Common use of Implementation Arrangements Clause in Contracts

Implementation Arrangements. A. Institutional Arrangements 1. The Recipient shall establish and maintain, throughout the period of implementation of the Project, a Project Steering Committee with representation that includes representatives from the Recipient at the national level and at the Khammouane’s provincial level to, inter alia, monitor the overall progress of the Project, and provide strategic guidance in the implementation of the Project; the mandate, terms of reference and composition of such committee shall be satisfactory to the Association. 2. The Recipient shall: (a) adopt and thereafter apply in the implementation of the Project an Operational Manual satisfactory to the Association giving details of: (i) implementation arrangements; (ii) procurement procedures as set forth in Section III of this Schedule and standard procurement documentation; (iii) reporting requirements, financial management procedures and audit procedures as set forth in Section II.B of this Schedule; (iv) project performance indicators as set forth in Section II.A of this Schedule; (v) Environment and Social Safeguard Screening Framework; (vi) criteria for the selection of Sub-projects, along with the terms and conditions of Sub-grants provided under the DDF and the PDF, including those set forth in Section I.D of this Schedule; and (vii) maintenance provisions for works to be carried out under a Sub-project; (b) undertake not to amend, suspend, abrogate, repeal or waive any provisions of the Operational Manual without the prior agreement of the Association; (c) ensure that the Operational Manual is made available, at all times until completion of the Project, to the Province’s departments, the Districts, the ▇▇▇ ▇▇▇▇, the villages and the ALG Eligible Villages, and applied in the carrying out of Sub-projects; and (d) subject to the prior agreement of the Association, periodically update the Operational Manual.

Implementation Arrangements. A. Institutional Arrangements 1The Recipient shall implement the Project in accordance with the Financial Management Operations Manual, the ESAMF and the Work-Fare Operations Manual, and except as the Association shall otherwise agree, the Recipient shall not amend, abrogate or waive any provision of any of the three above-stated documents. If any provision of the Financial Management Operations Manual, the ESAMF or the Work-Fare Operations Manual is inconsistent with a provision of this Agreement, the provision of this Agreement shall govern. Where required under the ESAMF, the Recipient shall prepare an EMP, acceptable to the Association, prior to the commencement of any activity for which such EMP shall be required, and shall thereafter carry out such activity in accordance with the provisions of the EMP. The Recipient shall: (a) employ, in accordance with the provisions of paragraph C of Section III of this Schedule, all of the financial management staff of the PMU by not later than January 31, 2010, and an internal audit firm by not later than May 1, 2010; (b) prepare and furnish to the Association, for its review and comments, a financial management operations manual that shall establish and maintain, throughout guide the period of implementation of the Project, and shall finalize said manual, by not later than January 31, 2010, taking into account the Association’s comment thereon; and (c) establish, by not later than March 1, 2010, a Project Steering Committee financial management system to be maintained in accordance with representation the provisions of paragraph B.1 of Section II of this Schedule. The Recipient shall at all times ensure that includes representatives from the Recipient at the national level return of IDPs under Phases III and at the Khammouane’s provincial level to, inter alia, monitor the overall progress IV of the ProjectResettlement Plan meets minimum standards, and provide strategic guidance in the implementation of the Project; the mandate, terms of reference and composition of such committee shall be satisfactory acceptable to the Association. 2, according to the following criteria: (a) adequacy, under internationally acceptable standards, of the financial and technical assistance provided to the Returnees, over and above the assistance provided to them by UNHCR and the World Food Program; (b) adequacy of the land dispute resolution arrangements available to the Returnees; (c) adequacy of the health and education services available to the Returnees, including access to schools and health services within a reasonable distance; and (d) adequacy of the grievance-redressed mechanisms available to the Returnees. The Recipient shall: (a) adopt and thereafter apply in the implementation of the Project an Operational Manual satisfactory : furnish to the Association giving details of: every six (i6) implementation arrangements; (ii) procurement procedures as set forth months, commencing on March 1, 2010, a rolling six-month activity plan, in Section III of this Schedule form and standard procurement documentation; (iii) reporting requirementssubstance acceptable to the Association, financial management procedures and audit procedures as set forth in Section II.B of this Schedule; (iv) project performance indicators as set forth in Section II.A of this Schedule; (v) Environment and Social Safeguard Screening Framework; (vi) criteria for describing the selection of Sub-projects, along with the terms and conditions of Sub-grants provided under the DDF and the PDF, including those set forth in Section I.D of this Schedule; and (vii) maintenance provisions for works activities to be carried out under a Subthe Project during the six-project; (b) undertake not month period immediately following the date of said plan; exchange views with the Association on such plan; promptly make such adjustments thereto as the Association shall request in order to amend, suspend, abrogate, repeal or waive any provisions of the Operational Manual without the prior agreement of the Association; (c) ensure that the Operational Manual is made available, at all times until completion objectives of the ProjectProject are met; thereafter, carry out the Project in accordance with the six-month activity plan, as revised to the Province’s departments, the Districts, the ▇▇▇ ▇▇▇▇, the villages and the ALG Eligible Villages, and applied in the carrying out of Sub-projects; and (d) subject to the prior agreement of take into account the Association, periodically update ’s requests and comments; and not amend said plan except after obtaining the Operational ManualAssociation’s prior written consent.

Implementation Arrangements. A. Institutional Arrangements 1. The Recipient shall establish and maintainshall, throughout through the period of PMD: apply in the implementation of the Project, a Project Steering Committee with representation that includes representatives from the Recipient at the national level and at the Khammouane’s provincial level to, inter alia, monitor the overall progress of the Project, and provide strategic guidance in the implementation of the Project; the mandate, terms of reference and composition of such committee shall be satisfactory Manual acceptable to the Association. 2. The Recipient shall: (a) adopt World Bank and thereafter apply in the implementation of the Project an Operational Manual satisfactory to the Association Recipient, giving details of: (i) implementation arrangements; (ii) procurement procedures as set forth in Section III of this Schedule and standard procurement documentation; (iii) reporting requirements, financial management procedures and audit procedures as set forth in Section II.B of this Schedule; (iv) project performance indicators as set forth in Section II.A of this Scheduleindicators; (v) Environment the Environmental Management Framework, the Isolated and Social Safeguard Screening Vulnerable Peoples Framework, and the Land Acquisition and Resettlement Framework, including the technical guidelines for implementation of such frameworks; (vi) criteria Eligibility Criteria for the selection of Sub-projects, along with projects and the terms and conditions of Sub-grants provided under governing the DDF Disaster Management Kecamatan Grants and the PDFLocal Government Participation, including those the terms and conditions set forth in Section I.D of the Annex 1 to this Schedule; and (vii) maintenance provisions for works to be carried out under a Sub-project; ; and (bviii) undertake the Better Governance Action Plan; apply the supplemental Disaster Management Manual which includes guidelines for implementation of the Disaster Management Implementation Guidelines for Environmental and Social Safeguards, acceptable to the Recipient and the World Bank, as necessary to set out criteria and implementation arrangement unique to the Project; not to amend, suspend, abrogate, repeal or waive any provisions of the Operational Project Manual or supplemental Disaster Management Manual without the prior written agreement of the Association; (c) World Bank and the Recipient; ensure that the Operational Manual Project Manual, and supplemental Disaster Management Manual, as applicable, is made available, at all times until completion of the Project, to the Province’s departments, the Districts, the ▇▇▇ ▇▇▇▇, the villages each Local Government and the ALG Eligible Villagesall Oversight Consultants and Facilitators, and applied in the carrying out of Sub-projects; and (d) subject to and with the prior written agreement of the AssociationWorld Bank, periodically update the Project Manual, and supplemental Disaster Management Manual, as necessary, at all times ensuring compliance thereof with the terms of this Agreement. For the purposes of providing Disaster Management Kecamatan Grants to Beneficiaries under the Project, the Recipient shall only submit an application for withdrawal of the proceeds of the Grant allocated to Category (1) in the Table in Section IV.A of this Schedule to finance Sub-projects prepared and selected in accordance with the Eligibility Criteria set forth in Annex 1 to this Schedule, the Project Manual, and supplemental Disaster Management Manual. The Recipient shall ensure that Facilitators are contracted, trained and mobilized by no later than April 30 in each year of Project implementation in accordance with the Project Manual. The Recipient, through PMD, shall ensure that, prior to carrying out Sub-project works, the technical Facilitators shall have completed a technical review of each Sub-project in accordance with the Project Manual and supplemental Disaster Management Manual and the requirements of Annex 1 to this Schedule. The Recipient shall ensure that the applicable Kabupaten Satker shall retain records of each such review. The Recipient, through PMD, shall ensure, on an annual basis during Project implementation, that adequate budget is made for training of Facilitators and Oversight Consultants based on a training plan agreed in writing between the World Bank and the Recipient. The Recipient shall ensure that the Facilitators responsible for Sub-projects shall provide facilitation services until such Sub-projects are completed. The Recipient and the World Bank shall agree, by no later than June 30 in each year of Project implementation, commencing on the first June 30 to occur after the Effective Date, on the list with each Project Kecamatan, which will be eligible for Sub-projects for the upcoming calendar year. The PMD Secretariat shall make available to the public through its website and in hard copy at its office, at all times until completion of the Project, free of charge, a list of each Project Kecamatan, amounts of Disaster Management Kecamatan Grants and the Project Manual and supplemental Disaster Management Manual. The Recipient, through the PMD Secretariat will coordinate with and ensure that Provincial and Kabupaten Satkers arrange for the public disclosure of complaints and cases related to the Project, if any, and their handling and resolution, including through media sources and on the PNPM website. The PMD Secretariat shall ensure that the relevant ▇▇▇▇▇ and Bupati in each Project Kecamatan and Project Kabupaten shall make publicly available in a manner acceptable to the Recipient and the World Bank for each year of Project implementation by January 15 of the subsequent year, the results of Project implementation and accounts for funds used during such year. The Recipient shall ensure that, except as the World Bank and the Recipient shall otherwise agree, auditing activities under the Project, including those referred to in Section II.B of this Schedule, are carried out in accordance with: (a) BPKP’s audit manual, dated December 19, 2008, as such manual may be amended from time to time with the prior written agreement of the World Bank and subject to its continued acceptability to the World Bank; and (b) in accordance with terms of reference agreed in writing between the Recipient and the World Bank. With respect to PNPM rural sub-projects financed from sources other than the Grant, including PNPM rural sub-projects for which Facilitators are financed by the Project but the PNPM rural sub-projects are themselves financed from such other sources, the PMD Secretariat shall: undertake such sub-projects in accordance with the Project Manual; and retain responsibility for the design, construction, fiduciary controls and implementation of such sub-projects. Identification of Affected Areas. The Recipient and the World Bank, with concurrence from the Joint Management Committee of the PSF, may from time to time designate in writing areas as Affected Areas qualifying for support from the Project. The Recipient shall ensure that all Affected Areas shall be designated in the Project Operational Manual. In the event of any conflict between the provisions of the Project Manual or the supplemental Disaster Management Manual and this Agreement, the latter shall prevail.

Implementation Arrangements. A. Institutional Arrangements 1. The Recipient shall establish and maintainshall, throughout through the period of PMD: apply in the implementation of the Project, a Project Steering Committee with representation that includes representatives from the Recipient at the national level and at the Khammouane’s provincial level to, inter alia, monitor the overall progress of the Project, and provide strategic guidance in the implementation of the Project; the mandate, terms of reference and composition of such committee shall be satisfactory Manual acceptable to the Association. 2. The Recipient shall: (a) adopt World Bank and thereafter apply in the implementation of the Project an Operational Manual satisfactory to the Association Recipient, giving details of: (i) implementation arrangements; (ii) procurement procedures as set forth in Section III of this Schedule and standard procurement documentation; (iii) reporting requirements, financial management procedures and audit procedures as set forth in Section II.B of this Schedule; (iv) project performance indicators as set forth in Section II.A of this Scheduleindicators; (v) Environment the Environmental Management Framework, the Isolated and Social Safeguard Screening Vulnerable Peoples Framework, and the Land Acquisition and Resettlement Framework, including the technical guidelines for implementation of such frameworks; (vi) criteria Eligibility Criteria for the selection of Sub-projects, along with projects and the terms and conditions of Sub-grants provided under governing the DDF Kecamatan Grants and the PDFLocal Government Participation, including those the terms and conditions set forth in Section I.D of the Annex 1 to this Schedule; and (vii) maintenance provisions for works to be carried out under a Sub-project; ; and (bviii) undertake the Better Governance Action Plan; adopt, prior to the commencement of Sub-project selection for any Pilot and Special Program or Sub-project for a natural disaster, emergency or catastrophic event under Part 1(a)(v) of the Project, a Supplemental Manual, acceptable to the Recipient and the World Bank, as necessary to set out criteria and implementation arrangement unique to such Pilot and Special Program; not to amend, suspend, abrogate, repeal or waive any provisions of the Operational Project Manual or any Supplemental Manual without the prior written agreement of the Association; (c) World Bank and the Recipient; ensure that the Operational Manual Project Manual, and each Supplemental Manual, as applicable, is made available, at all times until completion of the Project, to the Province’s departments, the Districts, the ▇▇▇ ▇▇▇▇, the villages each Local Government and the ALG Eligible Villagesall Oversight Consultants and Facilitators, and applied in the carrying out of Sub-projects; and (d) subject to and with the prior written agreement of the AssociationWorld Bank, periodically update the Operational Project Manual, and each Supplemental Manual, as necessary, at all times ensuring compliance thereof with the terms of this Agreement. For the purposes of providing Kecamatan Grants to Beneficiaries under the Project, the Recipient shall only submit an application for withdrawal of the proceeds of the Grant allocated to Category (1) in the Table in Section IV.A of this Schedule to finance Sub-projects prepared and selected in accordance with the Eligibility Criteria set forth in Annex 1 to this Schedule, the Project Manual, and any applicable Supplemental Manual. The Recipient shall ensure that Facilitators are contracted, trained and mobilized by no later than April 30 in each year of Project implementation in accordance with the Project Manual. The Recipient, through PMD, shall ensure that, prior to carrying out Sub-project works, the technical Facilitators shall have completed a technical review of each Sub-project in accordance with the Project Manual and the requirements of Annex 1 to this Schedule. The Recipient shall ensure that the applicable Kabupaten Satker shall retain records of each such review. The Recipient shall ensure that, prior to undertaking any activities under Part 1(a)(v) of the Project with respect to any natural disaster, emergency or catastrophic event, (a) the World Bank and the Recipient have agreed in writing that a disaster, emergency and/or catastrophic event requiring support for such activities has occurred; and (b) the World Bank and the Recipient have adopted a Supplemental Manual, if necessary, which defines the scope of such activities, and their implementation and disbursement arrangements. The Recipient, through PMD, shall ensure, on an annual basis during Project implementation, that adequate budget is made for training of Facilitators and Oversight Consultants based on a training plan agreed in writing between the World Bank and the Recipient. The Recipient shall ensure that the Facilitators responsible for Sub-projects shall provide facilitation services until such Sub-projects are completed. The PMD Secretariat shall make available to the public through its website and in hard copy at its office, at all times until completion of the Project, free of charge, a list of each Project Kecamatan, amounts of Kecamatan Grants and the Project Manual. The Recipient, through the PMD Secretariat will coordinate with and ensure that Provincial and Kabupaten Satkers arrange for the public disclosure of complaints and cases related to the Project, if any, and their handling and resolution, including through media sources and on the PNPM website. The PMD Secretariat shall ensure that the relevant ▇▇▇▇▇ and Bupati in each Project Kecamatan and Project Kabupaten shall make publicly available in a manner acceptable to the Recipient and the World Bank for each year of Project implementation by January 15 of the subsequent year, the results of Project implementation and accounts for funds used during such year. The Recipient shall ensure that, except as the World Bank and the Recipient shall otherwise agree, auditing activities under the Project, including those referred to in Section II.B of this Schedule, are carried out in accordance with: (a) BPKP’s audit manual, dated December 19, 2008, as such manual may be amended from time to time with the prior written agreement of the World Bank and subject to its continued acceptability to the World Bank; and (b) in accordance with terms of reference agreed in writing between the Recipient and the World Bank. With respect to PNPM rural sub-projects financed from sources other than the Grant, including PNPM rural sub-projects for which Facilitators are financed by the Project but the PNPM rural sub-projects are themselves financed from such other sources, the PMD Secretariat shall: undertake such sub-projects in accordance with the Project Manual; and retain responsibility for the design, construction, fiduciary controls and implementation of such sub-projects. In the event of any conflict between the provisions of the Project Manual or any supplemental manual and the provisions of this Agreement, the latter shall prevail.

Implementation Arrangements. A. Institutional Arrangements 1. The Recipient shall establish Borrower shall, through the PMD: implement the Project in accordance with Operations Manual, including all annexes and maintainsupplements thereto, throughout the period of implementation of the Project, a Project Steering Committee with representation that includes representatives from the Recipient at the national level and at the Khammouane’s provincial level to, inter alia, monitor the overall progress of the Project, and provide strategic guidance in the implementation of the Project; the mandate, terms of reference and composition of such committee shall be satisfactory acceptable to the Association. 2. The Recipient shall: (a) adopt Bank and thereafter apply in the implementation of the Project an Operational Manual satisfactory to the Association Borrower, giving details of: (i) implementation arrangements; (ii) procurement procedures as set forth in Section III of this Schedule and standard procurement documentation; (iii) reporting requirements, financial management procedures and audit procedures as set forth in Section II.B of this Schedule; (iv) project performance indicators as set forth in Section II.A of this Scheduleindicators; (v) Environment the Implementation Guidelines on Social and Social Safeguard Screening FrameworkEnvironmental Safeguards, which constitutes a supplement to the Operations Manual; (vi) criteria Eligibility Criteria for the selection of Sub-projects, along with projects and the terms and conditions of Sub-grants provided under governing the DDF Kecamatan Grants and the PDFLocal Government Participation, including those the terms and conditions set forth in Section I.D of the Annex 1 to this Schedule; and (vii) maintenance provisions for works to be carried out under a Sub-project; ; (bviii) undertake the Better Governance Action Plan; (ix) the Management Information System description and procedures; and (x) the Complaints Handling System description and procedures; adopt, prior to the commencement of Sub-project selection for any Pilot and Special Program or Sub-project, and thereafter implement such Sub-project in accordance with a Supplemental Manual, acceptable to the Borrower and the Bank, as necessary to set out the incremental scope of activities, eligibility criteria, implementation arrangements and disbursement mechanisms; adopt, prior to the Borrower undertaking any activities under Part 1(a)(v) of the Project with respect to any natural disaster, emergency or catastrophic event a Supplemental Manual, as necessary to set out the incremental scope of activities, eligibility criteria, implementation arrangements and disbursement mechanisms; not to amend, suspend, abrogate, repeal or waive any provisions of the Operational Operations Manual or any Supplemental Manual without the prior written agreement of the Association; (c) Bank and the Borrower; ensure that the Operational Operations Manual including all annexes and supplements thereto, and each Supplemental Manual, as applicable, is made available, at all times until completion of the Project, to the Province’s departmentseach Local Government and all National Management Consultants, the DistrictsRegional Management Consultants, the ▇▇▇ ▇▇▇▇, the villages Oversight Consultants and the ALG Eligible VillagesFacilitators, and applied in the carrying out of Sub-projects; and (d) subject to and with the prior written agreement of the AssociationBank, periodically update the Operational Operations Manual, and each Supplemental Manual, as necessary, at all times ensuring compliance thereof with the terms of this Agreement. In the event of any conflict between the provisions of the Operations Manual or any Supplemental Manual and the provisions of this Agreement, the latter shall prevail. The Borrower, through PMD, shall ensure that, prior to the Borrower undertaking any activities under Part 1(a)(v) of the Project with respect to any natural disaster, emergency or catastrophic event, the Bank and the Borrower have agreed in writing that a disaster, emergency and/or catastrophic event requiring support for such activities has occurred. The Borrower, through PMD, shall ensure that only Sub-projects prepared, selected and implemented in accordance with the Eligibility Criteria and the terms and conditions for Sub-Projects and Kecamatan Grants set forth in Annex 1 to this Schedule 2, the Operations Manual, and any applicable Supplemental Manual shall be financed out of the proceeds of the Loan. The Borrower, through PMD, shall ensure that: Facilitators are assigned and trained by no later than April 30 in each year of Project implementation in accordance with the Operations Manual; during Project implementation, adequate budget is made for training of Facilitators and Oversight Consultants based on a training plan agreed in writing between the Bank and the Borrower; and prior to the commencement of each Sub-project, the technical Facilitator(s) for the Kabupaten or Kecamatan of the Beneficiaries responsible for such Sub-Project shall have completed a technical review of each such Sub-project in accordance with the Operations Manual and Supplemental Manual, as applicable, and the requirements of Annex 1 to this Schedule 2. The Borrower, through PMD, shall ensure that the applicable Kabupaten Satker shall retain records of each such review. The Borrower, through PMD, shall, during implementation of the Project, continue to develop an updated Management Information System based on performance indicators and control data agreed in writing between the Borrower and the Bank. The Borrower, through PMD, shall ensure that a list of Project Kecamatan, a list of amounts of each Kecamatan Grant and the Operations Manual are made available to the public through the PNPM Website, at all times until completion of the Project. The Borrower, through the PMD, shall ensure that the relevant ▇▇▇▇▇ and Bupati in each Project Kecamatan and Project Kabupaten shall make publicly available in a manner acceptable to the Borrower and the Bank for each year of Project implementation by January 15 of the subsequent year, a report on the results of Project implementation and accounts for funds used during such year. The Borrower, through PMD, shall ensure that: (a) all annual audit reports referred to in Section II.B of this Schedule 2, including Kabupaten audit reports, shall be published on the PNPM Website by no later than September 30 in each year of Project implementation for the prior year annual audit reports, commencing on September 30, 2011 for the 2010 annual audit reports; and (b) appropriate action to follow up on any audit findings is taken at the National, Provincial, Kabupaten or Kecamatan level, as applicable, and reported as part of the regular quarterly report and made available on the PNPM Website. The Borrower shall ensure that, except as the Bank and the Borrower shall otherwise agree in writing: (a) BPKP shall carry out a continuous audit of the Project in partnership with Local Government inspectorates; and (b) on terms of reference agreed among PMD, BPKP and the Bank, BPKP shall, after PMD has compiled each interim financial report, review such interim financial report for each calendar quarter during Project implementation and shall provide to the Bank its report of each such review not later than forty-five (45) days after the end of each calendar quarter. The Borrower, through PMD, shall ensure that: (a) the Complaints Handling System is operated, maintained and consistently updated throughout Project implementation in accordance with the Operations Manual and terms of reference agreed in writing between the Borrower and the Bank; tracking of all active complaints cases is made available on the PNPM Website by no later than September 30, 2011; a service standard and a mechanism for its implementation, acceptable to the Borrower and the Bank, is established by September 30, 2011 by which except as may be otherwise agreed in writing between PMD and the Bank and reflected in the Standard Operating Procedures: with respect to Kecamatan Grants, if a problem related to fraud or corruption (as defined in the Standard Operating Procedures) is reported to the PMD in Jakarta by any Oversight Consultant, Facilitator or official of the Borrower charged with supervising the Project and no appropriate response (as determined by reference to the Standard Operating Procedures) is taken by PMD, by the within thirty (30) days after the report thereof, then the Provincial Coordinator shall ensure that disbursement and transfer of Kecamatan Grant funds is excluded on an interim basis in the location in question until further notice issued by PMD; with respect to any Facilitator, if a problem related to fraud, corruption or a breach of the code of ethics (as defined in the Standard Operating Procedures) is reported to the Provincial Satker and no decision on appropriate action (as determined by reference to the Standard Operating Procedures) is taken by the relevant Satker within thirty (30) days after the report thereof, the Provincial Coordinator shall remove on an interim basis the Facilitator from all duties without pay until a decision is reached by the ethics tribunal (as defined in and operating in accordance with the Standard Operating Procedures) and acted upon by the Provincial Satker which contracted such Facilitator; and these arrangements shall not be construed to waive any rights that the Bank or the Borrower may otherwise have under the terms of this Agreement with respect to the ensuring that the proceeds of the Loan are used for the purposes of the Project and for Eligible Expenditures; and each Provincial Satker and Kabupaten Satker arranges for the local public disclosure of complaints and cases related to the Project, if any, and their handling and resolution. The Borrower shall ensure that all PNPM rural sub-projects, whether financed by the Loan or by other sources, shall undertake such sub-projects in accordance with the Operations Manual.

Implementation Arrangements. A. Institutional Arrangements 1. The Recipient shall establish and maintainBorrower shall, throughout through the period of implementation of the Project, a Project Steering Committee with representation that includes representatives from the Recipient at the national level and at the Khammouane’s provincial level to, inter alia, monitor the overall progress of the Project, and provide strategic guidance in the implementation of the Project; the mandate, terms of reference and composition of such committee shall be satisfactory to the Association. 2. The Recipient shallPMD: (a) adopt and thereafter apply in the implementation of implement the Project an Operational Manual satisfactory in accordance with Operations Manual, including all annexes and supplements thereto, acceptable to the Association Bank and the Borrower, giving details of: (i) implementation arrangements; ; (ii) procurement procedures as set forth in Section III of this Schedule and standard procurement documentation; (iii) reporting requirements, financial management procedures and audit procedures as set forth in Section II.B of this Schedule; (iv) project performance indicators as set forth in Section II.A of this Scheduleindicators; (v) Environment the Implementation Guidelines on Social and Social Safeguard Screening FrameworkEnvironmental Safeguards, which constitutes a supplement to the Operations Manual; (vi) criteria Eligibility Criteria for the selection of Sub-projects, along with projects and the terms and conditions of Sub-grants provided under governing the DDF Kecamatan Grants and the PDFLocal Government Participation, including those the terms and conditions set forth in Section I.D of the Annex 1 to this Schedule; and (vii) maintenance provisions for works to be carried out under a Sub-project; (viii) the Better Governance Action Plan; (ix) the Management Information System description and procedures; and (x) the Complaints Handling System description and procedures; (b) undertake adopt, prior to the commencement of Sub-project selection for any Pilot and Special Program or Sub-project, and thereafter implement such Sub- project in accordance with a Supplemental Manual, acceptable to the Borrower and the Bank, as necessary to set out the incremental scope of activities, eligibility criteria, implementation arrangements and disbursement mechanisms; (c) adopt, prior to the Borrower undertaking any activities under Part 1(a)(v) of the Project with respect to any natural disaster, emergency or catastrophic event a Supplemental Manual, as necessary to set out the incremental scope of activities, eligibility criteria, implementation arrangements and disbursement mechanisms; (d) not to amend, suspend, abrogate, repeal or waive any provisions of the Operational Operations Manual or any Supplemental Manual without the prior written agreement of the AssociationBank and the Borrower; (ce) ensure that the Operational Operations Manual including all annexes and supplements thereto, and each Supplemental Manual, as applicable, is made available, at all times until completion of the Project, to the Province’s departmentseach Local Government and all National Management Consultants, the DistrictsRegional Management Consultants, the ▇▇▇ ▇▇▇▇, the villages Oversight Consultants and the ALG Eligible VillagesFacilitators, and applied in the carrying out of Sub-projects; and (df) subject to with the prior written agreement of the AssociationBank, periodically update the Operational Operations Manual, and each Supplemental Manual, as necessary, at all times ensuring compliance thereof with the terms of this Agreement. 2. In the event of any conflict between the provisions of the Operations Manual or any Supplemental Manual and the provisions of this Agreement, the latter shall prevail. 3. The Borrower, through PMD, shall ensure that, prior to the Borrower undertaking any activities under Part 1(a)(v) of the Project with respect to any natural disaster, emergency or catastrophic event, the Bank and the Borrower have agreed in writing that a disaster, emergency and/or catastrophic event requiring support for such activities has occurred. 4. The Borrower, through PMD, shall ensure that only Sub-projects prepared, selected and implemented in accordance with the Eligibility Criteria and the terms and conditions for Sub-Projects and Kecamatan Grants set forth in Annex 1 to this Schedule 2, the Operations Manual, and any applicable Supplemental Manual shall be financed out of the proceeds of the Loan. 5. The Borrower, through PMD, shall ensure that: (a) Facilitators are assigned and trained by no later than April 30 in each year of Project implementation in accordance with the Operations Manual; (b) during Project implementation, adequate budget is made for training of Facilitators and Oversight Consultants based on a training plan agreed in writing between the Bank and the Borrower; and (c) prior to the commencement of each Sub-project, the technical Facilitator(s) for the Kabupaten or Kecamatan of the Beneficiaries responsible for such Sub-Project shall have completed a technical review of each such Sub-project in accordance with the Operations Manual and Supplemental Manual, as applicable, and the requirements of Annex 1 to this Schedule 2. The Borrower, through PMD, shall ensure that the applicable Kabupaten Satker shall retain records of each such review. 6. The Borrower, through PMD, shall, during implementation of the Project, continue to develop an updated Management Information System based on performance indicators and control data agreed in writing between the Borrower and the Bank. 7. The Borrower, through PMD, shall ensure that a list of Project Kecamatan, a list of amounts of each Kecamatan Grant and the Operations Manual are made available to the public through the PNPM Website, at all times until completion of the Project. 8. The Borrower, through the PMD, shall ensure that the relevant ▇▇▇▇▇ and Bupati in each Project Kecamatan and Project Kabupaten shall make publicly available in a manner acceptable to the Borrower and the Bank for each year of Project implementation by January 15 of the subsequent year, a report on the results of Project implementation and accounts for funds used during such year. 9. The Borrower, through PMD, shall ensure that: (a) all annual audit reports referred to in Section II.B of this Schedule 2, including Kabupaten audit reports, shall be published on the PNPM Website by no later than September 30 in each year of Project implementation for the prior year annual audit reports, commencing on September 30, 2011 for the 2010 annual audit reports; and

Implementation Arrangements. A. Institutional Arrangements 1. The Recipient shall establish and maintainshall, throughout through the period of PMD: (a) apply in the implementation of the Project, a Project Steering Committee with representation that includes representatives from the Recipient at the national level and at the Khammouane’s provincial level to, inter alia, monitor the overall progress of the Project, and provide strategic guidance in the implementation of the Project; the mandate, terms of reference and composition of such committee shall be satisfactory Manual acceptable to the Association. 2. The Recipient shall: (a) adopt World Bank and thereafter apply in the implementation of the Project an Operational Manual satisfactory to the Association Recipient, giving details of: (i) implementation arrangements; (ii) procurement procedures as set forth in Section III of this Schedule and standard procurement documentation; (iii) reporting requirements, financial management procedures and audit procedures as set forth in Section II.B of this Schedule; (iv) project performance indicators as set forth in Section II.A of this Scheduleindicators; (v) Environment the Environmental Management Framework, the Isolated and Social Safeguard Screening Vulnerable Peoples Framework, and the Land Acquisition and Resettlement Framework, including the technical guidelines for implementation of such frameworks; (vi) criteria Eligibility Criteria for the selection of Sub-projects, along with projects and the terms and conditions of Sub-grants provided under governing the DDF Kecamatan Grants and the PDFLocal Government Participation, including those the terms and conditions set forth in Section I.D of the Annex 1 to this Schedule; and (vii) maintenance provisions for works to be carried out under a Sub-Sub- project; and (viii) the Better Governance Action Plan; (b) undertake adopt, prior to the commencement of Sub-project selection for any Pilot and Special Program or Sub-project for a natural disaster, emergency or catastrophic event under Part 1(a)(v) of the Project, a Supplemental Manual, acceptable to the Recipient and the World Bank, as necessary to set out criteria and implementation arrangement unique to such Pilot and Special Program; (c) not to amend, suspend, abrogate, repeal or waive any provisions of the Operational Project Manual or any Supplemental Manual without the prior written agreement of the AssociationWorld Bank and the Recipient; (cd) ensure that the Operational Manual Project Manual, and each Supplemental Manual, as applicable, is made available, at all times until completion of the Project, to the Province’s departments, the Districts, the ▇▇▇ ▇▇▇▇, the villages each Local Government and the ALG Eligible Villagesall Oversight Consultants and Facilitators, and applied in the carrying out of Sub-projects; and (de) subject to with the prior written agreement of the AssociationWorld Bank, periodically update the Operational Project Manual, and each Supplemental Manual, as necessary, at all times ensuring compliance thereof with the terms of this Agreement. 2. For the purposes of providing Kecamatan Grants to Beneficiaries under the Project, the Recipient shall only submit an application for withdrawal of the proceeds of the Grant allocated to Category (1) in the Table in Section IV.A of this Schedule to finance Sub- projects prepared and selected in accordance with the Eligibility Criteria set forth in Annex 1 to this Schedule, the Project Manual, and any applicable Supplemental Manual. 3. The Recipient shall ensure that Facilitators are contracted, trained and mobilized by no later than April 30 in each year of Project implementation in accordance with the Project Manual. 4. The Recipient, through PMD, shall ensure that, prior to carrying out Sub-project works, the technical Facilitators shall have completed a technical review of each Sub-project in accordance with the Project Manual and the requirements of Annex 1 to this Schedule. The Recipient shall ensure that the applicable Kabupaten Satker shall retain records of each such review. 5. The Recipient shall ensure that, prior to undertaking any activities under Part 1(a)(v) of the Project with respect to any natural disaster, emergency or catastrophic event, (a) the World Bank and the Recipient have agreed in writing that a disaster, emergency and/or catastrophic event requiring support for such activities has occurred; and (b) the World Bank and the Recipient have adopted a Supplemental Manual, if necessary, which defines the scope of such activities, and their implementation and disbursement arrangements. 6. The Recipient, through PMD, shall ensure, on an annual basis during Project implementation, that adequate budget is made for training of Facilitators and Oversight Consultants based on a training plan agreed in writing between the World Bank and the Recipient. The Recipient shall ensure that the Facilitators responsible for Sub-projects shall provide facilitation services until such Sub-projects are completed. 7. The PMD Secretariat shall make available to the public through its website and in hard copy at its office, at all times until completion of the Project, free of charge, a list of each Project Kecamatan, amounts of Kecamatan Grants and the Project Manual. 8. The Recipient, through the PMD Secretariat will coordinate with and ensure that Provincial and Kabupaten Satkers arrange for the public disclosure of complaints and cases related to the Project, if any, and their handling and resolution, including through media sources and on the PNPM website. 9. The PMD Secretariat shall ensure that the relevant ▇▇▇▇▇ and Bupati in each Project Kecamatan and Project Kabupaten shall make publicly available in a manner acceptable to the Recipient and the World Bank for each year of Project implementation by January 15 of the subsequent year, the results of Project implementation and accounts for funds used during such year. 10. The Recipient shall ensure that, except as the World Bank and the Recipient shall otherwise agree, auditing activities under the Project, including those referred to in Section II.B of this Schedule, are carried out in accordance with: (a) BPKP’s audit manual, dated December 19, 2008, as such manual may be amended from time to time with the prior written agreement of the World Bank and subject to its continued acceptability to the World Bank; and (b) in accordance with terms of reference agreed in writing between the Recipient and the World Bank. 11. With respect to PNPM rural sub-projects financed from sources other than the Grant, including PNPM rural sub-projects for which Facilitators are financed by the Project but the PNPM rural sub-projects are themselves financed from such other sources, the PMD Secretariat shall: (i) undertake such sub-projects in accordance with the Project Manual; and (ii) retain responsibility for the design, construction, fiduciary controls and implementation of such sub-projects. 12. In the event of any conflict between the provisions of the Project Manual or any supplemental manual and the provisions of this Agreement, the latter shall prevail.

Implementation Arrangements. A. Institutional Arrangements 1. The Recipient shall establish and maintainshall, throughout through the period of PMD: (a) apply in the implementation of the Project, a Project Steering Committee with representation that includes representatives from the Recipient at the national level and at the Khammouane’s provincial level to, inter alia, monitor the overall progress of the Project, and provide strategic guidance in the implementation of the Project; the mandate, terms of reference and composition of such committee shall be satisfactory Manual acceptable to the Association. 2. The Recipient shall: (a) adopt World Bank and thereafter apply in the implementation of the Project an Operational Manual satisfactory to the Association Recipient, giving details of: (i) implementation arrangements; (ii) procurement procedures as set forth in Section III of this Schedule and standard procurement documentation; (iii) reporting requirements, financial management procedures and audit procedures as set forth in Section II.B of this Schedule; (iv) project performance indicators as set forth in Section II.A of this Scheduleindicators; (v) Environment the Environmental Management Framework, the Isolated and Social Safeguard Screening Vulnerable Peoples Framework, and the Land Acquisition and Resettlement Framework, including the technical guidelines for implementation of such frameworks; (vi) criteria Eligibility Criteria for the selection of Sub-projects, along with projects and the terms and conditions of Sub-grants provided under governing the DDF Disaster Management Kecamatan Grants and the PDFLocal Government Participation, including those the terms and conditions set forth in Section I.D of the Annex 1 to this Schedule; and (vii) maintenance provisions for works to be carried out under a Sub-project; and (viii) the Better Governance Action Plan; (b) undertake apply the supplemental Disaster Management Manual which includes guidelines for implementation of the Disaster Management Implementation Guidelines for Environmental and Social Safeguards, acceptable to the Recipient and the World Bank, as necessary to set out criteria and implementation arrangement unique to the Project; (c) not to amend, suspend, abrogate, repeal or waive any provisions of the Operational Project Manual or supplemental Disaster Management Manual without the prior written agreement of the AssociationWorld Bank and the Recipient; (cd) ensure that the Operational Manual Project Manual, and supplemental Disaster Management Manual, as applicable, is made available, at all times until completion of the Project, to the Province’s departments, the Districts, the ▇▇▇ ▇▇▇▇, the villages each Local Government and the ALG Eligible Villagesall Oversight Consultants and Facilitators, and applied in the carrying out of Sub-projects; and (de) subject to with the prior written agreement of the AssociationWorld Bank, periodically update the Operational Project Manual, and supplemental Disaster Management Manual, as necessary, at all times ensuring compliance thereof with the terms of this Agreement. 2. For the purposes of providing Disaster Management Kecamatan Grants to Beneficiaries under the Project, the Recipient shall only submit an application for withdrawal of the proceeds of the Grant allocated to Category (1) in the Table in Section IV.A of this Schedule to finance Sub-projects prepared and selected in accordance with the Eligibility Criteria set forth in Annex 1 to this Schedule, the Project Manual, and supplemental Disaster Management Manual. 3. The Recipient shall ensure that Facilitators are contracted, trained and mobilized by no later than April 30 in each year of Project implementation in accordance with the Project Manual. 4. The Recipient, through PMD, shall ensure that, prior to carrying out Sub-project works, the technical Facilitators shall have completed a technical review of each Sub-project in accordance with the Project Manual and supplemental Disaster Management Manual and the requirements of Annex 1 to this Schedule. The Recipient shall ensure that the applicable Kabupaten Satker shall retain records of each such review. 5. The Recipient, through PMD, shall ensure, on an annual basis during Project implementation, that adequate budget is made for training of Facilitators and Oversight Consultants based on a training plan agreed in writing between the World Bank and the Recipient. The Recipient shall ensure that the Facilitators responsible for Sub-projects shall provide facilitation services until such Sub- projects are completed. 6. The Recipient and the World Bank shall agree, by no later than June 30 in each year of Project implementation, commencing on the first June 30 to occur after the Effective Date, on the list with each Project Kecamatan, which will be eligible for Sub-projects for the upcoming calendar year. 7. The PMD Secretariat shall make available to the public through its website and in hard copy at its office, at all times until completion of the Project, free of charge, a list of each Project Kecamatan, amounts of Disaster Management Kecamatan Grants and the Project Manual and supplemental Disaster Management Manual. 8. The Recipient, through the PMD Secretariat will coordinate with and ensure that Provincial and Kabupaten Satkers arrange for the public disclosure of complaints and cases related to the Project, if any, and their handling and resolution, including through media sources and on the PNPM website. 9. The PMD Secretariat shall ensure that the relevant ▇▇▇▇▇ and Bupati in each Project Kecamatan and Project Kabupaten shall make publicly available in a manner acceptable to the Recipient and the World Bank for each year of Project implementation by January 15 of the subsequent year, the results of Project implementation and accounts for funds used during such year. 10. The Recipient shall ensure that, except as the World Bank and the Recipient shall otherwise agree, auditing activities under the Project, including those referred to in Section II.B of this Schedule, are carried out in accordance with: (a) BPKP’s audit manual, dated December 19, 2008, as such manual may be amended from time to time with the prior written agreement of the World Bank and subject to its continued acceptability to the World Bank; and (b) in accordance with terms of reference agreed in writing between the Recipient and the World Bank. 11. With respect to PNPM rural sub-projects financed from sources other than the Grant, including PNPM rural sub-projects for which Facilitators are financed by the Project but the PNPM rural sub-projects are themselves financed from such other sources, the PMD Secretariat shall: (i) undertake such sub-projects in accordance with the Project Manual; and (ii) retain responsibility for the design, construction, fiduciary controls and implementation of such sub-projects.

Implementation Arrangements. A. Institutional Arrangements 1. The Recipient shall establish and maintainBorrower shall, throughout through the period of implementation of the Project, a Project Steering Committee with representation that includes representatives from the Recipient at the national level and at the Khammouane’s provincial level to, inter alia, monitor the overall progress of the Project, and provide strategic guidance in the implementation of the Project; the mandate, terms of reference and composition of such committee shall be satisfactory to the Association. 2. The Recipient shallPMD: (a) adopt adopt, and thereafter apply in the implementation of the Project, a Project an Operational Manual satisfactory acceptable to the Association Bank and the Borrower, giving details of: : (i) implementation arrangements; (ii) procurement procedures as set forth in Section III of this Schedule and standard procurement documentation; ; (iii) reporting requirements, financial management procedures and audit procedures as set forth in Section II.B of this Schedule; (iv) project performance indicators as set forth in Section II.A of this Scheduleindicators; (v) Environment the Environmental Management Framework, the Isolated Vulnerable Peoples Framework, and Social Safeguard Screening the Land Acquisition and Resettlement Framework, including the technical guidelines for implementation of such frameworks; (vi) criteria Eligibility Criteria for the selection of Sub-projects, along with projects and the terms and conditions of Sub-grants provided under governing the DDF Kecamatan Grants and the PDFLocal Government Participation, including those the terms and conditions set forth in Section I.D of the Annex 1 to this Schedule; and ; (vii) maintenance provisions for works to be carried out under a Sub-Sub- project; and (viii) the Better Governance Action Plan; (b) undertake adopt, prior to the commencement of Sub-project selection for any Pilot and Special Program or Sub-project for a natural disaster, emergency or catastrophic event under Part 1(a)(v) of the Project, a Supplemental Manual, acceptable to the Borrower and the Bank, as necessary to set out criteria and implementation arrangement unique to such Pilot and Special Program; (c) not to amend, suspend, abrogate, repeal or waive any provisions of the Operational Project Manual or any Supplemental Manual without the prior written agreement of the AssociationBank and the Borrower; (cd) ensure that the Operational Manual Project Manual, and each Supplemental Manual, as applicable, is made available, at all times until completion of the Project, to the Province’s departments, the Districts, the ▇▇▇ ▇▇▇▇, the villages each Local Government and the ALG Eligible Villagesall Oversight Consultants and Facilitators, and applied in the carrying out of Sub-projects; and (de) subject to with the prior written agreement of the AssociationBank, periodically update the Operational Project Manual, and each Supplemental Manual, as necessary, at all times ensuring compliance thereof with the terms of this Agreement. 2. For the purposes of providing Kecamatan Grants to Beneficiaries under the Project, the Borrower shall only submit an application for withdrawal of the proceeds of the Loan allocated to Category (1) in the Table in Section IV.A of this Schedule to finance Sub-projects prepared and selected in accordance with the Eligibility Criteria set forth in Annex 1 to this Schedule, the Project Manual, and any applicable Supplemental Manual. 3. The Borrower shall ensure that Facilitators are contracted, trained and mobilized by no later than April 30 in each year of Project implementation in accordance with the Project Manual. 4. The Borrower, through PMD, shall ensure that, prior to carrying out Sub-project works, the technical Facilitators shall have completed a technical review of each Sub-project in accordance with the Project Manual and the requirements of Annex 1 to this Schedule. The Borrower shall ensure that the applicable Kabupaten Satker shall retain records of each such review. 5. The Borrower shall ensure that, prior to undertaking any activities under Part 1(a)(v) of the Project with respect to any natural disaster, emergency or catastrophic event, (a) the Bank and the Borrower have agreed in writing that a disaster, emergency and/or catastrophic event requiring support for such activities has occurred; and (b) the Bank and the Borrower have adopted a Supplemental Manual, if necessary, which defines the scope of such activities, and their implementation and disbursement arrangements. 6. The Borrower, through PMD, shall ensure, on an annual basis during Project implementation, that adequate budget is made for training of Facilitators and Oversight Consultants based on a training plan agreed in writing between the Bank and the Borrower. The Borrower shall ensure that the Facilitators responsible for Sub-projects shall provide facilitation services until such Sub- projects are completed. 7. The Borrower and the Bank shall agree, by no later than June 30 in each year of Project implementation, commencing on the first June 30 to occur after the Effective Date, on the list with each Project Kecamatan, which will be eligible for Sub-projects for the upcoming calendar year. 8. The PMD Secretariat shall make available to the public through its website and in hard copy at its office, at all times until completion of the Project, free of charge, a list of each Project Kecamatan, amounts of Kecamatan Grants and the Project Manual. 9. The Borrower, through the PMD Secretariat will coordinate with and ensure that Provincial and Kabupaten Satkers arrange for the public disclosure of complaints and cases related to the Project, if any, and their handling and resolution, including through media sources and on the PNPM website. By no later than the date which is two (2) months after the Effective Date, the PMD Secretariat will issue instructions to Provincial and Kabupaten Satkers, agreed between the PMD Secretariat and the Bank, which specify the criteria for which types of complaints and cases shall be disclosed in accordance with this paragraph. 10. The Borrower, through the PMD Secretariat, shall, by no later than three (3) months after the Effective Date, issue instructions or issue an updated Project Manual, acceptable to the PMD Secretariat and the Bank, to all Local Governments at the Kabupaten, Kecamatan and Province levels and to relevant stakeholders defining time periods within which categories of complaints/cases must be resolved, to whom they should be escalated if not resolved within such time periods and what the consequences will be if such cases are not resolved or escalated in accordance with such instructions. 11. The PMD Secretariat shall ensure that the relevant ▇▇▇▇▇ and Bupati in each Project Kecamatan and Project Kabupaten shall make publicly available by December 31 in each year of Project implementation, commencing on December 31, 2010, the results of Project implementation and accounts for funds used during such year. 12. The Borrower shall ensure that, except as the Bank and the Borrower shall otherwise agree, auditing activities under the Project, including those referred to in Section II.B of this Schedule, are carried out in accordance with: (a) BPKP’s audit manual, dated November 30, 2007, as such manual may be amended from time to time with the prior written agreement of the Bank and subject to its continued acceptability to the Bank; and (b) in accordance with terms of reference agreed in writing between the Borrower and the Bank. 13. With respect to PNPM rural sub-projects financed from sources other than the Loan, including PNPM rural sub-projects for which Facilitators are financed by the Project but the PNPM rural sub-projects are themselves financed from such other sources, the PMD Secretariat shall: (i) undertake such sub-projects in accordance with the Project Manual; and (ii) retain responsibility for the design, construction, fiduciary controls and implementation of such sub-projects.

Implementation Arrangements. A. Institutional Arrangements 1. The Recipient shall establish and maintainBorrower, throughout the period of implementation of the Projectthrough MPW, a Project Steering Committee with representation that includes representatives from the Recipient at the national level and at the Khammouane’s provincial level to, inter alia, monitor the overall progress of the Project, and provide strategic guidance in the implementation of the Project; the mandate, terms of reference and composition of such committee shall be satisfactory to the Association. 2. The Recipient shall: (a) adopt and and, thereafter apply in the implementation of ensure that the Project an Operational Manual satisfactory is implemented in accordance with, a Project Manual, acceptable to the Association giving details Bank, which shall include the description of: (i) implementation arrangements; (ii) the procurement procedures as set forth in Section III of this Schedule 2 and standard procurement documentation; (iii) reporting requirements, financial management procedures and audit procedures as set forth in Section II.B II of this ScheduleSchedule 2; (iv) project the Project performance indicators as set forth in Section II.A of this Scheduleindicators; (v) Environment the Environmental Guidelines and Social Safeguard Screening the environmental criteria applicable to Sub-project design including environmental impact mitigation; the Isolated Vulnerable Peoples Framework; and the Land Acquisition and Resettlement Framework, including the technical guidelines for implementation of such frameworks; (vi) criteria for the selection of Sub-projects, along with the terms and conditions of Sub-grants provided under the DDF and the PDF, including those set forth in Section I.D of this ScheduleBetter Governance Action Plan; and (vii) maintenance provisions for works to be carried out under a Sub-project; (viii) the criteria for the selection of Sub-projects, as well as the terms and conditions governing the Kelurahan Grants and Local Government Participation meeting the requirements set out in Annex 1 to this Schedule; (ix) the Operational Guidelines for Monitoring and Evaluation of PNPM; and (x) criteria for operation of Revolving Funds; (b) undertake not to amend, suspend, abrogate, repeal or waive any provisions of the Operational Project Manual without the prior n agreement of the AssociationBorrower and the Bank; (c) ensure that the Operational Project Manual is made available, at all times until completion of the Project, to the Province’s departments, the Districts, the ▇▇▇ ▇▇▇▇, the villages Oversight Consultants and the ALG Eligible VillagesFacilitators and Participating Kelurahans, and applied in the carrying out of Sub-projects; and (d) subject to with the prior written agreement of the AssociationBorrower and the Bank, periodically update the Operational Project Manual, as necessary, at all times ensuring compliance thereof with the terms of this Agreement. For the purposes of providing Kelurahan Grants under the Project, the Borrower shall only submit an application for withdrawal of the proceeds of the Loan allocated to Category (1) in the Table in Section IV.A of this Schedule to finance Sub-projects prepared and selected in accordance with the criteria set forth in Annex 1 to this Schedule and the Project Manual. In carrying out Part 2 of the Project, the Borrower shall ensure that prior to participating in the Project, a Participating Local Government has: (a) agreed in writing to carry out activities under the Project in accordance with procedures acceptable to the Bank and included in the Project Manual; (b) taken all steps required to make available the Local Government Participation; and (c) published a list of Project Kelurahans in accordance with the criteria set out in the Project Manual. In carrying out Part 2 of the Project, the Borrower shall ensure that, prior to participating in the Project, a Participating Kelurahan has: (a) agreed in writing to carry out activities under the Project in accordance with procedures acceptable to the Bank and the Borrower and included in Project Manual; (b) established, through the BKM, a Project office for purposes of Project coordination and disbursement of Kelurahan Grants; (c) adopted, through the BKM, a Community Development Plan, or revised, through the BKM, a previous Community Development Plan meeting the requirements set out in the Project Manual and identifying each Sub-project; and (d) entered into a Sub-project Agreement for the Sub-project on the terms and conditions set forth in Annex 1 to this Schedule 2. The Borrower shall ensure that, for purposes of Part 2(b) of the Project, a Participating Kelurahan shall only finance Sub-projects through a Revolving Fund if the BKM proposed to receive such Revolving Fund meets the criteria for establishment and operation of a Revolving Fund set out in the Project Manual, including with respect to BKMs that have previously managed revolving funds, that they have a repayment rate meeting the requirements set out in the Project Manual. The Borrower shall ensure that, prior to undertaking any activities under Part 4 of the Project: (a) the Bank and the Borrower have agreed in writing that a disaster, emergency and/or catastrophic event requiring support for such activities has occurred; and (b) the Bank and the Borrower have entered into a written arrangement and/or the Borrower has adopted a supplement to the Project Manual, satisfactory to the Bank which defines the scope of such activities, and their implementation and disbursement arrangements. The Borrower shall ensure, at all times, that public information, for the purpose of disclosing to inhabitants of Participating Kelurahans all administrative, financial, environmental, social, procedural and technical aspects pertaining to the selection, design, preparation and implementation of Sub-projects, including the Project Manual, is available free of charge at the government offices of the respective Participating Kelurahan and Participating Local Government. The Borrower, through the PMU (Satker), shall, by the date which is no later than three (3) months after the Effective Date, issue instructions or issue an updated Project Manual, acceptable to the PMU (Satker) and the Bank, to Local Governments of Participating Kabupaten and Participating Kota, and to Provincial governments and to relevant stakeholders defining time periods within which categories of complaints/cases must be resolved, to whom they should be escalated if not resolved within such time periods and what the consequences will be if such cases are not resolved or escalated in accordance with such instructions. The Borrower shall ensure that, except as the Bank and the Borrower shall otherwise agree, auditing activities under the Project, including those referred to in Section II.B of this Schedule, are carried out in accordance with: (a) BPKP’s audit manual, dated November 30, 2007, as such manual may be amended from time to time with the prior written agreement of the Bank; and (b) in accordance with terms of reference agreed with the Bank. With respect to PNPM urban sub-projects financed from sources other than the Loan, including PNPM urban sub-projects for which Facilitators are financed by the Project but the PNPM urban sub-projects are themselves financed from such other sources, the PMU (Satker) shall: undertake such sub-projects in accordance with the Project Manual; and retain responsibility for the design, construction, fiduciary controls and implementation of such sub-projects.

Implementation Arrangements. A. Institutional Arrangements 1. The Recipient shall establish vest the overall responsibility for Project implementation in ACD. Without prejudice to the foregoing, the Recipient shall: (a) establish, by no later than July 30, 2010, and thereafter maintain, throughout the period of implementation of the Project, a Project Steering Committee headed by the Minister of Finance, and comprised of the Director General of ACD, the Director Technical of ACD, Director Planning & Reforms of ACD and the four Deputy Ministers of Finance, which steering committee shall be vested with representation that includes representatives from such functions, powers, resources and competencies, satisfactory to the Recipient at Association, as shall be required for purposes of providing overall policy guidance, and ensuring inter-agency cooperation and general oversight of Project implementation, including approving the national level Annual Work Plans, and at ensuring compliance with the Khammouane’s provincial level tolegal covenants set out in this Agreement; and (b) establish, inter aliaby no later than July 30, monitor 2010, and thereafter maintain, throughout the overall progress period of implementation of the Project, a Budget Committee, chaired by the Director General of ACD, and provide strategic guidance comprised of the representatives of MOF and the Project Implementing Consultant as detailed in the implementation of the Project; the mandateFinancial Management Manual, terms of reference and composition of such which committee shall be vested with such functions, powers, resources and competencies, satisfactory to the Association, as shall be required for purposes of overseeing the overall budgeting process for the Project, including quarterly reviews of incurred and forecasted expenditures, preparation of Annual Work Plans for approval by the PSC, and compliance with governmental budgeting principles, policies and procedures. 2. The To facilitate the carrying out of the Project, the Recipient shall: (a) adopt and thereafter apply in by no later than June 30, 2010, enter into a Management Service Agreement with the implementation Project Implementing Consultant under terms of reference acceptable to the Association, for purposes of assisting ACD with the fiduciary aspects of the Project an Operational Manual satisfactory to the Association giving details ofand its day-to-day implementation, including: (i) implementation arrangementspreparation of procurement documents (and any subsequent changes/variations thereto); (ii) procurement procedures as set forth assistance in Section III the preparation of this Schedule and standard procurement documentationthe Annual Work Plans; (iii) reporting requirements, evaluation of technical and financial management procedures and audit procedures as set forth in Section II.B of this Scheduleproposals; (iv) project performance indicators as set forth in Section II.A development of this Scheduleterms of reference for, and negotiation of inter-agency arrangements with, UNCTAD and UNIDO to implement Parts A, D and E of the Project; (v) Environment and Social Safeguard Screening Frameworkhandling of procurement disputes; (vi) criteria for the selection certification of Sub-projects, along with the terms performance/delivery of contractual obligations and conditions of Sub-grants provided under the DDF and the PDF, including those set forth in Section I.D of this Schedulequality control thereof; and (vii) maintenance provisions for works of computerized systems and accounting records regarding Project expenditures, and oversight of payments to be carried out under a Sub-projectservice providers and/or Project contractors; and (viii) enforcement, monitoring and evaluation of compliance with the Environmental and Social Safeguards Management Framework and, where applicable, the Environmental and Social Management Plan and Resettlement Action Plan; (b) undertake not exercise its rights under the Management Service Agreement in such manner as to amend, suspend, abrogate, repeal or waive any provisions protect the interests of the Operational Manual without Recipient and the prior agreement Association and to accomplish the purposes of the Association;Financing; and (c) ensure that refrain from amending, waiving, terminating, suspending and/or abrogating, whether in whole or in part, the Operational Manual is made availableManagement Service Agreement, at all times until completion if in the opinion of the Association, such amendment, waiver, termination, suspension and/or abrogation might materially or adversely compromise the successful implementation of the Project, to or the Province’s departments, the Districts, the ▇▇▇ ▇▇▇▇, the villages and the ALG Eligible Villages, and applied in the carrying out achievement of Sub-projects; and (d) subject to the prior agreement of the Association, periodically update the Operational Manualits development objectives.

Implementation Arrangements. A. Institutional Arrangements 1. The Recipient shall establish and maintainshall, throughout through MPW: ensure that the period of implementation of the ProjectProject is implemented in accordance with, a Project Steering Committee with representation that includes representatives from Manual and supplemental Disaster Management Manual, acceptable to the Recipient at and the national level and at World Bank, which shall include the Khammouane’s provincial level to, inter alia, monitor the overall progress of the Project, and provide strategic guidance in the implementation of the Project; the mandate, terms of reference and composition of such committee shall be satisfactory to the Association. 2. The Recipient shall: (a) adopt and thereafter apply in the implementation of the Project an Operational Manual satisfactory to the Association giving details description of: (i) implementation arrangements; (ii) the procurement procedures as set forth in Section III of this Schedule 2 and standard procurement documentation; (iii) reporting requirements, financial management procedures and audit procedures as set forth in Section II.B II of this ScheduleSchedule 2; (iv) project the Project performance indicators as set forth in Section II.A of this Scheduleindicators; (v) Environment the Environmental Guidelines and Social Safeguard Screening Frameworkthe environmental criteria applicable to Sub-project design including environmental impact mitigation; (vi) criteria for the selection of Sub-projects, along with the terms Isolated and conditions of Sub-grants provided under the DDF and the PDF, including those set forth in Section I.D of this ScheduleVulnerable Peoples Framework; and (vii) the Land Acquisition and Resettlement Framework; (viii) the Better Governance Action Plan; (ix) maintenance provisions for works to be carried out under a Sub-project; ; (bx) undertake the criteria for the selection of Sub-projects, as well as the terms and conditions governing the Disaster Management Kelurahan Grants and Local Government Participation meeting the requirements set out in Annex 1 to this Schedule; (xi) the Operational Guidelines for Monitoring and Evaluation of PNPM; and (xii) criteria for operation of Revolving Funds; not to amend, suspend, abrogate, repeal or waive any provisions of the Operational Project Manual or supplemental Disaster Management Manual without the prior written agreement of the Association; (c) World Bank and the Recipient; ensure that the Operational Manual Project Manual, and supplemental Disaster Management Manual, as applicable, is made available, at all times until completion of the Project, to the Province’s departments, the Districts, the ▇▇▇ ▇▇▇▇, the villages each Local Government and the ALG Eligible Villagesall Oversight Consultants and Facilitators, and applied in the carrying out of Sub-projects; and (d) subject to and with the prior written agreement of the AssociationWorld Bank, periodically update the Operational Project Manual., and supplemental Disaster Management Manual, as necessary. For the purposes of providing Kelurahan Grants under the Project, the Recipient shall only submit an application for withdrawal of the proceeds of the Loan allocated to Category (1) in the Table in Section IV.A of this Schedule to finance Sub-projects prepared and selected in accordance with the criteria set forth in Annex 1 to this Schedule and the Project Manual. In carrying out Part 2 of the Project, the Recipient shall ensure that prior to participating in the Project, a Participating Local Government has: agreed to carry out activities under the Project in accordance with procedures acceptable to the Recipient and the World Bank and included in the Project Manual;