OFFICIALDOCUMENTS

GRANT NUMBER TF0A6949

Trust Fund Grant Agreement(Public Financial Managenent Improvement Project)

between

PALESTINE LIBERATION ORGANIZATION(for the Benefit of the Palestinian Authority)

and

INTERNATIONAL DEVELOPMENT ASSOCIATION(as Administrator of the Trust Fund for Gaza and West Bank)

Dated , 2018

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GRANT NUMBER TF0A6949

TRUST FUND GRANT AGREEMENT

AGRIEEMN dated 2018- entered into

betw cen PALESTINE ̀1,BERA NZiON (Recipient") (for the be10et of

the Palestinian Authority) and INTERNATIONAL DEVELOPMENT ASSOCIA FlON

1 WVorld Bank"). acting as adnmin istrator ("Adinistrator') of the Trust FunId for Gjaza and

West Bank. established on October 19. 1993. b\ Resolution No. 93-1I and IDA 93-7. as

amlended b\ Resolution No. 95-6 and IDA 95-3 and Resolution No. 96-11 and IDA 96-7.

and as furtler amended b\ Resolution No. 99-3 and IDA 99-2 and Resolution No. 03-193

and IDA 03-208 of the Executive Directors of the International Bank for Reconstruction

and De\ elopment and the International Dc elopment Association (-Tiust Fund~).

vHIERLAS (A) the Boards of Goxernors of the International Bank for

Reconstruction and Development and the International Development Association ha\e

resol\ ed. on Iune 9. 20 15 to. inler aia. replenish the Trust Fund in the amount of fifty-five

million United States Dollars (S55.000.000). such amount to be transferred from the

surplus of the International Bank for Reconstruetion and Development and to be used for

financing rehabilitation projeets in parts of the Gaza Strip ((iaza-) and the West Bank

(-West Bank-). which are under the jurisdiction of the Palestinian Authority

(B) the Palestine Liberation Organization and the Government of the State of

Israel have entered. on September 28. 1995. into an agreement which. among other things.

sets out certain interimi se! f-government arrangements in Gaza and the West Bank (-Interim

A-reement-):

(C) Section 5(b) oC Artiele IX of the Interim Agreement authorizes the

Palestine Liberation Organization to conduct negotiations and. in certain cases described

thereunder. sign agreements x\ ith states and international orLanizations for the benefit of

the Palestinian Authority: and

(D) the Palestinian Authority. on behalf of the Recipient. has requested the

World Bank to assist in financing the proJect described in Schedule l to this Grant

Agreement (Ithe Projec).

W IEI-REAS the World Bank has agreed. on the basis, among other things. of the

Ioregoing to extend the Grant to the Palestine Liberation Organization. for the benefit of

the Palestinian Authority. for the purpose of inancing the project as described in Sehedule

I to the Agreemerit ('Project) upon the terms and conditions set forth in this Agreement.

[he Recipient and the World Banki hcrebx a2ree as follo\\s:

Article IStandard Conditions; Definitions

1.01. The "Standard Conditions for Grants Made by the World Bank Ont of VariousFunds~. dated Februarv 15. 20 12 ("Standard Conditions~), with the modificationsset forth in Section I of the Appendix to this Agreement. constitute an integral partof this Agreement.

1 .2. Unless the context requires otherm ise. the capitalized terns used in this Agreementhave the meanings ascribed to thei ii the Standard Conditions or in thisAgreement.

Article 11The Project

2.01. The Recipient declares its commitnient to the objective of the project described inSchedule I to this Agreement ("Project"). To this end. the Recipient shall causethe Palestinian Authority to carry out Components 1. 2 and 4 of the Project throughthe Ministr of Finance and Planning. and cause HCPPP to carry out Component3 of the Project, all in accordance with the provisions of Artiele Il of the StandardConditions.

2.02. Without limitation upon the provisions of Section 2.01 of this Agreement. andexcept as the Recipient and the World Bank shall otherwise agree. the Recipientshall ensure that the Project is carried out in accordance with the provisions ofSchedule 2 to this Agreement.

Article Il1The Grant

3.01. The World Bank agrees to extend to the Recipient. on the terms and conlitions setforth or referred to in this Agreement. a grant in an amount equal to three millionUnited States Dollars ($3.000.000) (~Grant") to assist in financimg the Project.

3.02. The Recipient may x\ ithdraw the proceeds of the Grant in accordance n ith SectionIV of Schedule 2 to this Agreement.

Article IVEffectiveness; Ternination

4.01. This Agreenent shall not become effective until ev idence satisfactory to the WorldBank has been furnished to the World Bank that:

(a) the execution and deli\ery of this Agreement on behalf of the Recipienthas been dul autliorized or iat ified b\ all neccessar% o, c iniental act Ions:and

(b) the Subsidiary Agreement has been executed on behalf of the Recipientand the Palestinian Authority.

4.02. As part of the evidence to be in-niished pursuant to Section 4.0 1. there shall befurnished to the World Bank an opinion or opinions satisfactory to the World Bankof counsel acceptable to the World Bank or. if the World Bank so requests. acertilicate satisfaetorn to the World Bank of a competent official of the Recipient.sho\ im the fol low\ ing matters:

(a) on behalf of the Recipient, that this Agreement has been dul- authorized orratilied bN. and executed and delivered on its behalf and is legallK bindingupon it in accordance N\ it its ternis: and

(b) the Subsidiarv Agreement has been duk aulithorized or ratilied by theRecipient and the Palestinian Autithority and is legally binding upon theRecipient and the Palestinian Authority in accordance with its terms.

4.03. Except as the Recipient and the World Bank shall otherwise agrec. this Agreementshall enter into ef`ect on the date upon which the World Bank dispatehes to theRecipient notice of its acceptance of the e\ idence required pursuant to Section 4.01(-"ffective Date~). If. before the Effective Date, anv event has occurred wkihichwould hae entitled the World Bank to suspend the right of the Recipient to makeN itlidranals froni the Grant Account if this Agreement had been effeetixe. the WorldBank may postpone the dispatch of the notice referred to in this Section until suelievent (or events) has (or have) ceased to exist.

4.04. This Agreement and all obligations of the parties under it slhall teriinate if it hasnot entered into effect by the date ninet\ (90) days after the date of this A(-greement.uiless the World Bank. after consideration of the reasons for the delay. establishiesa later date for the purpose of th is Section. The World Bank sliall proiptly noti fythe Recipient of such later date.

Article VRecipient's Representative; Addresses

5.01. The Recipient's Representative referred to in Section 7.02 of Ilie StandardConditions is the Miinister of Finance of the Palestinian Autliorit,.

5.02. The Recipieits Address referred to in Section 7.01 of the Standard Conditions is:

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Ministrn of Finance and PlanninuPalestinian National Authority

Raiallai. West Bank and Gaza

Telephone. Facsimile:

970-2-297 8846 970-2-297 8845

5.03. Thc World Banks Address referred to in Section 7.01 of the Standard Conditionsis:

International Development Association1818 H Street. N.W.Washington. DC. 20433United States of America

Telex: Facsiimile:

248423 (MCI) or 1-202-477-639 164145 (MCI)

AGREED at __ _AC, as of the day andear First abo\ e n ritten.

PALIESTINE LHBERATION ORGANIZATION(for the Benefit of the Palestinian Authoritv)

B- zed Reeset e

Fitle:_ 5 ý .- jplNQ (

INTERNATIONAL DEVELOPMENT ASSOCIATION(as Administrator of the Vrust Fund Kor Gaza and West Bank)By

Authorized Represeintative

Name:

itle: 57 l

SCHEDULE IProject Description

The objecti\e of the Project is to cnhance the expenditure controls. financialaccountabilit\ and procurement management of the Palestinian Authorit\.

The Project consists of the follo\ ilg components:

Component I - Improving Budget Expenditure Nlanagement and Control

DCVelop budget expendilure management monitoring tools thrI OLgh the follo\kingsubcomponents:

Subcomponent 1. 1: - Impro in Budget Expenditure Management, Financial Control andCash Plannin

Design. le\clopment and implementation of the Commitment Control S\,stem("CCS") and cash planning proceulre and modernizing financial controls in line \\ ith thene\ CCS and international standards.

Subcomponent 1.2 - EstablishinT Medical E-Relerrals Sxstem Linkages w\ith CommitmentControl System

Pro\ ision of technical assistance through (a) establishing an ad hoc committee atthe Ministr\ of Health for monitoring medical referral related budget expendltures: and(b) developing an exchange of data between the E-referrals system at the Mol-1 and IFMISat the MoFP. respectively.

Subcomponent 1.3 - Enhancing MoFP Management of Intergovernmental Fiscal Franisfers

Pro\ ision of technical assistance for (a) improving procedures related to fiscaltransfers: (b) establishing fiscal forecasts: (c) defining a calendar for transflers: and(d) developing a methodology to introduce fiscal discipline in management of the fiscaltransers.

Subcomponent 1.4 - Enhancing the Wage Bill Establishment Control

Pro ision of technical assistance for developing ne\x tools and procedures tooversee the \\age bill and monitor the budgetar impact of employment decisions on the\Nage bill and establishing mechanisMS for connecting the human resources IT s\ stem atthe General Personnel Council and the payroll system at MoFP.

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Component 2 - limproving Financial Accountability of the Public FinancialManagement System

Stibcoiponenit 2. 1. - Aliening AccountineReportin n ith International Standards (GFSIPSAS)

Provision of technical assistance in completing the alignment of the accountingand reporting on international GFS and IPSAS standards by (a) providing training to staffinvolved w ith [FMIS-based transactions on the Accounting -landbook: and(b) implenenting Accountant General's instructions in seeral public finance andaccounting areas.

Subcomponent 2.2. - linproving the Bank Reconci liation Process

ProN ision of technical assistance in iniplementing an action plan folloxw!ing there\ ieN of the bank reconciliation process hetwkeen the acconting edata in the 1FMIS andthe cash in the bank accounts, including tirough improving current bank reconciliationprocedures and developing associated ICT support functionalities.

Subcomiponent 2.3. - Reducing the Backlog of Financial Statements of the PA

Provision of technical assistance in expediting Ilie backlog of unissued Financialstatenents by supporting additional temporarn accounting and auditing task forces.

Subcomponent 2.4. - Enhancing SAACB's Capacitx to Audit Bank's Pro4eCts

Pro\ ision oftechnical assistance to SAACB to enable SAACB to act as an auditingbodx for the Palestinian Autlhority's projeets financed bk the World Bank and otherinternational public organizations.

Component 3 - Modernizing Public Prociireent

Subcomponent 3. 1. - Institutional Strenutheninu of IClPPP

Support the strengtihening of HCPPP. through: (a) deNeloping lCPPP internalsystems and procedures and building capacitv Xit its staff as a critical stel) to theeflecti\ eness of the lICIPPP in carrx ing out its regulatorn and o\ersight functions definedby the law: (b) establishing an independent dispute rex iexn unit to handle complaints ofnon-compliance by procuring entities in conducting procuireient proceedings: and(c) de\,eloping and implementing a performance moiitoriig fiamexwork for HICPPP1 toassess the functioning of Ilie procurement system and needs for inipro\ ement in order tobetter inform national procurelient policies.

Subcomponent 32. - Delklelpmenit o I'iodern ProcurCmiit Tools

Pro% ision of technical assistance in procurement b\: (a) implementing and furtherde\,eloping the single procIreilent porta Ito ser\ e as a gatc\% av to all inlormation about theprocurement s\ stem and proceedings (procurement plans. notices and award decisions andother procurement documentation): (b) developing Framew% ork agreements (standard Iormsto solicit participation and place orders and related terms and conditions) for procurementof common-use goods and ser\ ices ailmed at efficienc\ and serx ice-deliver\ benefits. andtransact ion-cost sains, w\hi le preserving competition and transparenci: and (c) issuingsector specific standard bidding documents Ior pliarmaceuticals. and non-consultingserv ices to address the requirements of the procurement process in these sectors.

Subcomponent 3.3. - Capacity Building of the Procurement Workfoirce and OtherStakeholders

Support the implementation of a capacit\ building and awareness raising strateg\for procurement officials both at the central and local levels. as \\ell as other stakeholdersfrom prikate sector/SME. ci\il societ\ organizations and the UeneralI public. SupportI-ICPPP in: (a) developing a sustainable training program based on the otitcomies of theneeds assessment: and (b) deliver the training program to procUrelent officials fromprocuring entities at the central and local levels.

Component 4 - Project Management

Pro) ision of support for the establishment of the PMU. Project management andimplementation. coordination, monitoring and e\aluation. including. inler duia. fiduciar\control. external audit. and oersight and preparation of the Project reports. includingFraining and Operating Costs.

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SCHEDILE 2

Project Execution

Section 1. Institutional and Other Arrangeinents

A. Institutional Arrangements- INoFP

1. The Recipient. through the Palestinian Authoritv. shall cause the Ministr ofFinance and Planning:

(a) to carry out Components 1. 2 and 4 of thc Project in accordance with theprovisions ol thlis Agreeiient:

(b to maintain the Project Manageiiient lnit (~PNIU) within the Office ofDirector General of International Relations and Projects of the MoFP in af`orm and \k ith functions. staffing and resources satisfactory to the WorldBank. The PMU will report to the Director General of InternationalRelations and Projects

(c) to assign ox erall dav-to-day responsibility for the carrn ing out of theProject to the PVlU, incIuding procurement and financial managementresponsibilities under the Project: and

(d) to ensure that the PMU i has an adequate number of staff (includilng aProject Director. Procurement Officer. Monitoring and EvaluationSpecialist, and Financial Management Specialist) with qualifications andexperience satisfactorv to the World Bank, who shall be employed onterns and conditions. satisfactory to the World Bank. The PMU shall beassisted b- a resident advisor situated at MoFP.

B. Institutional Arrangements- HCIPPP

. The Recipient. through the Palestinian Auithority. shall cause ICPPP to:

(a) carry out Component 3 of the Project in accordance n ith the provisions ofthis Agreement:

(b) prepare the Project Reports. quarterly interini unaudited financial reports.and annual audited financial statenents covering Component 3 of theProject to enable tbe Recipient to leet its obligations for Projectmonitoring. reporting and evalnation under Section Il of Schedule 2 of thisAgreement: and

(e) iac an adequate number of staff u\itlh quaiffications and experiencesatisflactory to tlie World BanL The HCPP shall be assisted h\ a residentad\ isor situated at li RPPP.

C. Subsidiary Agreenicit

l o facilitate the carry ing out of the Prolect. the Recipient shall make the proceedsof the Grant available to the Palestinlan AuthoritN under a subsidiar- agreementbet\\cii the Recipient and the Palestinian Authority rSubsidiar Agreement'").under terms and conditions appro\ ed by the World Bank.

2. The Reeipienit shall cause Ilie Palestinian Authority: (a) to perfoini ii aceordancewith the provisions of Ilie Subsidiarv Agreenient all of the obligzatiois of thePalestinian Autihoritx therem set forth: (b) to take all action. ineluding the prox isionof funds. facilities, serxices and other resources. necessary or appropriate for thecarrying out of the ProJect: and (c) not to take or permit to be taken any actionu5 hiehi would preilt or interfere uith the carrying out of the Project.

3. The Recipient sliall exereise its righits under Ilie Subsidiary Agreement in suclimanner as to protect the interests of the Recipient aid Ilie \Vorld Bank and toaccomplish Ilie purposes of the Grant. Exeept as the World Bank shal l other\ iseagrec, the Recipient shall not assign. anend, abrogate or w\aixe hile SubsidiaryAgrecinent or any of its pro\ isions.

D. Anti-Corruption

Tlie Recipient sliall ensure that the Project is carried out in accordance N itli Ilieprovisions of Ilie -Guidelines on Preventing and Combating Fraud aiid Corruption inProjects Financed by IBRD Loans and IDA Credits and Grants~. dated October Ii. 2006and revised in January 20 [ l and as of Jul\ 1. 2016 (-Anti-Corruption Ciidelines").

Section II. Project Monitoring. Reportint and Evaluation

A. Project Reports; Completion Report

. Thle Recipient shall. tilrough the Palestinian Autliorit,. monitor and evaluate Ilieprogress of the Project and prepare ProJect Reports in accordance n\ith Ilieprox isions of Section 2.06 of the Standard Conditions and on Ilie basis of Ilieindicators agreed \ it itlie World Bank. Eacli Project Report shall coxer tiie periodof one (Il) calendar semester. and sliall be furnished to Ilie World Bank not laterthan forty-five (45) daN s after Ilie end of tlie period covered bsuch report.

2. lie Recipient sliall prepare Ilie Completion Report in accordane wvith IlieproNisions of Section 2.06 of the Standard Conditions. The Completion Report

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slial be Curniished to tlie World Banlk not later than six (6) months a fler te iC losing,Date.

B. Financial Management, Financial Reports and Audits

i . The Recipient shall maintain or cause to be maintained a financial man-agementsy stem in accordance with the provisions of Section 2.07 of the StandardConditions.

2. Without limitation on the piovisions of Par, A of this Section. the Recipient shall.thirough the lPalestinian Au thoritx, prepare and furnish to the World Bank not laterthan forty-lix e (45) days after the end of cach calendar quarter, interim unanditedlinancial reports for ithe Project co\ering the quarter, in form and substancesatistactory to the World Bank.

3. Ihe Recipient, through the Palestinian Autliority. shall cause the PMl to prepareFinancial Statenicits and have them audited in accordance w\ ith the prox isions ofSection 2.07(b) of the Standard Conditions. Each audit ofthe Financial Statementsshall cover tiie period ol one (1) calendar year of the Recipient. The auditedFinancial Statements lr cach such period sliall be furniisliel to the World Banknot later than six (6) months after the end of such period.

Section III. Procurement

All oods, ion-consultinig services and consultig services required for the Projectand to be financed out of the proceeds of the Gratt sliall be procured in accordance withthe requirements set torth or referred to in the -World Bank Procurement Regulations forBorrow\ers under Inestient Project Financing dated July 1, 2016 and revised November2017. ("Procuremetit Regulations~). and the provisions of the Recipient's procureientplan for the Projeet (~Procurement Plan~) dated March 6, 2018 provided for under SectionIV of the Procurereit Regnlations, as tile same may be updated from timeiC to timie inagreeilent \N ith the World Bank.

Section IV. Withdrawal of Grant Proceeds

A. General

. The Recipient may \ itlhdraw\ the proceeds of the Grait in accorclance x iti thepro\isions of: (a) Article 1I1 of the Standard Conditions: (b) this Section: and(e) such additional instructions as the World Bank may specify by notice to ileRecipient (including the "Disbtirseient Guidelines for Investieit ProjectFinancing§ dated February 20 17, as revised from time to time by the World Bankand as made applicable to this Agreement pursuantt to such iistructions). to finianceEligible E,xpendituies as set Corth in paragraphi 2 belo\.

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2. lhe foow ing table specifies the categories of Eligible Expenditures that max befinanced out of the proceeds of the Grant (lategor\~). the allocations of theamouts of the Grant to each Category. and the percentage of expenditures to befinanced 6or Eligible Expenditures in eaeh Categorv:

Categories Amount of the Grant Percentage ofAllocated 1Ixpend itures to be

(expressed in USD) financed(incIlsi\ e of taxes)

. Goods. non-consulting serxices. 2.200.000 100%consultaits' services. Tainingand Operating Costs underComponents l. 2 and 4 of theProject.

2. Goods, non-consulting sern ices. 800.000 100%consultants' services. Trainingand Operating Costs underComponent 3 of the Project.

Total Amount 3,000.000

B. Witlidrawal Conditions; Withdrawal Period

. Not\ ithstanding the prov isions of Part A of this Section. no withdrawal sliall bemade tor pax ments made prior to the date of this Agreeient.

2. The Closing Date referred to in Section 3.06 (e) of the Standard Conditions isJine 30. 2022.

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APPENDIX I

Section 1. Definitions

1. -Accountant General" means a position of accountant general created b\ thePresidential Decree Lan No. 3 (2008). responsible for budget planning: cash flowand managemcnt: manageiment and control of funding resources: management ofthe PA bank accounis: management of the PA financial assets: budgetinplenentation: accounting and financial reports.

. Accounting landbook~ means the manual prepared b\ the M/oFP and issued in2016 containing procedures and guidelines for issuing the accounting and thefinancial statenents.

3. 'Category" meanis a category set forth in the table in Section IV of Schedule 2 tothis Agreement.

4. -CCS" or "Commitmnenit Control System~ means the Recipient's sN stem formanaging liqu idity shortages and fluctuations during Recipient's budgetexecution.

5. *General Personnel Council" means Recipient's official entity thatinstitutionalizes the civil servant sector through the monitoring of the civil servicelaw application and compliance. duly established and operating pursuant to thePresidential Decree No. 131 dated 1994.

6. CiFS" means Government Finance Statistics which measures the financialactix ities of the government in an economy.

7. "1 CPPP" means Hligh Council for Public Procurement Policies dulv establishedin September 2012 and operating pursuant to the Cabinet Decrce based onProcurement Law No. 8 of 2014.

8. -ICT~ means Information and Communication Teehnology.

9. IFMIS~ or -integrated Financial Mlanagernent Information System~" means theMI inistry off inance and Planning's system consisting of solutions to enable MkloFPto plan. execute and monitor its budgets and assist n\ith the compliance withfinancial regulations and reporting standards.

10. "IPSAS~ means International Public Sector Accounting Standards.

Il . "MoFP" or ~Ministry of Finance and Planning means Recipient's Ministry ofFinance and Planning. or an\ successor thereof.

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12. "Mollf or Ministry o f[ Ileath- means Recipient's M inistry of Ilcaith or anv successorthercol'.

13. *PA means the Palestinian Authority.

14. nPLO means the Palestinian Liberation Organiiation.

I5. nPM means the Recipient's Projeet Management Unit to be maintained withinthe Office of Director General of International Relations and Projeets of theMinistr\ oC Finance and Planning pursuant to paragraph I of Section L.A ofSchedule 2 to this Agreement with the responsibilities assigned to it according tothis Agreement.

16. "Procurement Reguiations" means the "World Bank Procurement Regulations forBorrowers under Inkestment Project Finacing". dated July 1. 2016 and revisedNovember 20 1 7.

17. "Prociii-ement Plan~ neans the Recipient's procurement plan for the Project, clatedMarch 6. 20 18. and provided for under Section IV of the Procurement Regulations.as the same shal 1 be updated friom time to time in accordance x\ ith the provisions ofsaid paragraphs.

18. "Operating Costs~ means expenditures incurred by the PIMU or the HCPPP onaccount of the Projeet for payments for rental of office space, utility charges.xehicle maintenance and insurance. fuel. general and health insurance. officesupplies. communications services. travel expenses. or any other expendituresacceptable to the World Bank.

19. "SAACB means the Recipient's State Audit and Administrative Control Bureauduly established and operating purstant to the State Audit and AdministrativeControl Bureau Lax\ No. 15 of Year 2004.

20. -Subsidiarx Agreement~ means the agreemlent referred to in Section l.C ofSchedule 2 to this Agreement pursuant to \kihich the Recipient shall make the

proceeds of the Grant available to the Palestinian Authorit\.

2 1 . Training e cludes the materials and rental of training facilhties and equipmnent.local travel and per diem for participants. travel accoimmodation and per dien oftrainers and trainees. printing of documents. communications. and various suppliesneeded for such training.

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APPENDIX II

Modifications to the Standard Conditions

The Standard Conditions are modified as 1olon s:

. Section 2.09 is amended to read as tollo\s:

_Section 2.09. Visits. The Recipient shall throughout the implementation of theProject and for a period of ten (10) years thereaefter:

(a) enable representatives of the World Bank to visit anv part of the WestBank and Gaza under the jurisdiction of the Palestinian Authority for

purposes related to the Grant: and

(b) enable the World Bank's representatives: (i) to visit any facilities and sitesincluded in the Project: and (ii) to examine the goods inanced out of theproceeds of the Grant. and any documents relevant to the performance ofits obliations under the Grant Ageiement."

2. Sub-section (a) of Section 3.07 is amended to read as follon s:

-Section 3.07. Financin- Taxes.

(a) The Grant Agreement may specify that the proceeds of the Grant may notbe withdrawn to pay for Taxes levied by. or in tlie parts of West Bank andGaza under the jurisdiction of the Palestinian Authority on or in respect ofEligible Expenditures. or on their importation. manulacture. procurementor supply. In such case, if the amount of any such Taxes decreases orincreases, the World Bank max. by notice to the Recipient. adjust the

percentage of such Eligible Expenditures to be financed out ofthe proceedsof the Grant specified in the Grant Agreeient. as required to ensureconsisteney wkith such limitation on wvithdravals.

Sub-sections (a) and (i) of Section 4.02 are deleted. and consequently.Sub-sections (b) through (k) are re-lettered as Sub-sections (a) through (i).

4. Re-lettered Sub-section (b) of Section 4.02 is amended to read as folloný s:

(b) Framd nd crruption. At any time. the World Bank determines that anyrepresentative of the Recipient (or any agenc, thereof or any entity in theWest Bank and Gaza under the jurisdiction of the Palestinian Authority,or any other recipient of any of the procceds of the Grant) has engaged incorrupt. fraudulent. coercive or collusive practices in connection n ith theuise of the proceeds of the Grant. N% ithout the Recipient (or any suich agencythercof or an suich entity in the West Bank and Gaza under the jurisdiction

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of the Palestinian Authority or any other suchi recipient) ha ing takentitmel and appropriate action satislbetory to the World Bank to addresssuch practices n ben they, occur.

5. Re-lettered Sub-section (c) of Section 4.02 is anended to read as follows:

(c) CIoss Suspension. IBRI) or IDA has suspended in whbole or in part theright of tbc Recipient or any agency thereof. or any entity in the West Bankand Gaza under the jurisdietion of tbc Palestinian Authority. to makenxithdrawkals under anx agreement xkithi IBRD or with IDA because of afailure b% the Recipient. or an\ agency thereof or an entity in the WestBank and Gaza under the j1urisd iction oC the Palestinian Authority. toperform any of its obligations under such agreement or anV otheragreement with IBRD or IDA.-

6. Re-lettered Sub-section (f) of Section 4.02 is amended to read as follow s:

( ) Assignment of ()hligations: Dispositi of ssets. The Recipient or anyother cntity responsible for implementing any part of the Project has.without the consent of the World Bank: (i) assigned or transferred, inwhole or in part. any of its obligations arising under or entered into

pursuant to the Grant Areenent: or (ii) sold. leased. transferred. assigned.or otherwise disposed of any property or assets financed wholly or in partout of the procceds of the Grant: prox ided, howkever, that the provisions ofthis paragraph shall not apply w ith respect to transactions in the ordinarvcourse of business wvhich. in the opinion of the World Bank: (A) do notnaterially and adverselv affect the abilitN of the Recipient (or such other

entity) to perform any of its obligations arising uinder or entered into

pursuant to the Grant Agreement or to achieNe the objectixes of theProject: and (B) do not materiallv and adversely affeet the financialcondition or operation of the Recipient (or sueh other entitx ).

7. Re-lettered Sub-section (g) of Section 4.02 is amended to read as follo\N s:

(g) (onditionl of Recipienl. If the Grant has been made to a Recipient uN hich isnot a member of I BRD:

(i) Any- action has been taken for the dissolution, disestablisiment orsuspension of operations of the Recipient (or of anv other entitNresponsible for implementing any part of the Project).

(ii) Te Recipient (or an other entity responsible for implementingany part of the Project) bas ceased to exist in the same lecal formas that pre\ail ing as of the date of the Grant Agreement.

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(iii) ln the opinion of the World Bank. the legal character. ow nershipor control of the Recipient (or any other entity responsible forniplementing any part of the Project) has changed from that

prcxailing as of the date of the Grant Agreement so as tomaterially and adversely affect the ability of the Recipient (or suchother entity) to perform any of its obligations arisimg under orentered into pursuant to the Grant Agreement. or to achieve theobjectives of the Project.

8. Re-lettered Sub-section (i) of Section 4.02 is amended to read as follow s:

(h) neligi/i/iiv. IBRD or IDA has declared the Recipient ineligible to receive

proceeds of any financing made b\ IBRD or IDA or othlerwise toparticipate in the preparation or implementation of any project lnanced in\xhole or in part by IBRD or IDA (including as administrator of fundsprok ided by another financier). as a result of a deteriination by IB3RD orIDA that the Recipient has engaged in fraudulent. corrupt, coercive orcollusive practices in connection with the use of the proceeds of anNlinancing made b\ IBRD or IDA.

9. Sub-section (c) of Section 4.03 is amended to read as tllows:

(c) Frud und Corruplion. At any time, the World Bank determines. wk ithrespect to any amount of the proceeds of the Grant. that corrupt.fraudulent. collusive or coercive practices were engaged in byrepresentatives of the Recipient (or any agency thereofor any entity in theWest Bank and Gaza under the jurisdiction of the Palestinian Authority.or any other recipient of the proceeds of the Grant) without the Recipient(or any such agency thereofor any such entity in the West Bank and Gazaunder the jurisdiction of the Palestinian Auithority. or an such otherrecipient ofihe proceeds of the Grant) ha\ ing taken timelk and appropriateaction satisfactory to the World Banlk to address such practices wk hen theyoccur.

10. Sub-section (a) of Section 4.05 is aiended to read as llows:

(a) If the World Bank determines that an amount of the Grant has bcen usedin a manner inconsistent with the prox isions of the Grant Agreement orthese Standard Conditions. the Recipient shall. upon notice by the WorldBank to the Recipient. promptly refund such anount to the World Bank.Such inconsistent use shall include, x ithout limitation:

(i) ise of such amount to make a pavment for an expenditure that isnot an Eligible Expenditure: or

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(ii) (A) engaging in corrupt. [rauduil[ent, collusixe or coereiscpraclices in connection \ ith the use of such amount. or (B use ofsuch ainount to linance a contract during the procurement orexecution of wkihich such practices were engaCed in byrepresentatives of the Recipient (or anN agencx thereof or anxentity in the West Bank and Gaza under the jurisdiction of thePalestinian Authority. or other recipient of such anount of theGrant). in cither case without the Recipient (or such agencthereof or such entity in the West Bank and Gaia under thejurisdiction of the Palestinian Authority . or other such recipient)having taken tinely and appropriate action satisfactory to theWorld Bank to address such practices wlhen they occur.

I. L Sub-section (j) of Section 5.03 is anended to read as f66 IoN s:

(jD I1. n ithin thirty (30) days after counterparts of the awkard hae beendelix ered to the parties. the an\ ardi has not been complied x ith any partymnay: (i) enter judgnent upon. or institute a pJroceeding to entorce. theaward in any court of competent jurisdiction against an .other part: (ii)enforce such judgient by execution: or (iii) pursue any other appropriaterened against such other party for the enforcemnent of the aw\ard and theprovisions of the Grant Agreenent. Notwithstanding the foregoing. thisSection shall not authorize an> entry of iudgment or enforcement of theaward against the Recipient except as such procedure ma> be aailableotherwise tihan b reason of the provisions of this Section

2. Paragraph (17) of the Appendix is deleted and. consequently., paragraphs (18)through (26) are re-numbered as paragraphs ( l 7) through (25).