DO* CUMEN T9The World Bank 1818 H Street N.W. L- - 7-1234INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 20433 Cable Address: INTBAFRADINTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A. Cable Address: INDEVAS

Q5qJ M,kW92- 2014

H. E. Abdusalom KurbonovMinister of FinanceMinistry of Finance3, Akademikov Rajabovikh Ave.Dushanbe, 734025Republic of Tajikistan

Re: Republic of Tajikistan: Private Sector Competitiveness ProjectGrant 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 (theFinancing Agreement) for the above referenced Project, and to the letter from the Recipient datedJune 2, 2014 requesting certain amendments to the Financing Agreement, including: (i) change inthe Project Development Objective (PDO); (ii) restatement of the Project activities; (iii) change inbudget reallocations; and (iv) extension of the Closing Date of the Project. We also refer to yourletter dated October 30, 2013 in which you requested an amendment to the percentage ofexpenditures to be financed from the Grant proceeds, to include financing of all taxes. We alsodiscussed and agreed that, as a result of the proposed amendments, it would be necessary to revisethe results indicators for the Project.

With regard to your request to extend the closing date of the Grant, we are pleased toinform you that the Association has established September 30, 2017 as the later date for purposesof Section IV.B.2 of Schedule 2 to the Financing Agreement.

With regard to your request to amend the Financing Agreement, the Association proposesto 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 areasthat influence private sector competitiveness, including business registration, infrastructureunderlying 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 thefollowing activities:

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(i) supporting the preparation of revised mining sector laws andregulations through technical assistance and capacity buildingactivities;

(ii) developing a modern mining cadastre and building capacityregarding said cadastre through the provision of technicalassistance, training, and equipment;

(iii) modernizing the geological survey function through technicalassistance, training, and equipment;

(iv) providing technical assistance to stakeholders concerningdevelopment of the mining sector through workshops and training;and

(v) conducting a Strategic Environmental and Social Assessment(SESA) to ensure the technical assistance recommendationsconform with international standards.

Part 2 Strengthening Business Registration Systems and Processes

Improving the investment climate through improvements to the business registrationprocesses and related institutions through the following activities:

(i) Reviewing the structure, processes, systems, relationships, andmonitoring and evaluation of business registration, as well as raisingpublic awareness to enable the Business Registration One Stop Shop(OSS) to be effectively implemented.

(ii) Supporting institutional strengthening through IT and locally-basedtraining in appropriate methods for operating an OSS (excluding foreignlearning trips).

(iii) Purchasing relevant IT infrastructure (hardware and software required forthe 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 ConstructionPermits

Increasing public awareness of the single window for construction permits andstrengthening of capacity at the Construction Committee through the following activities:

(i) Institutional strengthening of the Construction Committee of theRepublic of Tajikistan through training and capacity building andprocurement of specialist/technical equipment and IT systems(computers, printers, internet connections, etc.).

(ii) Organizing and conducting Dushanbe City Construction Permits SingleWindow public awareness raising campaign, including enhancing the

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website and promoting transparency across multiple dimensions (citymaster plan, processes, steps, fees, timelines, etc.).

Part 4 Improvement of Financial Infrastructure

Strengthening the banking regulation and supervision framework through the provision oftechnical assistance and information technology support for:

(i) enhancement of the secured transactions and debt resolution legal andregulatory framework, and IT system, including: (a) conducting afeasibility study to identify the optimal model and location for thecollateral registry; (b) procuring necessary IT capacity for moveablecollateral registry; and (c) strengthening the capacity of those using themoveable 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 nationalpayments 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 ofGeorgia's Central Bank; and

(iii) strengthening bank regulation and supervision, through: (a) review andrevision of legislation and regulations of the National Bank of Tajikistan;and (b) upgrading the IT system of the National Bank of Tajikistan forbank supervision.

Part 5 Project Management

Support the operation of the PMU, including establishing a monitoringand evaluation framework for the Project, through the provision of technical assistance, Training,and Incremental Operating Costs, and financing the hiring of an additional procurement specialistand a Project Coordinator.

2. The table in paragraph 2 of Section IV.A of Schedule 2 is replaced in its entirety by thefollowing new disbursement table:

Percentage ofExpenditures to be

FinancedAmount 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' servicesand Training under Part 1 ofthe Project

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Percentage ofExpenditures to be

FinancedAmount 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' servicesand Training under Part 2 ofthe Project

(3) Goods, non-consulting 400,000 100%services, consultants' servicesand Training under Part 3 ofthe Project

(4) Goods, non-consulting 2,930,000 100%services, consultants' servicesand Training under Part 4 ofthe Project

(5) Goods, non-consulting 420,000 100%services, consultants' services,Incremental Operating Costsand Training under Part 5 ofthe Project

TOTAL AMOUNT

3. As a result of the proposed amendments, and in connection with paragraph A. of SectionII of Schedule 2 to the Financing Agreement, the performance monitoring indicators set forth inthe attachment to Supplemental Letter No. 2 to the Financing Agreement, dated June 8, 2012, areproposed to be restated to reflect the proposed restructuring and revising the target dates for theProject Development Objective (PDO). A revised and restated results framework is reflected inthe Restated Supplemental Letter No. 2, attached hereto as Annex 1. If you agree with therevisions in said Results Framework and Monitoring, please kindly sign the Amended andRestated Supplemental Letter No. 2 and return it to us.

Except as specifically amended herein, all other provisions of the Financing Agreement shallremain unchanged and in full force and effect.

Please confirm your agreement with the foregoing amendments on behalf of the Republicof Tajikistan, by countersigning, dating and returning to us a hard copy of this letter.

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Upon receipt by the Association of: (i) a countersigned copy of this letter; and (ii) thesigned Amended and Restated Supplemental Letter No. 2, the amendments herein will becomeeffective as of the date of the countersignature.

Very truly yours,

INTERNATIONAL DEVELOPMENT ASSOCIATION

Saroj Kumar JhaRegional Director

Central Asia

CONFIRMED:

REPUBLIC OFTIKI AN

By:

Name: M_4u_________________

Title: _ _ _ _ _ _ _ _

Date: ~ ~~

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Annex 1

Restated and Amended Supplemental Letter No. 2

REPUBLIC OF TAJIKISTAN

, 2014

International Development Association1818 H Street, N.W.Washington, D.C. 20433United 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 Agreementbetween the Republic of Tajikistan (the Recipient) and the International DevelopmentAssociation (the Association). The Recipient hereby confirms to the Association that theindicators set out in the attachment to this letter shall serve as a basis for the Recipient to monitorand evaluate the progress of the Project and the achievement of the objectives thereof.

Very truly yours,

REPUBLIC OF TAJIKISTAN

ByAuthorized Representative

Attachment

Attachment to Restated and Amended Supplemental Letter No. 2

Private Sector Competitiveness ProjectPerformance 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 businessregistration 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, includingbusiness 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 5.00business registration Date 01-Jul-2012 13-Dec-2013 29-Sep-2017

Comment Introduction of astep raisednumber of days.

Revised Indicator Two: Lending based ] Amount(USD) Value 0.00 0.00 5000000.00on new registration of security Date 01-Jul-2012 13-Dec-2013 29-Sep-2017interests in the new collateralregistry using moveable assets Comment New collateral

as registry has not

collateral been procured, sono new

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registration hasoccurred

New Indicator Three: Modern Text Value No No System installedAutomated Transfer System and operational(ATS) and module of financial and all relevantinstruments for interbank staff trained totransactions 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 8.00regulatory framework to Date 01-Jul-2012 13-May-2014 29-Sep-2017improve bank supervision isdeveloped, adopted, and Comment Measured byimplemented compliance

with numberof Basel CorePrinciples

Revised Indicator Five: Number of new Number Value 3.00 3.00 10.00mining exploration licenses Date 01-Jul-2012 13-Dec-2013 29-Sep-2017issued

Comment

Marked for Indicator Two: Construction Number Value 300.00 300.00 432.00Deletion permits granted in the single Date 01-Jul-2012 13-Dec-2013 31 -Dec-2016

window in the city ofDushanbe Comment No changes from

baseline occurredyet as the singlewindow is notoperational

Marked for Indicator One: New businesses Number Value 60000.00 60000.00 69000.00Deletion registered through the new Date 01-Jul-2012 13-Dec-2013 31 -Dec-2016

online one-stop-shopComment No changes from

baseline occurred

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yet as the OSS isnot operational

Marked for Indicator Five: Legal and Text Value 4 out of 10 Improvement inDeletion regulatory framework to CPSIPS at least 3 areas

improve payment system is principles of the CPSIPSdeveloped, adopted, and observed assessmentimplemented Date 01-Jul-2012 13-Dec-2013 31 -Dec-2016

Comment No changes toframework.Likely to berevised throughrestructuring.

Marked for Indicator Four: Legal and r Text Value Compliance Improvement inDeletion regulatory framework to achieved in 0 at least 8 out of

improve bank supervision is out of 25 Basel 25 Basel Coredeveloped, adopted, and Core Principlesimplemented Principles

Date 01 -Jul-2012 13-Dec-2013 31-Dec-2016

Comment No changes toframework.Likely to berevised throughrestructuring.

Intermediate Results Indicators

Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target

New Intermediate Result indicator 1: [, Days Value 0.50Electronic data and information Date 13-Dec-2013 29-Sep-2017sharing am ong the three related Comment M easured as_Target _of

agencies Comment Measured as Target oftime in days instantaneous

required to sharing of datashare business across the

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registration related agenciesapplicationsbetween thethree agencies

New Intermediate Result indicator 2: 1 Number Value 0.00 0.00 30.00Number of staff of Statistics Date 13-May-2014 13-May-2014 29-Sep-2017Agency, Social InsuranceAgency, and Tax Committee Comment

trained

New Intermediate Result indicator 4: Number Value 0.00 2000.00Visits to new City of Dushanbe Date 13-May-2014 29-Sep-2017Construction Website

Comment

Revised Intermediate Result indicator 5: Number Value 0.00 0.00 600.00Number of loans backed by Date 01-Jul-2012 13-Dec-2013 29-Sep-2017moveable assets and registeredin moveable collateral registry Comment

New Intermediate Result indicator 6: Number Value 4.00 4.00 7.00Regulatory framework to Date 01-Jul-2012 13-May-2014 29-Sep-2017improve payment system isdeveloped and implemented Comment

Revised Intermediate Result indicator 7: Text Value Supervisory Adoption ofAdoption of modem framework improved offsitesupervision methods lacking reporting and

modern analyses, newsupervision bankmethods supervision

manual, riskfocusedsupervision, andconsolidatedsupervision

Date 01-Mar-2012 13-Dec-2013 29-Sep-2017

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Comment Reforms in thesupervisoryframework notundertaken yet

Revised Intermediate Results indicator r- Number Value 0.00 0.00 7.008: Adoption of banking Date 01-Jul-2012 13-Dec-2013 29-Sep-2017regulations in line withinternational standards Comment Work on banking

regulations hasnot taken placeyet.

Revised Intermediate Results indicator Text Value No Formal9: Contingency planning and framework is incrisis management framework place andadopted and implemented simulations do

not reveal anyseriousshortcoming

Date 01-Jul-2012 13-Dec-2013 29-Sep-2017

Comment

Revised Intermediate Result indicator Months Value 36.00 36.00 18.0010: Average time to issue a Date 01-Mar-2012 13-Dec-2013 29-Sep-2017mining exploration license

Comment

Revised Intermediate Result indicator 1 Percentage Value 0.00 0.00 75.0011: Share of existing and new Date 01-Mar-2012 13-Dec-2013 29-Sep-2017claims in the Mining Cadastreon new system Comment Procurement has

not taken placeyet

Revised Intermediate Result indicator Percentage Value 0.00 1000 80.0012: Share of geological surveys Date 01-Mar-2012 13-Dec-2013 29-Sep-2017in electronic form on Modern

Comment Procurement has

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System not taken placeyet

Marked for Intermediate Result indicator Amount(USD) Value 227.00 227.00 166.00Deletion Two: Costs to register a Date 01-Mar-2012 13-Dec-2013 31-Dec-2016

businessComment No changes to

framework.Likely to berevised throughrestructuring.

Marked for Intermediate Result indicator Yes/No Value No No YesDeletion Eight: Existence of an Date 01-Mar-2012 13-Dec-2013 31-Dec-2016

operational online system forregistering collateral Comment No changes to

framework.Likely to berevised throughrestructuring.

Marked for Direct project beneficiaries Number Value 300.00 300.00 432.00Deletion Date 01-Mar-2012 13-Dec-2013 31-Dec-2016

Comment This indicator No change fromwill measure baseline value hasthe direct occurred yet.projectbeneficiariesfromintroduction ofsingle windowforconstructionpermits

No Change Female beneficiaries X Percentage Value 0.00 0.00 10.00

Sub Type

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Supplemental

Marked for Intermediate Result indicator Days Value 24.00 24.00 3.00Deletion One: Time spent on business Date 01-Mar-2012 13-Dec-2013 31-Dec-2016

registrationComment No changes to

framework.Likely to berevised throughrestructuring.

Marked for Intermediate Result indicator Number Value 5.00 5.00 3.00Deletion Three: Steps to register a Date 01-Mar-2012 13-Dec-2013 31-Dec-2016

businessComment No changes to

framework.Likely to berevised throughrestructuring.

Marked for Volume of Bank Support: Amount(USD) Value 0.00 0.00 1900000.00Deletion Enabling Environment - SME Date 01-Mar-2012 13-Dec-2013 31-Dec-2016

Comment No change frombaseline value hasoccurred yet

Marked for Intermediate Result indicator Days Value 228.00 228.00 150.00Deletion Four: Time spent on getting a Date 01-Mar-2012 13-Dec-2013 31 -Dec-2016

construction permit in the cityof Dushanbe Comment No changes to

framework.Likely to berevised throughrestructuring.

Marked for Intermediate Result indicator Amount(USD) Value 850.00 850.00 75.00Deletion Five: Costs to obtain a Date 01-Mar-2012 13-Dec-2013 31-Dec-2016

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construction permit Comment No changes toframework.Likely to berevised throughrestructuring.

Marked for Intermediate Result indicator Number Value 26.00 26.00 17.00Deletion Six: Steps to obtain a Date 01-Mar-2012 13-Dec-2013 31-Dec-2016

construction permit in the cityof Dushanbe Comment No changes to

framework.Likely to berevised throughrestructuring.

Marked for Intermediate Result indicator Yes/No Value No No YesDeletion Seven: Amended legal Date 01-Mar-2012 13-Dec-2013 31 -Dec-2016

framework for securedtransactions and debt resolution Comment No changes toregimes framework.

Likely to berevised throughrestructuring.

Marked for Intermediate Result indicator Text Value No System installedDeletion Ten: Modem Automated and operational

Transfer System (ATS) and and all themodule of financial instruments relevant stafffor interbank transactions trained to use itoperational Date 01-Mar-2012 13-Dec-2013 31-Dec-2016

Comment No changes toframework.Likely to berevised throughrestructuring.

Marked for Direct project beneficiaries M Number Value 60000.00 60000.00 69000.00

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Deletion Date 01-Mar-2012 13-Dec-2013 31 -Dec-2016

Comment This indicator No change fromwill measure baseline hasthe direct occurred yetprojectbeneficiariesfromintroduction ofone-stop-shopfor businessregistration

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 2150.00Deletion Eleven: Number of high value Date 01-Jul-2012 13-Dec-2013 31-Dec-2016

(RTGS) payments madethrough ATS per day Comment No changes to

framework.Likely to berevised throughrestructuring.

Marked for Intermediate Result Indicator Number Value 0.00 0.00 2500.00Deletion Twelve: Number of low value Date 01-Jul-2012 13-Dec-2013 31 -Dec-2016

(ACH) payments made throughATS per day Comment No changes to

framework.Likely to berevised throughrestructuring.