Vice President and Head of Network

JANAMITRA DEVAN

Vice President and Head of Network

Financial and Private Sector Development

World Bank Group

CONFORMED COPY

December 6, 2011

Mr. Luc Frieden

Minister of Finance

Ministry of Finance

3, rue de la Congrégation

L-2931 Luxembourg

Trust Fund Administration Agreement between the Grand Duchy of Luxembourg and the International Bank for Reconstruction and Development and the International Development Association concerning the Multi-Donor Trust Fund for Middle-Income Countries for the Financial Sector Reform and Strengthening Initiative (TF No. 070723)

Dear Mr. Frieden:

1.We are pleased to acknowledge on behalf of the International Bank for Reconstruction and Development (“IBRD”) and the International Development Association (“IDA”, and together with IBRD, the “Bank”) that the Grand Duchy of Luxembourg (the “Donor”) shall make available as a grant the sum of one million and ninety-three thousand Euros (€1,093,000) (the “Contribution”) for the Multi-Donor Trust Fund for Middle-Income Countries for the Financial Sector Reform and Strengthening Initiative(the “Trust Fund”) in accordance with the terms of this Agreement. Other donors are also expected to contribute to the Trust Fund on the terms and conditions specified in the Annexes to this Agreement.

2.The Contribution shall be used to finance the activities and the categories of expenditure set forth in the “Description of Activities and Expenditures Under FIRST’s Middle-Income MDTF” attached hereto as Annex 1, and shall be administered by the Bank on behalf of the Donor in accordance with the terms of this Agreement including: (i) the “Standard Provisions Applicable to FIRST’s Middle-Income MDTF” (the “Standard Provisions”) attached hereto as Annex 2; (ii) the “Governance Terms Applicable to FIRST’s Middle-Income MDTF” (the “Governance Terms”) attached hereto as Annex 3; and (iii) the “Forms to Transfer Funds from FIRST’s Middle-Income MDTF to the IMF” (the “IMF Transfer Forms”) attached hereto as Annex 4.

3.The Donor shall deposit the Contribution into such bank account designated by the Bank in installments in accordance with the following schedule:

(a)promptly following countersignature of this Agreement by the Donor and following submission of a payment request by the Bank, six hundred and seventy-four thousand Euros ((€674,000);

(b)on or before December 31, 2012,two hundred and nine thousand, five hundred Euros (€209,500) and following submission of a payment request by the Bank; and

(c)provided that all donors agree to duly extend the end-disbursement date of the Trust Fund, then on or before December 31, 2013, two hundred and nine thousand, five hundred Euros (€209,500) and following submission of a payment request by the Bank.

4.When making each such deposit, the Donor shall instruct its bank to include in its payment details information (remittance advice) field of its SWIFT payment message, information indicating: the amount paid, that the payment is made by the Donor for TF No. 070723 (the Multi-Donor Trust Fund for Middle-Income Countries for the Financial Sector Reform and Strengthening Initiative), and the date of the deposit (the “Deposit Instruction”). In addition, the Donor shall provide a copy of the Donor’s Deposit Instruction to the Bank’s Accounting Trust Funds Division by e-mail sent to or by fax sent to (202) 614-1315.

5. The Bank shall convert the Contribution funds into the holding currency of the Trust Fund, namely United States dollars, promptly upon receipt of the Contribution funds and the Deposit Instruction containing the information specified in paragraph 4 at the exchange rate obtained by the Bank on the date of the conversion. Where the Contribution proves to be insufficient to complete the activities as a result of an exchange rate fluctuation, neither the Bank nor the Donor shall bear any responsibility for providing any additional financing.

6.Except as provided for in paragraph 4 above, any notice, request or other communication to be given or made under this Agreement shall be in writing and delivered by mail, facsimile or e-mail to the respective party’s address specified below or at such other address as such party notifies in writing to the other party from time to time:

For the Bank:

Program Manager of FIRST’s Program Management Unit

Finance and Private Sector Development Vice Presidency, FIRST Unit (FPDFT)

The World Bank

1818 H Street, NW

Washington, DC 20433

U.S.A.

Tel: + 1-202-473-6709

Fax: + 1-202-522-0277

E-mail:

For the Donor:

The Director of the Treasury

Ministry of Finance

3, rue de la Congrégation

L2931 Luxembourg

Tel:+352 2478 2715 / 2709

+33 1 4555 1337

Fax: +352 466212

E-mail:
cc:

7.All annexes hereto constitute an integral part of this Agreement. This Agreement may be amended only in writing between the Bank and the Donor; provided, however, that each of the annexes to this Agreement may only be amended either: (i) with the agreement of all donors contributing to the Trust Fund; or (ii) by FIRST’s Governing Council in accordance with the then-current Governance Terms for FIRST.

8.Please confirm your agreement with the foregoing, on behalf of the Donor, by signing, dating, and returning to us the enclosed copy of this Agreement. Upon receipt by the Bank of the copy of this Agreement countersigned by you, this Agreement will become effective as of the date of the countersignature.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

INTERNATIONAL DEVELOPMENT ASSOCIATION

Sincerely,

/s/ Janamitra Devan

AGREED:

GRAND DUCHY OF LUXEMBOURG acting through the Ministry of Finance

By: /s/ Luc FriedenDate: December 16, 2011

Mr. Luc Frieden

Minister of Finance
ANNEX 1

Description of Activities and Expenditures under FIRST’s Middle-Income MDTF

I. Description of Activities

FIRST’s Middle-Income MDTF (TF No.070723) will finance only activities of FIRST approved in accordance with FIRST’s then-current project selection procedures (“Project Selection Procedures”) and charter (the “Charter”). The Middle-Income MDTF will support a country-specific and multi-country technical assistance program in middle-income countries, which are those countries defined by the Bank as eligible to receive low or no interest loans and grants from the International Development Association (IDA) (“Middle-Income Countries”). The Middle-Income MDTF may finance the following activities, all of which may be either executed by the Bank or IMF:

(i)Funding technical assistance in the areas of financial sector regulation, supervision and development in response to country demands.

(ii)Providing support to countries to strengthen their financial systems or implement standards and codes in advance of Financial Sector Assessment Programs (“FSAPs”) or Reports on Standards and Codes (“ROSCs”), and to facilitate systematic follow- up of related recommendations.

(iii)Assisting recipients to prepare prioritized action plans addressing financial sector development and the sequencing of reforms, for example as a follow-up to FSAPs, and advising clients in the implementation of financial sector development programs.

(iv)Promoting better coordination in the delivery of technical assistance and capacity building, drawing particularly on consultants in the private sector.

(v)Supporting research on and dissemination of best practices and useful tools related to financial sector reform and development in Middle-Income Countries.

(vi)Working with international standard-setting bodies and other relevant partners to broaden the base of providers supporting countries' efforts to implement standards and codes in accordance with FSAP/ROSC recommendations and strengthen their financial systems.

(vii)Working on the completion of technical assistance projects funded by FIRST under prior trust funds that have been started but not completed prior to effectiveness of the Arrangement.

(viii)Crisis preparedness technical assistance activities, including, but not limited to, developing or strengthening contingency plans, strengthening laws, policies and procedures for dealing with distressed banks and other financial institutions in distress, organizing simulation exercises to test plans in practice, and delivering workshops

II. Categories of Expenditure

For Bank-executed activities, Contribution funds will be used to finance the following categories of expenditure: associated overheads, short-term consultant fees, contractual services, extended term consultants, temporary staff costs, staff costs with indirects, field benefits media and workshop costs, equipment costs, grants (to cover Phase 1 costs), and travel expenses.

For IMF-executed activities financed by funds transferred to the IMF by the Bank, expenditures may be made in accordance with the IMF’s normal policies, practices, and procedures.

ANNEX 2

Standard Provisions Applicable to FIRST’s Middle-Income MDTF

The following provisions (hereinafter referred to as the “Standard Provisions”) will be applicable to and form an integral part of all arrangements entered into between the International Bank for Reconstruction and Development (“IBRD”) and the International Development Association (“IDA”) (collectively, the “Bank”) and donor countries and/or organizations (hereinafter referred to as the “Donors”) that provide grants (whether new funds or remaining Phase I funds for FIRST, hereinafter referred to as the “Contributions”) to be administered by the Bank for the Multi-Donor Trust Fund for Middle-Income Countries (the “Middle-Income MDTF”) for the Financial Sector Reform and Strengthening Initiative (“FIRST”).

1.Administration of the Contributions

1.1The Bank will be responsible only for performing those functions specifically set forth in this Arrangement and will not be subject to any other duties or responsibilities to the Donors, including, without limitation, any duties or obligations that might otherwise apply to a fiduciary or trustee under general principles of trust or fiduciary law. Nothing in this Arrangement will be considered a waiver of any privileges or immunities of the IBRD and IDA under their Articles of Arrangement or any applicable law, all of which are expressly reserved.

1.2After receipt of a Donor Contribution by the Bank, fifteen percent of such Contribution, net of any Bank cost recovery fee, (the “IMF Funds”) will be disbursed to the International Monetary Fund (the “IMF”) in accordance with the understandings set forth in documents to be agreed between the Bank and the IMF and approved by the Donors; provided that no such disbursements will be made to the IMF until such agreement and approvals are in place; and provided further that if no such agreement and approvals are in place by the end of nine months after effectiveness of this Arrangement, such IMF Funds will be returned in respect of each Donor Contribution to the respective Donor. Any investment income earned on the IMF Funds pending their disbursement to the IMF or refund to the Donors will be credited to the Middle-Income MDTF to be used for the same purposes as the other Contributions.

1.3With respect to the IMF Funds, the Donors acknowledge and accept that the Bank’s willingness to “administer” the Middle-Income MDTF will be fully met by performance of the following functions, all in accordance with this Arrangement:

• Receiving Contributions; and
• Upon receipt of a Contribution, disbursing the IMF Funds to the IMF in accordance with paragraph 1.2 above.

Thereafter, the Donors expect and accept that all financial management, financial reporting and auditing by the IMF with respect to the IMF Funds will be carried out in accordance with the IMF’s policies, practices, and procedures. The Donors and the Bank acknowledge that Sections 4 and 6 of this Annex 2 will not apply to the IMF Funds.

1.4The Donors acknowledge and accept that any activities carried out by the Bank, including through FIRST’s Program Management Unit (“PMU”), in connection with the IMF Funds that are not specifically required under this Arrangement, such as support in obtaining regular progress reports and project completion reports from the IMF for Donors, are facilitating activities, rather than additional obligations of the Bank under this Arrangement. The Donors specifically acknowledge and accept that the Bank has no responsibility, under this Arrangement or otherwise, for (i) confirming use of the IMF Funds; (ii) implementing, monitoring, supervising, evaluating, or providing quality assurance for activities financed by the IMF Funds; (iii) providing Donors with reports on the progress of activities financed by the IMF Funds; (iv) any misuse or misprocurement with respect to the IMF Funds; or (v) pursuing any Donor interests or IMF undertakings with respect to the IMF Funds. The Donors acknowledge and accept that any financial statements with respect to the use of the IMF funds are the responsibility of the IMF. The Donors further acknowledge and accept that the Bank will pass on the IMF Funds under the IMF Forms on behalf of the Donors, with any pursuit of Donor interests or any other Donor remedy arising directly between each Donor and the IMF, without involvement of the Bank.

2.Commingling, Exchange and Investment of the Contributions

2.1.The Contribution funds will be accounted for as a single trust fund and will be kept separate and apart from the funds of the Bank. The Contribution funds may be commingled with other trust fund assets maintained by the Bank.

2.2.The Contribution funds may be freely exchanged by the Bank into other currencies as may facilitate their disbursement.

2.3The Bank will invest and reinvest the Contribution funds pending their disbursement in accordance with the Bank’s policies and procedures for the investment of trust funds administered by the Bank. The Bank will credit all income from such investment to the Middle-Income MDTF to be used for the same purposes as the Contribution funds.

3.Administrative Cost Recovery

In order to assist in the defrayment of the costs of administration and other expenses incurred by the Bank under this Arrangement, the Bank may, following deposit of Contribution funds, deduct from such funds and retain for the Bank’s own account an amount equal to five percent (5 %) of the Contributions.

4.Employment of Consultants and Procurement of Goods

The employment and supervision of consultants and the procurement of goods financed by the Contributions (excluding the IMF Funds) will be the responsibility solely of the Bank and will be carried out in accordance with its applicable policies and procedures.

5.Accounting and Financial Reporting

5.1.The Bank will maintain separate records and ledger accounts in respect of the Contributions deposited in the trust fund account and disbursements made therefrom.

5.2.Within ninety (90) days of each March 31, June 30, September 30 and December 31, the Bank will furnish to the Donors an unaudited cash-based statement of receipts, disbursements and fund balance in United States dollars with respect to the Contributions. Within six (6) months of the final disbursement date specified in paragraph 7.1, the Bank will furnish to the Donors a final unaudited cash-based statement of receipts, disbursements and fund balance in United States dollars with respect to the Contribution funds.

5.3.The Bank will provide to the Donors, within six (6) months following the end of each Bank fiscal year, a management assertion together with an attestation from the Bank’s external auditors concerning the adequacy of internal control over cash-based financial reporting for trust funds as a whole. The cost of such attestations will be borne by the Bank.

5.4.If a Donor wishes to request, on an exceptional basis, a financial statement audit by the Bank’s external auditors of the Middle-Income MDTF, the Donor and the Bank will first consult as to whether such an external audit is necessary. The Bank and the Donor will decide on the most appropriate scope and terms of reference of such audit. If consensus is reached on the scope and terms of reference, the Bank will arrange for such external audit. The costs of any such audit, including the internal costs of the Bank with respect to such audit, will be paid by the Donor.

6.Coordination and Project Reporting

6.1.The Bank will provide the Donors with an annual report on the progress of activities financed by the Contributions (excluding the IMF Funds). Within six (6) months of the final disbursement date specified in paragraph 7.1, the Bank will furnish to the Donors a final report on the activities financed by the Contributions (excluding the IMF Funds).

7.Disbursement Deadline; Cancellation; Refund

7.1.It is expected that the Contribution funds will be fully disbursed by the Bank in accordance with the provisions of this Arrangement by the final disbursement date of April 30, 2013. The Bank will only disburse Contribution funds for the purposes of this Arrangement after such date with the written approval of the Donors.

7.2.Any Donor or the Bank may, upon three (3) months’ prior written notice, cancel all or part of the Donor’s pro rata share of any remaining balance of the Contribution funds that is not committed pursuant to any arrangements entered into between the Bank and any consultants and/or other third parties for the purposes of this Arrangement prior to the receipt of such notice.

7.3.After the final disbursement date specified in paragraph 7.1, the Bank will return any remaining balance of the Contribution funds to the Donors on a prorata basis. In the event of a cancellation of an individual Donor’s pro rata share of uncommitted Contribution funds in accordance with paragraph 7.2, the Bank will return such cancelled balance to the Donor.