OFFICIAL DOCUMENTS The World Bank 1818 H Street N.W. (202) 473-1000 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 20433 Cable Address: INTBAFRAD INTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A. Cable Address: INDEVAS March 9, 2017 H.E. Kiril Minoski Minister of Finance Ministry of Finance Dame Gruev 12 1000 Skopje, Macedonia Re: IBRD Loan 8332-MK (Skills Development and Innovation Project) Additional Instructions: Disbursement First Restatement Excellency: I refer to the Loan Agreement between the International Bank for Reconstruction and Development (the "Bank") and Former Yugoslav Republic of Macedonia (the "Borrower") for the above-referenced project, dated February 7, 2014. The Loan Agreement provides that the Bank may issue additional instructions regarding the withdrawal of the proceeds of Loan 8332- MK ("Loan"). This letter ("Disbursement Letter"), as revised from time to time, constitutes the additional instructions. I also refer to your letter of March 3, 2017, requesting the Bank to change supporting documentation requirements for expenditures incurred under the School Grants (disbursement category 2) and Innovation Grants and Innovation Sub-loans (disbursement category 3), as a result of the agreed change to consider and record the relevant expenditures as expended at the time of transfers of funds related to these Grants and Sub-loans to the final beneficiaries, instead of based on the actual expenditures incurred by the final beneficiaries. In response, the Bank hereby: a) restates the related provisions in Section III. of the Disbursement Letter, by adding a separate bullet point specifying the supporting documentation requirements for the payments against the above mentioned Grants and Sub-loans; b) removes originally provided Section IV. of the Disbursement Letter, thus renumbering originally provided Section V. to Section IV; and c) adds attachment 3C to the Disbursement Letter - Form of Statement of Expenditures for payments against School Grants and Innovation Grants and Sub-loans. This First Restatement of the Disbursement Letter replaces the Disbursement Letter dated February 7, 2014 for the above referenced project. 1 The attached World Bank Disbursement Guidelines for Projects, dated May 1, 2006, ("Disbursement Guidelines") (Attachment 1), are an integral part of the Disbursement Letter. The manner in which the provisions in the Disbursement Guidelines apply to the Loan is specified below. Sections and subsections in parentheses below refer to the relevant sections and subsections in the Disbursement Guidelines and, unless otherwise defined in this letter, the capitalized terms used have the meanings ascribed to them in the Disbursement Guidelines. I. Disbursement Arrangements (i) Disbursement Methods (section 2). The following Disbursement Methods may be used under the Loan: * Advance * Direct Payment (ii) Disbursement Deadline Date (subsection 3.7). The Disbursement Deadline Date is 4 months after the Closing Date specified in the Loan Agreement. Any changes to this date will be notified by the Bank. (iii) Disbursement Conditions (subsection 3.8). Please refer to the Disbursement Condition(s) in the Loan Agreement. II. Withdrawal of Loan Proceeds (i) Authorized Signatures (subsection 3.1). An authorized signatory letter in the Form attached (Attachment 2) should be furnished to the Bank at the address indicated below providing the name(s) and specimen signature(s) of the official(s) authorized to sign Applications: The World Bank 1818 H Street, N.W. Washington, DC 20433 United States of America Attention: Country Director (ii) Applications (subsections 3.2 - 3.3). Please provide completed and signed applications for withdrawal, together with supporting documents, to the address indicated below: Loan Department Regional Center Zagreb The World Bank Radnicka 80/9, 10 000 Zagreb, Croatia Attention: Loan Department 2 (iii) Electronic Delivery (subsection 3.4) The Bank may permit the Borrower to electronically deliver to the Bank Applications (with supporting documents) through the Bank's Client Connection, web-based portal. The option to deliver Applications to the Bank by electronic means may be effected if: (a) the Borrower has designated in writing, pursuant to the terms of subparagraph (i) of this Section, its officials who are authorized to sign and deliver Applications and to receive secure identification credentials ("SIDC") from the Bank for the purpose of delivering such Applications by electronic means; and (b) all such officials designated by the Borrower have registered as users of Client Connection. If the Bank agrees, the Bank will provide the Borrower with SIDC for the designated officials. Following which, the designated officials may deliver Applications electronically by completing Form 2380, which is accessible through Client Connection (https://clientconnection.worldbank.ora). The Borrower may continue to exercise the option of preparing and delivering Applications in paper form. The Bank reserves the right and may, in its sole discretion, temporarily or permanently disallow the electronic delivery of Applications by the Borrower. (iv) Terms and Conditions of Use of SIDC to Process Applications. By designating officials to use SIDC and by choosing to deliver the Applications electronically, the Borrower confirms through the authorized signatory letter its agreement to: (a) abide by the Terms and Conditions of Use ofSecure Identification Credentials in connection with Use ofElectronic Means to Process Applications and Supporting Documentation ("Terms and Conditions of Use of Secure Identification Credentials") provided in Attachment 4; and (b) to cause such official to abide by those terms and conditions. (v) Minimum Value ofApplications (subsection 3.5). The Minimum Value of Applications is EUR 200,000 for the parts of the project implemented by MOES-PMU through Designated Account A, which include Part 3.1, and EUR 200,000 for Part 3.2 of the project to be implemented by FITD through Designated Account B. (vi) Advances (sections 5 and 6). * Type ofDesignated Accounts (subsection 5.3): Segregated. Two segregated Designated Accounts will be opened for implementation of the project: Designated Account A for the parts of the project to be implemented by MOES-PMU, which include Part 3.1, and Designated Account B for FITD (Part 3.2 of the project). * Currency of Designated Accounts (subsection 5.4): EUR * Financial Institution at which the Designated Accounts Will Be Opened (subsection 5.5): National Bank of Macedonia * Ceiling (subsection 6.1): Designated Account A: EUR 1,000,000 and Designated Account B: EUR 1,000,000. However, advances into DA-B can only be made once the disbursement condition that applies to disbursement category 3 of the Loan Agreement is met. 3 III. Reporting on Use of Loan Proceeds (i) Supporting Documentation (section 4). Supporting documentation should be provided with each application for withdrawal as set out below: * for reporting eligible expenditures paid from the Designated Accounts: o Records (e.g., copies of receipts, supplier invoices) and Statement of Expenditures in the form attached (Attachment 3A - SOE with supporting documents) evidencing eligible expenditures for payments against contracts valued at: EUR 750,000 equivalent or more for works; EUR 75,000 equivalent or more for goods; EUR 50,000 equivalent or more for consulting firms; and EUR 35,000 equivalent or more for individual consultants; o Statement of Expenditures in the form attached (Attachment 3B - SOE without supporting documents) for payments against all other contracts below the above mentioned thresholds and including training and operating costs; and o Statement of Expenditures in the form attached (Attachment 3C - SOE for Grants and Sub-loans) for payments against School Grants and Innovation Grants and Sub-loans, under the disbursement categories (2) and (3). * For requests for Direct Payment: records evidencing eligible expenditures, e.g., copies of receipts, supplier invoices. (ii) Frequency of Reporting Eligible Expenditures Paid from the Designated Account (subsection 6.3): Monthly. IV. Other Important Information For additional information on disbursement arrangements, please refer to the Disbursement Handbook available on the Bank's public website at https://www.worldbank.org and its secure website "Client Connection" at https://clientconnection.worldbank.org. Print copies are available upon request. If you have not already done so, the Bank recommends that you register as a user of the Client Connection website (https://clientconnection.worldbank.org). From this website you will be able to prepare and deliver Applications, monitor the near real-time status of the Loan, and retrieve related policy, financial, and procurement information. All Borrower officials authorized to sign and deliver Applications by electronic means are required to register with Client Connection before electronic delivery can be effected. For more information about the website and registration arrangements, please contact the Bank by email at . 4 If you have any queries in relation to the above, please contact Jasna Mestnik, Finance Officer at jmestnik@worldbank.org using the above reference. Yours sincerely, Jasna Mestnik Finance Officer World Bank Group Finance & Accounting - WFALN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Attachments: 41.World Bank Disbursement Guidelines for Projects, dated May 1, 2006 2. Form for Authorized Signatures 3. Statement of Expenditures (SOE) Forms: attachment 3A - SOE with supporting documents; attachment 3B - SOE without supporting documents; attachment 3C - SOE for Grants and Sub-loans 4. Terms and Conditions of Use of Secure Identification Credentials in connection with Use of Electronic Means to Process Applications and Supporting Documentation, dated March 1, 2013 Prepared by: Jasna Mestnik, Finance Officer - WFALN Cleared with and cc: Elena Segura, Country Lawyer - LEGLE Bojana Naceva, Task Team Leader - GEDO3 5 Attachment 2 Form of Authorized Signatory Letter [Letterhead] Ministry of Finance [Street address] [City] [Country] [DATE] The World Bank 1818 H Street, N.W. Washington, D.C. 20433 United States of America Attention: [Country Director] Re: Loan No. 8332-MK (Skills Development and Innovation Project) I refer to the Loan Agreement ("Agreement") between the International Bank for Reconstruction and Development (the "Bank") and Former Yugoslav Republic of Macedonia (the "Borrower"), dated February 7, 2014, providing the above Loan. For the purposes of Section 2.03 of the General Conditions as defined in the Agreement, any '[one] of the persons whose authenticated specimen signatures appear below is authorized on behalf of the Borrower to sign applications for withdrawal [and applications for a special commitment] under this Loan. For the purpose of delivering Applications to the Bank, 2[each] of the persons whose authenticated specimen signatures appears below is authorized on behalf of the Borrower, acting 3[individually] 4[jointly], to deliver Applications, and evidence in support thereof on the terms and conditions specified by the Bank. This confirms that the Borrower is authorizing such persons to accept Secure Identification Credentials (SIDC) and to deliver the Applications and supporting documents to the Bank by electronic means. In full recognition that the Bank shall rely upon such representations and warranties, including without limitation, the representations and warranties contained in the Terms and Conditions of Use of Secure Identification Credentials in connection with Use of Electronic Means to Process Applications and Supporting Documentation I Instruction to the Borrower: Stipulate if more than one person needs to sign Applications, and how many or which positions, and if any thresholds apply. Please delete this footnote in final letter that is sent to the Bank 2 Instruction to the Borrower: Stipulate if more than one person needs to jointly sign Applications, if so, please indicate the actual number. Please delete this footnote in final letter that is sent to the Bank Instruction to the Borrower: Use this bracket if any one of the authorized persons may sign; if this is not applicable, please delete. Please delete this footnote in final letter that is sent to the Bank 4 Instruction to the Borrower: Use this bracket only if several individuals must jointly sign each Application; if this is not applicable, please delete. Please delete this footnote in final letter that is sent to the Bank 6 ("Terms and Conditions of Use of SIDC"), the Borrower represents and warrants to the Bank that it will cause such persons to abide by those terms and conditions. This Authorization replaces and supersedes any Authorization currently in the Bank records with respect to this Agreement. [Name], [position] Specimen Signature: [Name], [position] Specimen Signature: [Name], [position] Specimen Signature: Yours truly, / signed / [Position] 7 Attachment 3A INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Statement of Expenditures (SOE) (With supporting documents) Payments made during the period from to Loan No.: Application No.: CategoryNo.: SOE No.: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Suppliefs WB Supplier's Type of Good or Currency and Payment Amount Date of % Amount Rate of Date of Date of Date of Name Contract Country Service Total Amount of I Invoice paid to Payment Financed Eligible in Ebg Withdrawn Withdrawn No Number in (CWiGOiCS/OPJT Contract Number Supplier in by this from from Objection Client R) / Brief (including this IBRDIDA Application Designated Designated (as Connection Description Amendments) Application ITF (Col 7 x 9) Account Account applicable for H Prior Review Contacts TOTALS 8 Attachment 3B INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPENT Statement of Expenditures (SOE) (Without supporting documentation) Payments made during the period from to Loan No,: Application No.: Category No.: SOE No.: I 2 3 4 5 6 7 8 9 10 11 12 13 14 Supplier's WB Supplier's Type of Good or Currency and Payment Amount Date of % Amount Rate of Date of Date of Date of Name Contract County Service Total Amount of I Invoice paid to Payment Financed Eligible in Ebg Withdrawn Withdrawn No Number in (CWGO/CS/OP.T Contract Number Supplier in by this from from Objection Client R)f Brief (including this IBRDIDA Application Designated Designated (as Connection Description Amendments) Application /TF (Col. 7 x 9) Account Account applicable for WB Prior Review Contracts TOTALS Supporting documents forthis SOE retained at (location) 9 Attachment 3C INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT LOAN NO.: APPLICATION NO.: STATEMENT OF EXPENDITURES - SOE CATEGORY NUMBER: (No Supporting Documents) SOE NO.: GRANTS/SUB-LOANS 1 2 3 4 5 6 7 8 9 10 11 12 Currency and Amount Reference or Name Currency Amount of Number Amount of Grant % requested in Date of Rate Date of EUR Amount Number of of of Grant/ of tranche Sub-loan covered Financ this Application Payment of Withdrawal withdrawn Grantl Benefic. Grant/ Sub-loan to the Beneficiary in this by IBRD (Col 6 X 7) Exchange from DA from DA Sub-loan Sub-loan Application 13-Total 10 Attachment 4 Terms and Conditions of Use of Secure Identification Credentials In connection with Use of Electronic Means to Process Applications and Supporting Documentation March 1, 2013 The World Bank (Bank)' will provide secure identification credentials (SIDC) to permit the Borrower2 to deliver applications for withdrawal and applications for special commitments under the Agreement(s) and supporting documentation (such applications and supporting documentation together referred to in these Terms and Conditions of Use as Applications) to the Bank electronically, on the terms and conditions of use specified herein. SIDC can be either: (a) hardware-based (Physical Token), or (b) software-based (Soft Token). The Bank reserves the right to determine which type of SIDC is most appropriate. A. Identification of Users. 1. The Borrower will be required to identify in a completed Authorized Signatory Letter (ASL) duly delivered to and received by the Bank each person who will be authorized to deliver Applications. The Bank will provide SIDC to each person identified in the ASL (Signatory), as provided below. The Borrower shall also immediately notify the Bank if a Signatory is no longer authorized by the Borrower to act as a Signatory. 2. Each Signatory must register as a user on the Bank's Client Connection (CC) website (https://clientconnection.worldbank.org) prior to receipt of his/her SIDC. Registration on CC will require that the Signatory establish a CC password (CC Password). The Signatory shall not reveal his/her CC Password to anyone or store or record the CC Password in written or other form. Upon registration as a CC user, the Signatory will be assigned a unique identifying account name. B. Initialization of SIDC. 1. Prior to initialization of SIDC by a Signatory, the Signatory will acknowledge having read, understood and agreed to be bound by these Terms and Conditions of Use. '"Bank" includes IBRD and IDA. 2 "Borrower" includes the borrower of an IBRD loan, IDA credit, or Project Preparation Facility advance and the recipient of a grant. 11 2. Where a Physical Token is to be used, promptly upon receipt of the Physical Token, the Signatory will access CC using his/her account name and CC Password and register his/her Physical Token and set a personal identification number (PIN) to be used in connection with the use of his/her Physical Token, after which the Physical Token will be initialized for use by the Signatory exclusively for purposes of delivering Applications. Where a Soft Token is to be used, the Signatory will access CC using his/her account name and CC Password and set a personal identification number (PIN) to be used in connection with the use of his/her Soft Token, after which the Soft Token will be initialized for use by the Signatory exclusively for purposes of delivering Applications. Upon initialization of the SIDC, the Signatory will be a "SIDC User". The Bank will maintain in its database a user account (Account) for each SIDC User for purposes of managing the SIDC of the SIDC User. Neither the Borrower nor the SIDC User will have any access to the Account. 3. Prior to first use of the SIDC by the SIDC User, the Borrower shall ensure that the SIDC User has received training materials provided by the Bank in use of the SIDC. C. Use of SIDC. 1. Use of the SIDC is strictly limited to use in the delivery of Applications by the SIDC User in the manner prescribed by the Bank in the Agreement(s) and these Terms and Conditions. Any other use of the SIDC is prohibited. 2. The Bank assumes no responsibility or liability whatsoever for any misuse of the SIDC by the SIDC User, other representatives of the Borrower, or third parties. 3. The Borrower undertakes to ensure, and represents and warrants to the Bank (such representation and warranty being expressly relied upon by the Bank in granting SIDC) that each SIDC User understands and will abide by, these Terms and Conditions of Use, including without limitation the following: 4. Security 4.1. The SIDC User shall not reveal his/her PIN to anyone or store or record the PIN in written or other form. 4.2. The SIDC User shall not allow anyone else to utilize his/her SIDC to deliver an Application to the Bank. 4.3. The SIDC User shall always logout from CC when not using the system. Failure to logout properly can create a route into the system that is unprotected. 4.4. If the SIDC User believes a third party has learned his/her PIN or has lost his/her Physical Token he/she shall immediately notify clientconnectiongworldbank.org. 12 4.5. The Borrower shall immediately notify the Bank at clientconnection@worldbank.ori of any lost, stolen or compromised SIDC, and take other reasonable steps to ensure such SIDC are disabled immediately. 5. Reservation of Right to Disable SIDC 5.1. The Borrower shall reserve the right to revoke the authorization of a SIDC User to use a SIDC for any reason. 5.2. The Bank reserves the right, in its sole discretion, to temporarily or permanently disable a SIDC, de-activate a SIDC User's Account or both. 6. Care of Physical Tokens 6.1. Physical Tokens will remain the property of the Bank. 6.2. The Bank will physically deliver a Physical Token to each Signatory designated to receive one in a manner to be determined by and satisfactory to the Bank. 6.3. Physical Tokens contain delicate and sophisticated instrumentation and therefore should be handled with due care, and should not be immersed in liquids, exposed to extreme temperatures, crushed or bent. Also, Physical Tokens should be kept more than five (5) cm from devices that generate electromagnetic radiation (EMR), such as mobile phones, phone-enabled PDAs, smart phones and other similar devices. Physical Tokens should be carried and stored separate from any EMR device. At close range (less than 5 cm), these devices can output high levels of EMR that can interfere with the proper operation of electronic equipment, including the Physical Token. 6.4. Without derogating from these Terms and Conditions of Use, other technical instructions on the proper use and care of Physical Tokens are available at http://www.rsa.com. 7. Replacement 7.1. Lost, damaged, compromised (in terms of 4.5, above) or destroyed Physical Tokens will be replaced at the expense of the Borrower. 7.2. The Bank reserves the right, in its sole discretion, not to replace any Physical Token in the case of misuse, or not to reactivate a SIDC User's Account. 13