OFFICIAL DOCUMENTS CREDIT NUMBER 5444-BA Financing Agreement (Drina Flood Protection Project) between BOSNIA AND HERZEGOVINA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated )EPTEBtE ) O , 2014 CREDIT NUMBER 5444-BA FINANCING AGREEMENT AGREEMENT dated EPTEMbE_. tO , 2014, entered into between BOSNIA AND HERZEGOVINA ("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 II - 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 fifteen million six hundred thousand Special Drawing Rights (SDR 15,600,000) ("Financing"), to assist in financing the project described in Schedule I 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 The Service Charge payable by the Recipient on the Withdrawn Credit Balance shall be equal to three-fourths of one percent (3/4 of 1%). 2.05. The Interest Charge payable by the Recipient on the Withdrawn Credit Balance shall be equal to one and a quarter percent (1.25%) per annum. 2.06. The Payment Dates are May 15 and November 15 in each year. 2.07. The principal amount of the Financing shall be repaid in accordance with the repayment schedule set forth in Schedule 3 to this Agreement. 2.08. The Payment Currency is Euros. ARTICLE III - PROJECT 3.01. The Recipient declares its commitment to the objectives of the Project. To this end, the Recipient shall cause the Project to be carried out by the Entities in accordance with the provisions of Article IV of the General Conditions and the Federation Project Agreement and the RS Project Agreement respectively. 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 - REMEDIES OF THE ASSOCIATION 4.01. The Additional Events of Suspension consist of the following: (a) The Federation or the RS shall have failed to perform any of its obligations under the Federation Project Agreement or the RS Project Agreement, respectively, or under its respective Subsidiary Agreement. (b) As a result of events which have occurred after the date of this Agreement, an extraordinary situation shall have arisen which shall make it improbable that either the Federation or the RS shall be able to perform its obligations under the Federation Project Agreement or the RS Project Agreement, respectively, or under its respective Subsidiary Agreement. 4.02. The Additional Event of Acceleration consists of the following: namely, that any event specified in Section 4.01 of this Agreement occurs and is continuing for a period of sixty (60) days after notice of the event has been given by the Association to the Recipient. ARTICLE V - EFFECTIVENESS; TERMINATION 5.01. The Additional Conditions of Effectiveness consist of the following: (a) a Project Agreement has been executed on behalf of the Association and an Entity on terms and conditions satisfactory to the Association; and (b) for the Entity that has met the condition contained in Section 5.01(a) above, a Subsidiary Agreement has been executed on behalf of the Recipient and the Entity, on terms and conditions satisfactory to the Association. 5.02. The Additional Legal Matters consist of the following: -2- (a) that the Project Agreement referred to in Section 5.01(a) above has been duly authorized or ratified by the Entity concerned and is legally binding upon said Entity in accordance with its terms; and (b) that the Subsidiary Agreement referred to in Section 5.01(b) above has been duly authorized or ratified by the Recipient and the Entity concerned and is legally binding upon the Recipient and said Entity in accordance with its terms. 5.03. The Effectiveness Deadline is the date one hundred twenty (120) days after the date of this Agreement. 5.04. 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 VI- REPRESENTATIVE; ADDRESSES 6.01. The Recipient's Representative is the Minister of Finance and Treasury of Bosnia and Herzegovina. 6.02. The Recipient's Address is: Ministry of Finance and Treasury Trg BiH 1 71000 Sarajevo Bosnia and Herzegovina Facsimile: (387-33) 202-930 6.03. The Association's Address is: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America -3- Cable: Telex: Facsimile: INDEVAS 248423 (MCI) 1-202-477-6391 Washington, D.C. AGREED at Sarajevo, Bosnia and Herzegovina, as of the day and year first above written. BOSNIA AND HERZEGOVINA By .)thorized Representative Name: LAW)LA \ThV2- Title: HLWt2c 7ELCE 13AV CE Ahk5 720kSu\< INTERNATIONAL DEVELOPMENT ASSOCIATION By Authorized Representative Name: NKhELA A!';PEU Title: COUUTZR MAUAQ -4- SCHEDULE 1 Project Description The objective of the Project is to provide increased protection from flood events to agricultural and commercial interests and communities in the Project area. The Project consists of the following parts: Part A: Flood Protection Works in the Republika Srpska Strengthening flood protection on the Drina River in the Bijeljina area near the confluence with the Sava River, including Project management support and institutional strengthening, through the provision of works, goods, consultants' services, Training, and Incremental Operating Costs. Part B: Flood Protection Works in the Federation Strengthening flood protection on the Drina River in the Bosnia Podrinje Canton around Gorazde, including Project management support, through the provision of works, goods, consultants' services, Training, and Incremental Operating Costs. -5- SCHEDULE 2 Project Execution Section I. Implementation Arrangements A. Institutional Arrangements 1 (a) The Recipient shall cause the RS, through the RS MoAFW, to carry out Part A of the Project. The RS MoAFW shall be responsible for the day- to-day implementation, including procurement and financial management of Part A of the Project. (b) The Recipient shall cause the RS to maintain the RS APCU within the RS MoAFW at all times during Project implementation, with terms of reference and resources satisfactory to the Association, and with competent staff in adequate numbers. 2. (a) The Recipient shall cause the Federation, through the Federation MoAWF, to carry out Part B of the Project. The Federation MoAWF shall be responsible for the day-to-day implementation, including procurement and financial management of Part B of the Project. (b) The Recipient shall cause the Federation to maintain the Federation PIU within the Federation MoAWF at all times during Project implementation, with terms of reference and resources satisfactory to the Association, and with competent staff in adequate numbers. 3. (a) The Recipient shall ensure that the Federation and the RS do not amend or waive, or permit to be amended or waived, their respective POMs, or any provision thereof, except with the prior written approval of the Association; and (b) The Recipient shall ensure that the Federation and the RS duly perform all obligations under their respective POMs in a timely manner and in accordance with the respective terms, and apply and implement, as the case may be, the actions, policies, procedures and arrangements therein set forth. B. Subsidiary Agreements 1 . To facilitate the carrying out of Part A of the Project, the Recipient shall make a portion of the proceeds of the Financing available to the RS ("Subsidiary Financing") under a subsidiary agreement between the Recipient and the RS (the "RS Subsidiary Agreement") under terms and conditions approved by the -6- Association. Except as the Association shall otherwise agree, such terms and conditions shall include the following: (a) the Recipient shall relend to RS an amount in Euros equivalent to the amount of the Financing allocated from time to time to Category (1) as set forth in the table in Schedule 2, Section IV, paragraph 2 to this Agreement; (b) the term of the Subsidiary Financing shall be twenty-five (25) years, including a five (5) year grace period; (c) the Recipient shall charge RS a commitment charge at a rate equal to the rate payable under Section 2.03 of this Agreement, on the principal amount of the Subsidiary Financing not withdrawn from time to time; (d) the Recipient shall charge RS a service charge on the principal amount of the Subsidiary Financing withdrawn and outstanding from time to time at a rate equal to the rate payable under Section 2.04 of this Agreement; (e) the principal amount of the Subsidiary Financing shall be repayable in Euros and shall be the equivalent in Special Drawing Rights (determined as of the date or respective dates of repayment) of the value of currency or currencies withdrawn from the Credit Account on account of expenditures for the Project; and (f) the Recipient shall charge RS interest on the withdrawn Subsidiary Financing at a rate of one and a quarter percent (1.25%). 2. The Recipient shall exercise its rights under the RS Subsidiary Agreement in such manner as to protect the interests of the Recipient and the Association and to accomplish the purposes of the Financing. Except as the Association shall otherwise agree, the Recipient shall not assign, amend, abrogate or waive the RS Subsidiary Agreement or any of its provisions. 3. To facilitate the carrying out of Part B of the Project, the Recipient shall make a portion of the proceeds of the Financing ("Subsidiary Financing") available to the Federation under a Subsidiary Agreement between the Recipient and the Federation (the "Federation Subsidiary Agreement") under terms and conditions approved by the Association. Except as the Association shall otherwise agree, such terms and conditions shall include the following: (a) the Recipient shall relend to the Federation an amount in Euros equivalent to the amount of the Financing allocated from time to time to Category (2) as set forth in the table of Schedule 2, Section IV, paragraph 2 to this Agreement; -7- (b) the term of the Subsidiary Financing shall be twenty-five (25) years, including a five (5) year grace period; (c) the Recipient shall charge the Federation a commitment charge at a rate equal to the rate payable under Section 2.03 of this Agreement, on the principal amount of the Subsidiary Financing not withdrawn from time to time; (d) the Recipient shall charge the Federation a service charge on the principal amount of the Subsidiary Financing withdrawn and outstanding from time to time at a rate equal to the rate payable under Section 2.04 of this Agreement; (e) the principal amount of the Subsidiary Financing shall be repayable in Euros and shall be the equivalent in Special Drawing Rights (determined as of the date or respective dates of repayment) of the value of currency or currencies withdrawn from the Credit Account on account of expenditures for the Project; and (f) the Recipient shall charge the Federation interest on the withdrawn Subsidiary Financing at a rate of one and a quarter percent (1.25%). 4. The Recipient shall exercise its rights under the Federation Subsidiary Agreement in such manner as to protect the interests of the Recipient and the Association and to accomplish the purposes of the Financing. Except as the Association shall otherwise agree, the Recipient shall not assign, amend, abrogate or waive the Federation Subsidiary Agreement or any of its provisions. C. Anti-Corruption The Recipient shall ensure that the Project is carried out in accordance with the provisions of the Anti-Corruption Guidelines. D. Safeguards The Recipient shall cause the Federation and the RS: to carry out the Project in accordance with the Environmental Assessments (the "EA") and the Resettlement Policy Frameworks ("RPF") for their respective parts of the Project; 2. prior to carrying out any works under the Project, to prepare site-specific Environmental Management Plan(s) ("EMPs") in accordance with the respective EAs, including disclosure and public consultation, in form and substance -8- satisfactory to the Association, and to implement Project activities in accordance with the respective EMPs; 3. prior to carrying out any works under the Project which require land acquisition, to prepare a Resettlement Action Plan ("RAP") in accordance with the respective RFP and to ensure that such RAP is implemented by the relevant municipality, including by providing appropriate compensation, consistent with the provisions of the RPF and site-specific RAP, to all owners and users of the land where works are to be implemented; and 4. to not assign, amend, abrogate or waive the RPF and/or RAP or any provision thereof, without the prior approval of the Association. Section II. Project Monitoring, Reporting and Evaluation A. Project Reports 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 acceptable to the Association. Each Project Report shall cover the period of one calendar semester, and shall be furnished to the Association not later than forty-five (45) days after the end of the period covered by such report. B. Financial Management, Financial Reports and Audits 1. The Recipient shall and shall cause the Federation and the RS to 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 on the provisions of Part A of this Section, the Recipient shall cause the Federation and the Republika Srpska to prepare and furnish to the Association not later than forty-five (45) 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 the Financial Statements audited in accordance with the provisions of Section 4.09(b) of the General Conditions. Each audit of the Financial Statements shall cover the period of one fiscal year of the Recipient. The audited Financial Statements for each such period shall be furnished to the Association not later than six months after the end of such period. -9- Section III. Procurement A. General 1. Goods, Works and Non-consulting Services. All goods, works and non- consulting services required for the Project and to be financed out of the proceeds of the Financing shall be procured in accordance with the requirements set forth or referred to in Section I of the Procurement Guidelines, and with the provisions of this Section. 2. Consultants' Services. All consultants' services required for the Project and to be financed out of the proceeds of the Financing shall be procured in accordance with the requirements set forth or referred to in Sections I and IV of the Consultant Guidelines, and with the provisions of this Section. 3. Definitions. The capitalized terms used below in this Section to describe particular procurement methods or methods of review by the Association of particular contracts, refer to the corresponding method described in Sections II and III of the Procurement Guidelines, or Sections II, III, IV and V of the Consultant Guidelines, as the case may be. B. Particular Methods of Procurement of Goods, Works and Non-consulting Services 1. International Competitive Bidding. Except as otherwise provided in paragraph 2 below, goods, works and non-consulting services shall be procured under contracts awarded on the basis of International Competitive Bidding. 2. Other Methods of Procurement of Goods, Works and Non-consulting Services. The following methods, other than International Competitive Bidding, may be used for procurement of goods, works and non-consulting services for those contracts specified in the Procurement Plans: (a) National Competitive Bidding, subject to the additional provisions set forth in the attached Annex to this Schedule 2; (b) Shopping; and (c) Direct Contracting. C. Particular Methods of Procurement of Consultants' Services 1. Quality- and Cost-based Selection. Except as otherwise provided in paragraph 2 below, consultants' services shall be procured under contracts awarded on the basis of Quality and Cost-based Selection. -10- 2. Other Methods of Procurement of Consultants' Services. The following methods, other than Quality and Cost-based Selection, may be used for procurement of consultants' services for those contracts which are specified in the Procurement Plans: (a) Quality-based Selection; (b) Selection under a Fixed Budget; (c) Least Cost Selection; (d) Selection based on Consultants' Qualifications; (e) Sole Source Selection; and (f) Selection of Individual Consultants. D. Review by the Association of Procurement Decisions The Procurement Plans shall set forth those contracts which shall be subject to the Association's Prior Review. All other contracts shall be subject to Post Review by the Association. Section IV. Withdrawal of the Proceeds of the Financing 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 "World Bank Disbursement Guidelines for Projects" dated May 2006, 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: -ll- Category Amount of the Financing Percentage of Allocated Expenditures to be (expressed in SDR) Financed (inclusive of Taxes) (1) Goods, works, non- 8,970,000 100% consulting services, consultants' services, Training, and Incremental Operating Costs for Part A of the Project (2) Goods, works, non- 6,630,000 100% consulting services, consultants' services, Training, and Incremental Operating Costs for Part B of the Project TOTAL AMOUNT 15,600,000 B. Withdrawal Conditions; Withdrawal Period 1. Notwithstanding the provisions of Part A of this Section, no withdrawal shall be made: (a) for payments made prior to the date of this Agreement; or (b) under Category 1 unless: (i) the RS Project Agreement between the Association and the Republika Srpska has been executed, on terms and conditions satisfactory to the Association; (ii) the RS Subsidiary Agreement has been executed on behalf of the Recipient and the Republika Srpska, on terms and conditions satisfactory to the Association; and (iii) opinions have been furnished to the Association by the Recipient and the RS stating that such Project Agreement and Subsidiary Agreement have been duly authorized or ratified by the parties thereto and are legally binding upon them in accordance with their respective terms. (c) under Category 2 unless: -12- (i) the Federation Project Agreement between the Association and the Federation has been executed, on terms and conditions satisfactory to the Association; (ii) the Federation Subsidiary Agreement has been executed on behalf of the Recipient and the Federation, on terms and conditions satisfactory to the Association; and (iii) opinions have been furnished to the Association on behalf of the Recipient and the Federation stating that such Project Agreement and Subsidiary Agreement have been duly authorized or ratified by the parties thereto and are legally binding upon them in accordance with their respective terms; 2. The Closing Date is December 31, 2019. -13- ANNEX TO SCHEDULE 2 Additional Provisions for National Competitive Bidding For the purposes of following National Competitive Bidding procedures in the procurement of goods, works and non-consulting services to be financed under the Grant, the following modifications and additions shall apply: (1) Registration (a) bidding shall not be restricted to pre-registered firms; (b) where registration is required, bidders: (i) shall be allowed a reasonable time to complete the registration process; and (ii) shall not be denied registration for reasons unrelated to their capability and resources to successfully perform the contract, which shall be verified through post-qualification; and (c) foreign bidders shall not be precluded from bidding. If a registration process is required, a foreign bidder declared the lowest evaluated bidder shall be given a reasonable opportunity to register. (2) Advertising Invitations to bid shall be advertised in at least one widely circulated national daily newspaper allowing a minimum of thirty (30) days for the preparation and submission of bids. (3) Pre-qualification When pre-qualification shall be required for large or complex works, invitations to pre-qualify for bidding shall be advertised in at least one widely circulated national daily newspaper a minimum of thirty (30) days prior to the deadline for the submission of pre-qualification applications. Minimum experience and technical and financial requirements shall be explicitly stated in the pre-qualification documents. (4) Participation by Government-owned enterprises Government-owned enterprises in Bosnia and Herzegovina, including those in the Federation and RS, shall be eligible to participate in bidding only if they can establish that they are legally and financially autonomous, operate under commercial law and are not a dependent agency of the contracting authority. -14- Furthermore, they will be subject to the same bid and performance security requirements as other bidders. (5) Bidding Documents Procuring entities shall use the appropriate standard bidding documents for the procurement of goods, works or services, acceptable to the Association. (6) Bid Opening and Bid Evaluation (a) bids shall be opened in public, immediately after the deadline for submission of bids; (b) evaluation of bids shall be made in strict adherence to the monetarily quantifiable criteria declared in the bidding documents; and (c) contracts shall be awarded to the qualified bidder having submitted the lowest-evaluated, substantially responsive bid and no negotiation shall take place. (7) Price Adjustment Civil works contracts of long duration (more than 18 months) shall contain an appropriate price adjustment clause. (8) Rejection of Bids All bids shall not be rejected and new bids solicited without the Association's prior concurrence. (9) Securities (a) bid security and performance security should follow the generally accepted practice used in the local market; (b) alternative methods such as bid securing declaration may be acceptable, in which case the Borrower may require bidders to sign a declaration accepting that if they withdraw or modify their bids during the period of validity or they are awarded the contract and they fail to sign the contract or to submit a performance security before the deadline defined in the bidding documents, the bidder will be suspended for bidding in any contract with the implementing unit; and -15- (c) no advance payment shall be made to contractors without a suitable advance payment security. These securities shall be included in the bidding documents in a text and format acceptable to the Association. (10) Right to inspect and audit Each contract financed out of the proceeds of the Financing shall provide that the suppliers, contractors and subcontractors shall permit the Association, at its request, to inspect their accounts and records relating to the procurement and performance of the contract and to have said accounts and records audited by auditors appointed by the Association. The deliberate and material violation by the supplier, contractor or subcontractor of such provision may amount to obstructive practice. (11) Fraud and Corruption The Association shall declare a firm or individual ineligible, either indefinitely or for a stated period, to be awarded a contract financed by the Association, if it at any time determines that the firm or individual has, directly or through an agent, engaged in corrupt, fraudulent, collusive, coercive or obstructive practices in competing for, or in executing, a contract financed by the World Bank Group. -16- SCHEDULE 3 Repayment Schedule Date Payment Due Principal Amount of the Financing repayable (expressed as a percentage)* On each May 15 and November 15: commencing on November 15, 2019 to and 1.65% including May 15, 2029 commencing November 15, 2029 to and 3.35% including May 15, 2039 * The percentages represent the percentage of the principal amount of the Financing to be repaid, except as the Association may otherwise specify pursuant to Section 3.03(b) of the General Conditions. -17- APPENDIX Section I. 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. "Category" means a category set forth in the table in Section IV of Schedule 2 to this Agreement. 3. "Consultant Guidelines" means the "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011. 4. "Entity" means the Federation and the RS (as these are hereafter defined), as the case may be, and "Entities" refers to the Federation and the RS collectively. 5. "Environmental Assessments" or "EAs" means the Environmental Assessments prepared and disclosed by the Federation for Part B of the Project and by the RS for Part A of the Project on January 8, 2014, and both disclosed in the World Bank's InfoShop on January 28, 2014, as such EAs satisfactory to the Association, describe the rules, guidelines and procedures to assess environmental impacts of the Project's activities and defining measures to reduce, mitigate or offset adverse environmental impacts and enhance the positive impacts of the Project's activities, as the same shall be amended from time to time with the prior approval of the Association. "Environmental Assessment" or "EA" refers to a respective EA of the Federation or EA of the RS, as applicable. 6. "Environmental Management Plan(s)" or "EMPs" means site-specific Environmental Management Plans comprised of environmental mitigation plan and environmental monitoring plan to be prepared and adopted by the Federation and/or the RS pursuant to the respective EAs and in conformity with the provisions of the Project Operations Manual, and to be implemented by the Federation and/or the RS in accordance with the provisions of Schedule 2, Section I of this Agreement, satisfactory to the Association, wherein are set forth specific details of measures to manage identified or potential environmental risks and to mitigate, reduce and/or offset adverse environmental impacts associated with the implementation of activities under the Project, together with an environmental and social baseline for each site, details of the relevant environmental legislative framework, adequate institutional, monitoring and reporting arrangements capable of ensuring proper implementation of, and -18- regular feedback on compliance with, its terms, as the same may be amended and supplemented from time to time with the Association's prior written approval. 7. "Federation" means the Federation of Bosnia and Herzegovina, a constitutive part of the Recipient, and includes any successor thereto. 8. "Federation MoAWF" means the Federation's Ministry of Agriculture, Water and Forestry, or any successor thereto. 9. "Federation Project Agreement" means the agreement between the Association and the Federation for this Project, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the Federation Project Agreement. 10. "Federation PIU" means the project implementation unit established by the Federation MoAWF to carry out Part B of the Project. 11. "Federation Subsidiary Agreement" means the agreement to be entered into between the Recipient and the Federation, referred to in Schedule 2, Section I of this Agreement, as the same may be amended from time to time. 12. "General Conditions" means the "International Development Association General Conditions for Credits and Grants", dated July 31, 2010, with the modifications set forth in Section II of this Appendix. 13. "Incremental Operating Costs" means reasonable incremental expenses incurred on account of Project implementation, management and monitoring, including office supplies, publication of procurement notices, vehicle operation, office and equipment maintenance and repair, communication, translation and interpretation, travel and supervision costs, and other miscellaneous costs directly associated with Project, but excluding salaries of officials and employees of the Recipient, the Federation of Bosnia and Herzegovina, and the Republika Srpska. 14. "Procurement Guidelines" means the "Guidelines: Procurement of Goods, Works and Non-consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011. 15. "Procurement Plans" means the Recipient's procurement plans for Part A and Part B of the Project, dated March 3, 2014 for the Federation and January 20, 2014 for the RS, and referred to in paragraph 1.18 of the Procurement Guidelines and paragraph 1.25 of the Consultant Guidelines, as the same shall be updated from time to time in accordance with the provisions of said paragraphs. 16. "Project Operations Manual(s)" or "POM(s)" means manuals to be adopted by the Federation and the RS with respect to their Parts of the Project, satisfactory to the Association, describing and setting forth procedures for implementation of -19- the Project and institutional arrangements, consistent with the provisions of this Agreement and with applicable laws and regulations and including, inter alia, timetables of actions required to be carried out under the Project, the respective roles and responsibilities of the agencies involved in the implementation of the Project, staffing, the fiduciary, technical and operational aspects and procedures for implementation of the Project, including the financial management procedures (budgeting, accounting and internal control, disbursement and flow of funds, financial reporting, annual reports, internal and external audit arrangements procedures and including the Project specific chart of accounts), procurement procedures, monitoring and evaluation arrangements, and other fiduciary and administrative arrangements and necessary terms of reference, as the same may be amended from time to time by agreement with the Association. 17. "Republika Srpska" or "RS" means Republika Srpska, a constitutive part of the Recipient, or any successor thereto. 18. "RPFs" means Resettlement Policy Frameworks prepared and disclosed by the Federation for Part B of the Project and by the RS for Part A of the Project on January 28, 2014, and both disclosed in the World Bank's InfoShop on January 27, 2014, satisfactory to the Association, defining the modalities for land acquisition under the Project and describing the policies, procedures, plans and actions (including the resettlement action plan), and institutional measures related to land acquisition and other social impacts that may arise during the Project and other phases related to the Project, and satisfactory to the Association. 19. "RAP" means a resettlement action plan, satisfactory to the Association, to be prepared and implemented by the Recipient for carrying out activities under the Project in accordance with the Resettlement Policy Framework (as hereinafter defined), to set out, inter alia, the principles and objectives, the affected persons' eligibility criteria, compensation, assistance and rehabilitation entitlements, as well as the monitoring and reporting arrangements in conformity with the Resettlement Policy Framework (as hereinafter defined). 20. "RS MoAFW" means the Republika Srpska's Ministry of Agriculture, Water and Forestry, or any successor thereto. 21. "RS Project Agreement" means the agreement between the Association and the Republika Srpska for this Project, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the RS Project Agreement. 22. "RS APCU" means the Agriculture Project Coordination Unit established by the RS MoAFW and responsible for the implementation of Part A of the Project. -20- e 23. "RS Subsidiary Agreement" means the agreement to be entered into between the Recipient and the Republika Srpska, referred to in Schedule 2, Section I of this Agreement, as the same may be amended from time to time. 24. "Subsidiary Financing" means the financing to be made out of the proceeds of the Financing provided to each Entity under the terms of a Subsidiary Agreement. 25. "Training" means all expenditures related to training activities under the Project such as training workshops, seminars, study tours and local training and including fees, travel costs and per-diem allowances for the trainers and trainees, cost of training materials, space and equipment rental, and other related expenditures approved by the Association. Section II. Modifications to the General Conditions The modifications to the General Conditions are as follows: 1. Section 3.02 is modified to read as follows: "Section 3.02. Service Charge and Interest Charge (a) Service Charge. The Recipient shall pay the Association a service charge on the Withdrawn Credit Balance at the rate specified in the Financing Agreement. The Service Charge shall accrue from the respective dates on which amounts of the Credit are withdrawn and shall be payable semi- annually in arrears on each Payment Date. Service Charges shall be computed on the basis of a 360-day year of twelve 30-day months. (b) Interest Charge. The Recipient shall pay the Association interest on the Withdrawn Credit Balance at the rate specified in the Financing Agreement. Interest shall accrue from the respective dates on which amounts of the Credit are withdrawn and shall be payable semi-annually in arrears on each Payment Date. Interest shall be computed on the basis of a 360-day year of twelve 30-day months." 2. Paragraph 16 of the Appendix ("Credit Account") is modified to read as follows: ""Credit Account" means the accounts opened by the Association in its books in the name of the Recipient to each of which the amounts of Portion A and Portion B of the Credit specified in the Financing Agreement are respectively credited." 3. Paragraph 28 of the Appendix ("Financing Payment") is modified by inserting the words "the Interest Charge" between the words "the Service Charge" and "the Commitment Charge". -21- 4. The Appendix is modified by inserting a new paragraph 32 with the following definition of "Interest Charge", and renumbering the remaining paragraphs accordingly: "32. "Interest Charge" means the interest charge specified in the Financing Agreement for the purpose of Section 3.02(b)." 5. Renumbered paragraph 37 (originally paragraph 36) of the Appendix ("Payment Date") is modified by inserting the words "Interest Charges" between the words "Service Charges" and "Commitment Charges". 6. Renumbered paragraph 50 (originally paragraph 49) of the Appendix ("Service Charge") is modified by replacing the reference to Section 3.02 with Section 3.02 (a). -22-