of Schedule 2 is replaced in its entirety by the following new disbursement table: Percentage of Expenditures to be Financed Amount of the Grant (inclusive of taxes, Allocated exclusive of VAT and "Category (expressed in SDR) excise taxes) (1) Goods, non-consulting 2,200,000 100% services, consultants' services and Training under Part 1 of the Project -4- Percentage of Expenditures to be Financed Amount of the Grant (inclusive of taxes, Allocated exclusive of VAT and "Category (expressed in SDR) excise taxes) (2) Goods, non-consulting 550,000 100% services, consultants' services and Training under Part 2 of the Project (3) Goods, non-consulting 400,000 100% services, consultants' services and Training under Part 3 of the Project (4) Goods, non-consulting 2,930,000 100% services, consultants' services and Training under Part 4 of the Project (5) Goods, non-consulting 420,000 100% services, consultants' services, Incremental Operating Costs and Training under Part 5 of the Project TOTAL AMOUNT 3. As a result of the proposed amendments, and in connection with paragraph A. of Section II of Schedule 2 to the Financing Agreement, the performance monitoring indicators set forth in the attachment to Supplemental Letter No. 2 to the Financing Agreement, dated June 8, 2012, are proposed to be restated to reflect the proposed restructuring and revising the target dates for the Project Development Objective (PDO). A revised and restated results framework is reflected in the Restated Supplemental Letter No. 2, attached hereto as Annex 1. If you agree with the revisions in said Results Framework and Monitoring, please kindly sign the Amended and Restated Supplemental Letter No. 2 and return it to us. Except as specifically amended herein, all other provisions of the Financing Agreement shall remain unchanged and in full force and effect. Please confirm your agreement with the foregoing amendments on behalf of the Republic of Tajikistan, by countersigning, dating and returning to us a hard copy of this letter. -5- Upon receipt by the Association of: (i) a countersigned copy of this letter; and (ii) the signed Amended and Restated Supplemental Letter No. 2, the amendments herein will become effective as of the date of the countersignature. Very truly yours, INTERNATIONAL DEVELOPMENT ASSOCIATION Saroj Kumar Jha Regional Director Central Asia CONFIRMED: REPUBLIC OFTIKI AN By: Name: M_4u_________________ Title: _ _ _ _ _ _ _ _ Date: ~ ~~ -6- Annex 1 Restated and Amended Supplemental Letter No. 2 REPUBLIC OF TAJIKISTAN , 2014 International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Re: Grant No. H771-TJ (Private Sector Competitiveness Project) Performance Monitoring Indicators Dear Sirs and Mesdames: This refers to paragraph A of Section II of Schedule II to the Financing Agreement between the Republic of Tajikistan (the Recipient) and the International Development Association (the Association). The Recipient hereby confirms to the Association that the indicators set out in the attachment to this letter shall serve as a basis for the Recipient to monitor and evaluate the progress of the Project and the achievement of the objectives thereof. Very truly yours, REPUBLIC OF TAJIKISTAN By Authorized Representative Attachment Attachment to Restated and Amended Supplemental Letter No. 2 Private Sector Competitiveness Project Performance Monitorins! Indicators Project Development Objectives Original Project Development Objective: The development objective of the project is to remove key constraints to business development and investment by: (i) simplifying business registration and construction permitting processes; (ii) improving regulations and infrastructure underlying access to financial services; and (iii) encouraging development of the mining industry, where Tajikistan has a competitive advantage. New Project Development Objective: The development objective of the project is to foster increased efficiency in key areas that influence private sector competitiveness, including business registration, infrastructure underlying access to financial services, and the mining industry. Results Core sector indicators are considered: Yes Results reporting level: Project Level Project Development Objective Indicators Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target New Indicator One: Time spent on Days Value 24.00 33.00 5.00 business registration Date 01-Jul-2012 13-Dec-2013 29-Sep-2017 Comment Introduction of a step raised number of days. Revised Indicator Two: Lending based ] Amount(USD) Value 0.00 0.00 5000000.00 on new registration of security Date 01-Jul-2012 13-Dec-2013 29-Sep-2017 interests in the new collateral registry using moveable assets Comment New collateral as registry has not collateral been procured, so no new -8- registration has occurred New Indicator Three: Modern Text Value No No System installed Automated Transfer System and operational (ATS) and module of financial and all relevant instruments for interbank staff trained to transactions operational use it Date 13-May-2014 13-May-2014 29-Sep-2017 Comment New Indicator Four: Legal and Number Value 0.00 0.00 8.00 regulatory framework to Date 01-Jul-2012 13-May-2014 29-Sep-2017 improve bank supervision is developed, adopted, and Comment Measured by implemented compliance with number of Basel Core Principles Revised Indicator Five: Number of new Number Value 3.00 3.00 10.00 mining exploration licenses Date 01-Jul-2012 13-Dec-2013 29-Sep-2017 issued Comment Marked for Indicator Two: Construction Number Value 300.00 300.00 432.00 Deletion permits granted in the single Date 01-Jul-2012 13-Dec-2013 31 -Dec-2016 window in the city of Dushanbe Comment No changes from baseline occurred yet as the single window is not operational Marked for Indicator One: New businesses Number Value 60000.00 60000.00 69000.00 Deletion registered through the new Date 01-Jul-2012 13-Dec-2013 31 -Dec-2016 online one-stop-shop Comment No changes from baseline occurred -9- yet as the OSS is not operational Marked for Indicator Five: Legal and Text Value 4 out of 10 Improvement in Deletion regulatory framework to CPSIPS at least 3 areas improve payment system is principles of the CPSIPS developed, adopted, and observed assessment implemented Date 01-Jul-2012 13-Dec-2013 31 -Dec-2016 Comment No changes to framework. Likely to be revised through restructuring. Marked for Indicator Four: Legal and r Text Value Compliance Improvement in Deletion regulatory framework to achieved in 0 at least 8 out of improve bank supervision is out of 25 Basel 25 Basel Core developed, adopted, and Core Principles implemented Principles Date 01 -Jul-2012 13-Dec-2013 31-Dec-2016 Comment No changes to framework. Likely to be revised through restructuring. Intermediate Results Indicators Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target New Intermediate Result indicator 1: [, Days Value 0.50 Electronic data and information Date 13-Dec-2013 29-Sep-2017 sharing am ong the three related Comment M easured as_Target _of agencies Comment Measured as Target of time in days instantaneous required to sharing of data share business across the - 10 - registration related agencies applications between the three agencies New Intermediate Result indicator 2: 1 Number Value 0.00 0.00 30.00 Number of staff of Statistics Date 13-May-2014 13-May-2014 29-Sep-2017 Agency, Social Insurance Agency, and Tax Committee Comment trained New Intermediate Result indicator 4: Number Value 0.00 2000.00 Visits to new City of Dushanbe Date 13-May-2014 29-Sep-2017 Construction Website Comment Revised Intermediate Result indicator 5: Number Value 0.00 0.00 600.00 Number of loans backed by Date 01-Jul-2012 13-Dec-2013 29-Sep-2017 moveable assets and registered in moveable collateral registry Comment New Intermediate Result indicator 6: Number Value 4.00 4.00 7.00 Regulatory framework to Date 01-Jul-2012 13-May-2014 29-Sep-2017 improve payment system is developed and implemented Comment Revised Intermediate Result indicator 7: Text Value Supervisory Adoption of Adoption of modem framework improved offsite supervision methods lacking reporting and modern analyses, new supervision bank methods supervision manual, risk focused supervision, and consolidated supervision Date 01-Mar-2012 13-Dec-2013 29-Sep-2017 -1l- Comment Reforms in the supervisory framework not undertaken yet Revised Intermediate Results indicator r- Number Value 0.00 0.00 7.00 8: Adoption of banking Date 01-Jul-2012 13-Dec-2013 29-Sep-2017 regulations in line with international standards Comment Work on banking regulations has not taken place yet. Revised Intermediate Results indicator Text Value No Formal 9: Contingency planning and framework is in crisis management framework place and adopted and implemented simulations do not reveal any serious shortcoming Date 01-Jul-2012 13-Dec-2013 29-Sep-2017 Comment Revised Intermediate Result indicator Months Value 36.00 36.00 18.00 10: Average time to issue a Date 01-Mar-2012 13-Dec-2013 29-Sep-2017 mining exploration license Comment Revised Intermediate Result indicator 1 Percentage Value 0.00 0.00 75.00 11: Share of existing and new Date 01-Mar-2012 13-Dec-2013 29-Sep-2017 claims in the Mining Cadastre on new system Comment Procurement has not taken place yet Revised Intermediate Result indicator Percentage Value 0.00 1000 80.00 12: Share of geological surveys Date 01-Mar-2012 13-Dec-2013 29-Sep-2017 in electronic form on Modern Comment Procurement has - 12 - System not taken place yet Marked for Intermediate Result indicator Amount(USD) Value 227.00 227.00 166.00 Deletion Two: Costs to register a Date 01-Mar-2012 13-Dec-2013 31-Dec-2016 business Comment No changes to framework. Likely to be revised through restructuring. Marked for Intermediate Result indicator Yes/No Value No No Yes Deletion Eight: Existence of an Date 01-Mar-2012 13-Dec-2013 31-Dec-2016 operational online system for registering collateral Comment No changes to framework. Likely to be revised through restructuring. Marked for Direct project beneficiaries Number Value 300.00 300.00 432.00 Deletion Date 01-Mar-2012 13-Dec-2013 31-Dec-2016 Comment This indicator No change from will measure baseline value has the direct occurred yet. project beneficiaries from introduction of single window for construction permits No Change Female beneficiaries X Percentage Value 0.00 0.00 10.00 Sub Type - 13 - Supplemental Marked for Intermediate Result indicator Days Value 24.00 24.00 3.00 Deletion One: Time spent on business Date 01-Mar-2012 13-Dec-2013 31-Dec-2016 registration Comment No changes to framework. Likely to be revised through restructuring. Marked for Intermediate Result indicator Number Value 5.00 5.00 3.00 Deletion Three: Steps to register a Date 01-Mar-2012 13-Dec-2013 31-Dec-2016 business Comment No changes to framework. Likely to be revised through restructuring. Marked for Volume of Bank Support: Amount(USD) Value 0.00 0.00 1900000.00 Deletion Enabling Environment - SME Date 01-Mar-2012 13-Dec-2013 31-Dec-2016 Comment No change from baseline value has occurred yet Marked for Intermediate Result indicator Days Value 228.00 228.00 150.00 Deletion Four: Time spent on getting a Date 01-Mar-2012 13-Dec-2013 31 -Dec-2016 construction permit in the city of Dushanbe Comment No changes to framework. Likely to be revised through restructuring. Marked for Intermediate Result indicator Amount(USD) Value 850.00 850.00 75.00 Deletion Five: Costs to obtain a Date 01-Mar-2012 13-Dec-2013 31-Dec-2016 - 14 - construction permit Comment No changes to framework. Likely to be revised through restructuring. Marked for Intermediate Result indicator Number Value 26.00 26.00 17.00 Deletion Six: Steps to obtain a Date 01-Mar-2012 13-Dec-2013 31-Dec-2016 construction permit in the city of Dushanbe Comment No changes to framework. Likely to be revised through restructuring. Marked for Intermediate Result indicator Yes/No Value No No Yes Deletion Seven: Amended legal Date 01-Mar-2012 13-Dec-2013 31 -Dec-2016 framework for secured transactions and debt resolution Comment No changes to regimes framework. Likely to be revised through restructuring. Marked for Intermediate Result indicator Text Value No System installed Deletion Ten: Modem Automated and operational Transfer System (ATS) and and all the module of financial instruments relevant staff for interbank transactions trained to use it operational Date 01-Mar-2012 13-Dec-2013 31-Dec-2016 Comment No changes to framework. Likely to be revised through restructuring. Marked for Direct project beneficiaries M Number Value 60000.00 60000.00 69000.00 - 15 - Deletion Date 01-Mar-2012 13-Dec-2013 31 -Dec-2016 Comment This indicator No change from will measure baseline has the direct occurred yet project beneficiaries from introduction of one-stop-shop for business registration No Change Female beneficiaries X Percentage Value 0.00 0.00 10.00 Sub Type Supplemental Marked for Intermediate Result indicator Number Value 1600.00 3459.00 2150.00 Deletion Eleven: Number of high value Date 01-Jul-2012 13-Dec-2013 31-Dec-2016 (RTGS) payments made through ATS per day Comment No changes to framework. Likely to be revised through restructuring. Marked for Intermediate Result Indicator Number Value 0.00 0.00 2500.00 Deletion Twelve: Number of low value Date 01-Jul-2012 13-Dec-2013 31 -Dec-2016 (ACH) payments made through ATS per day Comment No changes to framework. Likely to be revised through restructuring.