58900 Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 

MILLENNIUM CHALLENGE 

CORPORATION 

[MCC FR 05–17] 

Notice of Entering Into a Compact With 

the Government of Georgia 

AGENCY: Millennium Challenge 

Corporation. 

ACTION: Notice. 

SUMMARY: In accordance with Section 

610(b)(2) of the Millennium Challenge 

Act of 2003 (Pub. L. 108–199, Division 

D), the Millennium Challenge 

Corporation is publishing a detailed 

summary and text of the Millennium 

Challenge Compact between the United 

States of America, acting through the 

Millennium Challenge Corporation, and 

the Government of Georgia. 

Representatives of the United States 

Government and the Government of 

Georgia executed the Compact 

documents on September 12, 2005. 

Dated: September 29, 2005. 

John C. Mantini, 

Acting General Counsel, Millennium 

Challenge Corporation. 

Summary of Millennium Challenge 

Compact With the Government of 

Georgia 

I. Introduction 

Despite positive developments since 

the Rose Revolution, Georgia has had 

difficulty in building an integrated 

national economy, reducing poverty, 

and stimulating economic growth in the 

regions outside of the capital, Tbilisi. 

These regions, home to more than 40 

percent of the country’s total 

population, have been particularly 

affected by declining economic 

conditions, with poverty rising nearly 

10 percent between 1996 and 2003. This 

makes them home to the poorest and 

most vulnerable segments of Georgia s 

population. In some regions, more than 

50 percent of rural households live 

below the official poverty line. 

Based on the results of an extensive 

consultative process and consideration 

of other donor programs, the 

Government of Georgia focused its 

Millennium Challenge Account (MCA) 

Program on two impediments to poverty 

reduction and economic development in 

the regions outside Tbilisi: a lack of 

reliable infrastructure and the slow 

development of enterprises, particularly 

in agribusiness. The Program will work 

to achieve two main objectives, as 

follows: 

• Rehabilitate key regional 

infrastructure, thus improving 

transportation for regional trade, 

ensuring a reliable supply of energy, 

and regional and municipal service 

delivery. 

• Develop regional enterprises by 

funding investment and technical 

assistance and by increasing 

productivity in farms, agribusinesses 

and other enterprises to increase jobs 

and rural income. 

The five-year, $295.3 million MCA 

Compact will help Georgia achieve 

these objectives, as outlined below. 

II. Program Activities, Costs and 

Performance 

1. Regional Infrastructure Rehabilitation 

Project 

Dilapidated infrastructure, especially 

the poor condition of roads, unreliable 

gas and electricity supply, and 

deteriorating municipal services, was 

consistently indicated as a major 

impediment to economic growth during 

Georgia’s consultative process. Georgia 

recognizes the importance of adequate 

and reliable infrastructure for 

manufacturing, commerce, improved 

health services and economic 

development in general. 

The Regional Infrastructure 

Rehabilitation Project is designed to 

address chronic infrastructure 

challenges, with a particular focus on 

rehabilitating key regional transport 

routes, natural gas transport and 

distribution, and regional and 

municipal services. Activities under this 

project include: 

• Samtskhe-Javakheti Road 

Rehabilitation activity ($102.2 million) 

for the rehabilitation and construction 

of approximately 245 kilometers of a 

main road traversing the isolated 

Samtskhe-Javakheti region, including 

technical assistance for a road master 

plan, operations and maintenance 

planning and contracting. 

• Energy Rehabilitation activity 

($49. 5 million) for the rehabilitation of 

the North-South Gas Pipeline that fuels 

electric power generation and provides 

commercial and residential gas and 

heating services to the entire country, 

and for the provision of advisory 

services to support implementation of 

Georgia’s energy sector strategy. 

• Regional Infrastructure 

Development activity ($60.0 million) to 

fund regional and municipal physical 

infrastructure for water supply, 

sanitation, irrigation, municipal 

gasification, roads and solid waste in 

the regions outside Tbilisi. 

2. Enterprise Development Project 

Although Georgia has witnessed a 

significant economic expansion in 

recent years, growth has been 

concentrated in and around the capital 

city, Tbilisi, while economic conditions 

in the regions remain stagnant. Small 

and medium enterprises (SMEs) could 

be a powerful driver for economic 

growth in these areas. However, the 

performance of SMEs has been 

disappointing. Of particular concern is 

the agriculture sector, which accounts 

for 16 percent of Georgia’s economic 

output and an even larger share of 

employment. Georgia’s diverse climactic 

zones and rich natural resources 

provide the potential for future 

development of the agriculture and 

agribusiness sectors, particularly in the 

regions. With increased quantity and 

quality, Georgian agricultural products 

could better compete with imported 

food products, thereby improving the 

living standards of the rural poor. Yet 

businesses face problems with poor 

technology, processing, marketing, 

management skills, and credit access. 

The Enterprise Development Project is 

designed to address two of the key 

constraints faced by SMEs in 

agribusiness and other sectors in the 

regions, namely the need for additional 

long-term risk capital and the need for 

improved skills and capacity in 

enterprises to recognize and take 

advantage of market opportunities. 

Activities under this project include: 

• Georgia Regional Development 

Fund activity ($32.5 million) for a 

professionally and independently 

managed investment fund to provide 

long-term risk capital and technical 

assistance to SMEs, primarily in the 

regions outside Tbilisi, and for activities 

to identify and encourage legal and 

policy reforms needed to improve the 

investment environment. 

• Agribusiness Development activity 

($15.0 million) for technical assistance 

and grants to farmers and agribusinesses 

that supply products to the domestic 

market and the provision of services for 

disseminating information on regional 

market prices and volumes. 

3. Measuring Outcome and Impact 

The Monitoring and Evaluation (M&E) 

Plan provides the methodological 

approach, management structures, tasks 

and timelines, and performance 

indicators for monitoring progress 

toward achieving the Compact goal, 

project objectives, activity outcomes and 

sub-activity outputs. It also provides the 

framework for evaluating the impact of 

the program on beneficiaries, 

disaggregated by gender and age, where 

appropriate. The M&E Plan will be 

complemented by an Activity 

Monitoring Plan to track activity and 

sub-activity outputs and process 

benchmarks. 

Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 58901 

The overall objective of Georgia’s 

MCA Program is to increase economic 

growth and reduce poverty in the 

regions of Georgia, with a particular 

emphasis on the Samtskhe-Javakheti 

region. The Program’s success will be 

measured by the incremental increase in 

financial benefits from each activity, as 

well as reductions in both the poverty 

incidence and the poverty gap in the 

Samtske-Javakheti region. 

Within five years, it is estimated that 

the Program will benefit nearly half a 

million Georgians and could indirectly 

impact the lives of a quarter of the 

population. The Program is also 

expected to reduce the incidence of 

poverty in the Samtskhe-Javakheti 

region by 12 percent. Other benefits 

include an expected increase of about 

$37 million in annual income to 

households and $27 million in business 

revenue nationwide through the 

Enterprise Development Project, as well 

as a reduction in technical losses from 

the gas pipeline from five percent to 

approximately two percent, with a 

significantly reduced risk that a major 

pipeline accident could cut off critical 

winter heat to hundreds of thousands of 

households. 

4. Program Administration and Control 

The MCA program will be 

administered by MCG, an independent 

legal entity ultimately accountable for 

the success of the Program. A 

Supervisory Board consisting of 

members of Government, parliament, 

the private sector, and civil society will 

oversee MCG’s professional 

management unit. The management unit 

will also be advised by a Stakeholders’

Committee consisting of representatives 

from municipal government, the private 

sector and civil society. MCC will retain 

approval rights at a number of key 

decision points during implementation, 

including key procurements, project 

budgets, major re-disbursements and 

key personnel decisions, in addition to 

its observer status on the MCG 

Supervisory Board. 

For the Road Rehabilitation activity, 

an international project management 

firm will work in conjunction with the 

Road Department of the Ministry of 

Economic Development in Georgia. For 

the Energy Rehabilitation activity, a 

project management consultant with 

experience in rehabilitating pipelines 

will manage the pipeline rehabilitation 

work, in conjunction with the Georgia 

Gas International Company (GGIC). The 

Municipal Development Fund, the 

project implementation unit for an 

existing World Bank project, will 

implement the Regional Infrastructure 

Development activity, with support 

from the World Bank. Independent 

project managers selected through open 

and transparent international tenders 

will manage each of the remaining 

projects. A professional firm with 

substantial prior experience conducting 

non-asset based financing and 

investment in transitional economies or 

similar business environments will 

manage the Georgia Regional 

Development Fund activity. The 

Agribusiness Development activity will 

be managed by a development 

organization selected according to 

detailed selection criteria developed by 

MCG, with MCC support. 

Fiscal and procurement management 

will be managed by an internationally 

recognized, private sector accounting 

firm chosen in a competitive process. 

The Fiscal/Procurement Agent will 

provide professional services for (1) 

funds control, disbursement 

documentation and management, cash 

management and accounting; and (2) the 

planning, management and supervision 

of the procurement processes 

contemplated under the MCA Program. 

World Bank procurement guidelines, as 

modified by MCC, will serve as the basis 

of a procurement agreement that will 

govern all procurements under the 

Compact. 

III. Assessment 

1. Economic Analysis 

Georgia’s MCA Program has an overall 

economic rate of return (ERR) of 17 

percent, calculated as a weighted 

average of each component. The base 

case return on the Samtskhe-Javakheti 

Road activity is estimated to be 20 

percent, based on enhanced agricultural 

surplus and reduced vehicle operating 

costs. The base case return on the 

Energy Rehabilitation activity is 

estimated to be 11 percent. By 

rehabilitating the North-South Gas 

Pipeline, it was assumed that Georgia 

could avoid additional expenditures on 

gas purchases and reap returns from 

selling carbon credits for the reduction 

of greenhouse gas emissions under the 

United Nations Framework Convention 

on Climate Change. The base case return 

on the Regional Infrastructure 

Development activity is estimated to be 

12 percent, on the assumption that 

improvements in regional and 

municipal services resulting from 

improved infrastructure would ease 

bottlenecks that constrain economic 

activity, perpetuate market 

fragmentation, impose numerous 

transaction costs on business, and lower 

productivity. The base case return on 

the Georgia Regional Development Fund 

activity was calculated to be 24 percent. 

This ERR captures economic benefits 

that include anticipated net profit, 

wages, taxes and payments to local 

suppliers from the enterprises in which 

the Fund is expected to invest. The base 

case return on the Agribusiness 

Development activity is estimated to be 

12 percent. The activity’s efforts to 

identify, introduce, and anchor 

appropriate innovations in primary 

agriculture and agribusiness is expected 

to (1) mitigate problems of incomplete 

information, credit constraints, and risk 

perceptions and management, leading in 

turn to increased productivity, 

profitability, and incomes, and (2) 

facilitate and increase meaningful 

coordination among stakeholders in key 

agricultural value chains, permitting 

them to take advantage of larger, more 

integrated vertical economies. 

2. Consultative Process 

In developing the MCA Program, 

Georgia engaged in a broad, meaningful 

and participatory consultative process 

that was unique in its recent history. 

When Georgia was notified of MCA 

eligibility in May 2004, the government 

formed a Millennium Challenge 

working group, representing key 

Government ministries, parliament, 

civil society, NGOs and private 

business, to discuss and agree on the 

priority areas for MCA support. This 

working group identified infrastructure 

rehabilitation and investment in 

selected industry sectors as priority 

areas, initiated a broad outreach 

program, and solicited feedback from 

the general public. The working group 

conducted five regional forums, 

initiated extensive media coverage, and 

conducted roundtables as part of the 

consultative process. Its outreach effort 

resulted in more than 500 specific 

proposals being submitted to the 

government, many of them reiterating 

the need for infrastructure rehabilitation 

and promotion of agriculture 

development. 

More recently, MCG has hired a 

public outreach officer and has begun 

holding weekly outreach events to keep 

stakeholders and citizens informed. 

Regular updates of meetings and events 

are placed on the MCG website. Prior to 

initiating formal negotiations with MCC 

in June 2005, MCG held several all-day 

forums for stakeholders, NGOs, civil 

society and donor organizations to 

review and elicit additional feedback on 

each of the proposed activities. 

3. Demonstration of Government 

Commitment 

The MCA Program has received a high 

degree of financial and other support 

from Georgia’s President and Prime 

58902 Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 

Minister, the Ministers of Economy, 

Energy, and Agriculture, and members 

of Parliament. Continued high-level 

Government involvement is assured 

with the governance structure of the 

Supervisory Board of MCG, chaired by 

the Prime Minister, and composed of 

high-level cabinet and parliament 

members and a representative from the 

President’s administration. 

4. Sustainability 

In the Regional Infrastructure 

Rehabilitation Project, the key issue for 

sustainability across all the Project 

Activities will be the ability of national 

and local authorities to provide long 

term maintenance on capital 

investments. These concerns have been 

addressed in the design of each Project 

activity through the provision of 

technical assistance, where necessary, to 

aid local institutions in planning and 

budgeting for the maintenance of roads 

and municipal infrastructure and to 

enhance their ability to sustain a 

supportive policy environment in the 

energy sector. 

For the Road, Georgia committed to 

funding road maintenance in an amount 

appropriate for the existing road 

network. For the Energy Rehabilitation 

activity, Georgia committed to certain 

measures to address past liabilities and 

current collection problems of the GGIC, 

the pipeline owner and operator, to help 

ensure improved cash flow for pipeline 

maintenance once rehabilitation is 

complete. It has also committed not to 

sell, transfer or pledge the Pipeline and/ 

or a controlling interest in GGIC during 

the Compact’s five-year term without 

prior consent from MCC. For the 

Regional Infrastructure Development 

activity, the operations manual requires 

that all proposals for investment be 

submitted with a plan for funding 

operations and maintenance (based on a 

combination of user charges and local 

and national Government budget 

support). The Government of Georgia 

will, in certain cases, provide a 

commitment letter evidencing financial 

support in whole or in part for certain 

projects in certain cities. 

In the Enterprise Development 

Project, neither the Georgia Regional 

Development Fund (GRDF) activity nor 

the Agribusiness Development activity 

(ADA) is intended to be fully 

sustainable beyond Compact 

completion. When the Compact ends, 

the GRDF will enter a five-year ‘‘wind 

down’’ phase of asset management and 

liquidation, with its distributions used 

to support approved charitable, 

educational or social development 

programs in Georgia. The ADA will 

cease direct operations when the 

Compact ends. Nonetheless, both 

Activities are expected to enhance 

business expertise and build successful 

companies. This contributes to 

sustainability at the individual 

enterprise level and strengthens market 

mechanisms that will remain long after 

the Compact concludes. In addition, the 

Activities are expected to increase the 

level of financial investment in the 

regions, thereby perpetuating 

competitive economic growth. 

5. Environmental and Social Impacts 

The Road Rehabilitation activity is a 

‘‘Category A’’ project. One section 

consists of a significant rehabilitation 

that will upgrade a lightly traveled 

seasonal road for inter-regional cargo 

traffic and other transport, which may 

introduce potentially significant 

negative impacts following 

construction. In addition, there are two 

new road sections, including one that 

will pass an environmentally-sensitive 

wetland area. MCC has provided 609(g) 

funding for the development of a full 

Environmental and Social Impact 

Assessment. 

The Energy Rehabilitation activity is a 

‘‘Category B’’ project. It is expected to 

impact the environment positively 

through a significant reduction in 

greenhouse gas emissions and an 

increase in energy reliability that should 

reduce use of less clean and less safe 

alternative fuels, such as biomass and 

kerosene. Nevertheless, the works 

would present both an occupational and 

a public health risk if safety precautions 

are not followed, and some resettlement 

may be required for public safety and 

rehabilitation needs where 

encroachment onto the pipeline right-ofway has occurred. The Compact 

requires an environmental audit of 

GGIC, a focused project Environmental 

Assessment to include a resettlement 

plan framework, and an Environmental 

Management Plan that incorporates 

health and safety procedures. 

The Regional Infrastructure 

Development activity is a ‘‘Category B’’

project although it may fund ‘‘Category 

A’’ activities, In addition to the 

requirement that all funding from the 

activity be consistent with World Bank 

safeguards and MCC environmental 

guidelines, the Compact requires that 

the Municipal Development Fund, 

which will be the implementing entity 

and currently implements a similar 

World Bank project, include an 

environmental and social impact 

assessment expert on staff. 

Due to the nature of the GRDF, it is 

not possible to assess potential 

environmental and social impacts at this 

point. The Compact requires that GRDF 

investments comply with MCC 

environmental guidelines. To help 

compliance the GRDF manager will be 

required to develop investment 

guidelines and an environmental review 

process and monitoring check-list. The 

ADA is a ‘‘Category C’’ project. It is not 

likely to have adverse environmental or 

social impacts. The Compact will 

specify the environmental review 

criteria for the ADA and describe the 

environmental sustainability principles 

to be used for agricultural and 

agribusiness technical assistance. 

6. Donor Coordination 

The MCA Program complements 

efforts by other donors currently active 

in Georgia, The MCA Program envisions 

direct collaboration with the World 

Bank’s Municipal Development Fund 

for the implementation of the 

Infrastructure Facility. Its proposed 

infrastructure rehabilitation activities 

will complement efforts by the World 

Bank, EBRD, USAID, KfW and other 

donors that are currently active in road 

transport, energy, and municipal 

services. 

The Compact’s proposed Enterprise 

Development activities would 

complement the efforts of the World 

Bank, EBRD, UNDP, USAID, USDA, 

FAO, IFAD DFID, KfW and other donors 

that are currently active in agriculture, 

financing and business development. 

IV. Summary and Conclusion 

The Georgia Program focuses on the 

rehabilitation of critical regional 

infrastructure and the provision of 

grants, long-term capital and technical 

assistance to spur the development of 

enterprises, particularly in agribusiness. 

The Program enjoys broad support from 

civil society and is well coordinated 

with the goals of the Government of 

Georgia and of other donors. 

The Regional Infrastructure 

Rehabilitation Project has the potential 

to improve living conditions and the 

business environment by dramatically 

improving basic services in the regions 

outside Tbilisi. In addition, the 

Samtskhe-Javakheti Road is intended to 

integrate more fully an isolated ethnic 

minority population into the greater 

Georgian economy and society. The 

Enterprise Development Project 

complements these efforts by 

significantly expanding the reach of 

advanced training in agricultural 

production, processing, and 

agribusiness and increasing the 

availability of longer term risk capital to 

entrepreneurs. 

This Program will have a positive 

impact on economic growth and will 

Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 58903 

contribute to the reduction of poverty in 

Georgia. 

Millennium Challenge Compact 

Between the United States of America 

Acting Through the Millennium 

Challenge Corporation and the 

Government of Georgia 

Table of Contents 

Article I. Purpose and Term 

Section 1.1 Objectives 

Section 1.2 Projects 

Section 1.3 Entry into Force; Compact 

Term 

Article II. Funding and Resources 

Section 2.1 MCC Funding 

Section 2.2 Government Resources 

Section 2.3 Limitations on the Use or 

Treatment of MCC Funding 

Section 2.4 Incorporation; Notice; 

Clarification 

Section 2.5 Refunds; Violation 

Article III. Implementation 

Section 3.1 Implementation Framework 

Section 3.2 Government Responsibilities 

Section 3.3 Government Deliveries 

Section 3.4 Government Assurances 

Section 3.5 Implementation Letters; 

Supplemental Agreements 

Section 3.6 Procurement; Awards of 

Assistance 

Section 3.7 Policy Performance; Policy 

Reforms 

Section 3.8 Records and Information; 

Access; Audits; Reviews 

Section 3.9 Insurance 

Section 3.10 Domestic Requirements 

Section 3.11 No Conflict 

Section 3.12 Reports 

Article IV. Conditions Precedent; Deliveries 

Section 4.1 Conditions Prior to the Entry 

into Force and Deliveries 

Section 4.2 Conditions Precedent to MCC 

Disbursements or Re-Disbursements 

Article V. Final Clauses 

Section 5.1 Communications 

Section 5.2 Representatives 

Section 5.3 Amendments 

Section 5.4 Termination; Suspension 

Section 5.5 Privileges and Immunities 

Section 5.6 Attachments 

Section 5.7 Inconsistencies 

Section 5.8 Indemnification 

Section 5.9 Headings 

Section 5.10 Interpretation; Definitions 

Section 5.11 Signatures 

Section 5.12 Designation 

Section 5.13 Survival 

Section 5.14 Consultation 

Section 5.15 MCC Status 

Section 5.16 Language 

Section 5.17 Publicity; Information and 

Marking 

Exhibit A: Definitions 

Exhibit B: List of Certain Supplemental 

Agreements 

Annex I: Program Description 

Schedule 1: Regional Infrastructure 

Rehabilitation Project 

Schedule 2: Enterprise Development Project 

Annex II: Financial Plan Summary 

Annex III: Description of the M&E Plan 

Millennium Challenge Compact 

This Millennium Challenge Compact 

(the ‘‘Compact’’) is made between the 

United States of America, acting 

through the Millennium Challenge 

Corporation, a United States 

Government corporation (‘‘MCC’’), and 

the Government of Georgia (the 

‘‘Government’’) (referred to herein 

individually as a ‘‘Party’’ and 

collectively, the ‘‘Parties’’). A 

compendium of capitalized terms 

defined herein is included in Exhibit A 

attached hereto. 

Recitals 

Whereas, MCC, acting through its 

Board of Directors, has selected Georgia 

as eligible to present to MCC a proposal 

for the use of 2004 and 2005 

Millennium Challenge Account 

(‘‘MCA’’) assistance to help facilitate 

poverty reduction through economic 

growth in Georgia; 

Whereas, the Government has carried 

out a consultative process with the 

country’s private sector and civil society 

to outline the country’s priorities for the 

use of MCA assistance and developed a 

proposal, which was submitted to MCC 

on September 24, 2004 (the ‘‘Proposal’’); 

Whereas, the Proposal focused on, 

among other things, rehabilitation of key 

regional infrastructure and development 

of enterprises in the regions of Georgia; 

Whereas, MCC has evaluated the 

Proposal and related documents to 

determine whether the Proposal is 

consistent with core MCA principles 

and includes proposed activities and 

projects that will advance the progress 

of Georgia towards achieving economic 

growth and poverty reduction; 

Whereas, based on MCC’s evaluation 

of the Proposal and related documents 

and subsequent discussions and 

negotiations between the Parties, the 

Government and MCC determined to 

enter into this Compact to implement a 

program using MCC Funding to advance 

Georgia’s progress towards economic 

growth and poverty reduction (the 

‘‘Program’’); and 

Whereas, the Government has 

established Millennium Challenge 

Georgia Fund, established pursuant to 

Presidential Decree No 561, dated 

December 3, 2004, and Ministry of 

Finance Order No. 796, dated December 

8, 2004 (‘‘MCA-Georgia’’), to continue 

the consultative process and implement 

the Program; 

Now, Therefore, in consideration of 

the foregoing and the mutual covenants 

and agreements set forth herein, the 

Parties hereby agree as follows: 

Article I. Purpose and Term 

Section 1.1 Objectives. The overall 

objective of this Compact is increased 

economic growth and poverty reduction 

in the regions of Georgia outside of 

Tbilisi (‘‘Program Objective’’), which is 

key to economic growth and poverty 

reduction in Georgia (‘‘Compact Goal’’). 

The Parties have identified the 

following project-level objectives (each 

a ‘‘Project Objective’’ and together the 

‘‘Project Objectives’’) to advance the 

Program Objective, each of which is 

described in more detail in the Annexes 

attached hereto: 

(a) Rehabilitation of key regional 

infrastructure (the ‘‘Key Regional 

Infrastructure Rehabilitated Objective’’); 

and 

(b) Development of enterprises in 

regions (the ‘‘Enterprises in Regions 

Developed Objective’’). 

(The Program Objective and the 

individual Project Objectives are 

referred to herein collectively as the 

‘‘Objectives’’ and each individually as 

an ‘‘Objective’’). The Government 

expects to achieve, and shall use its best 

efforts to ensure the achievement of, 

these Objectives during the Compact 

Term. 

Section 1.2 Projects. The Annexes 

attached hereto describe the specific 

projects and the policy reforms and 

other activities related thereto (each, a 

‘‘Project’’) that the Government will 

carry out, or cause to be carried out, in 

furtherance of this Compact to achieve 

the Objectives. 

Section 1.3 Entry into Force; 

Compact Term. This Compact shall 

enter into force on the date of the last 

letter in an exchange of letters between 

the Principal Representatives of each 

Party confirming that each Party has 

completed its domestic requirements for 

entry into force of this Compact and that 

all conditions set forth in Section 4.1 

have been satisfied by the Government 

and MCC (such date, the ‘‘Entry into 

Force’’). This Compact shall remain in 

force for five (5) years from the date of 

the entry into force of this Compact, 

unless earlier terminated in accordance 

with Section 5.4 (the ‘‘Compact Term’’). 

Article II. Funding and Resources 

Section 2.1 MCC Funding. 

(a) MCC’s Contribution. MCC hereby 

grants to the Government, subject to the 

terms and conditions of this Compact, 

an amount not to exceed Two Hundred 

Ninety-Five Million Three Hundred 

Thousand United States Dollars (USD 

$295,300,000) (‘‘MCC Funding’’) during 

the Compact Term to enable the 

Government to implement the Program 

and achieve the Objectives. 

58904 Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 

(i) Subject to Sections 2.1(a)(ii), 2.2.(b) 

and 5.4, the allocation of the MCC 

Funding within the Program and among 

and within the Projects shall be as 

generally described in Annex II or as 

otherwise agreed upon by the Parties 

from time to time. 

(ii) If at any time MCC determines that 

a condition precedent to an MCC 

Disbursement has not been satisfied, 

MCC may, upon written notice to the 

Government, reduce the total amount of 

MCC Funding by an amount equal to the 

amount estimated in the applicable 

Detailed Financial Plan for the Program 

or Project activity for which such 

condition precedent has not been met. 

Upon the expiration or termination of 

this Compact, (1) any amounts of MCC 

Funding not disbursed by MCC to the 

Government shall be automatically 

released from any obligation in 

connection with this Compact and (2) 

any amounts of MCC Funding disbursed 

by MCC to the Government as provided 

in Section 2.1(b)(i), but not re-disbursed 

as provided in Section 2.1(b)(ii) or 

otherwise incurred as permitted 

pursuant to Section 5.4(e) prior to the 

expiration or termination of this 

Compact, shall be returned to MCC in 

accordance with Section 2.5(a)(ii). 

(b) Disbursements. 

(i) Disbursements of MCC Funding. 

MCC shall from time to time make 

disbursements of MCC Funding (each 

such disbursement, an ‘‘MCC 

Disbursement’’) to a Permitted Account 

or through such other mechanism 

agreed by the Parties under and in 

accordance with the procedures and 

requirements set forth in Annex I, the 

Disbursement Agreement or as 

otherwise provided in any other 

relevant Supplemental Agreement. 

(ii) Re-Disbursements of MCC 

Funding. The release of MCC Funding 

from a Permitted Account (each such 

release, a ‘‘Re-Disbursement’’), shall be 

made in accordance with the procedures 

and requirements set forth in Annex I, 

the Disbursement Agreement or as 

otherwise provided in any other 

relevant Supplemental Agreement. 

(c) Interest. Unless the Parties agree 

otherwise in writing, any interest or 

other earnings on MCC Funding that 

accrue or earn (collectively, ‘‘Accrued 

Interest’’) shall be held in a Permitted 

Account and accrue or be earned in 

accordance with the requirements for 

the earning and treatment of Accrued 

Interest as specified in Annex I or any 

relevant Supplemental Agreement. On a 

quarterly basis and upon the 

termination or expiration of this 

Compact, the Government shall return, 

or ensure the return of, all Accrued 

Interest to any United States 

Government account designated by 

MCC. 

(d) Conversion; Exchange Rate. The 

Government shall ensure that all MCC 

Funding in the Permitted Account(s) 

into which MCC Disbursements are 

made is held in the currency of the 

United States of America (‘‘United 

States Dollars’’) prior to ReDisbursement; provided, that a certain 

portion of MCC Funding may be 

transferred to a Local Account and may 

be held in such Local Account in the 

currency of Georgia prior to ReDisbursement in accordance with the 

requirements of Annex I and any 

relevant Supplemental Agreement. To 

the extent that any amount of MCC 

Funding held in United States Dollars 

must be converted into the currency of 

Georgia for any purpose, including for 

any Re-Disbursement or any transfer of 

MCC Funding into a Local Account, the 

Government shall ensure that such 

amount is converted consistent with 

Annex I, including the rate and manner 

set forth in Annex I, and the 

requirements of the Disbursement 

Agreement or any other Supplemental 

Agreement between the Parties. 

(e) Guidance. From time to time, MCC 

may provide guidance to the 

Government through Implementation 

Letters on the frequency, form and 

content of requests for MCC 

Disbursements and Re-Disbursements or 

any other matter relating to MCC 

Funding. The Government shall apply 

such guidance in implementing this 

Compact. 

Section 2.2 Government Resources. 

(a) The Government shall provide or 

cause to be provided such Government 

funds and other resources, and shall 

take or cause to be taken such actions, 

including obtaining all necessary 

approvals and consents, as are specified 

in this Compact or in any Supplemental 

Agreement to which the Government is 

a party or as are otherwise necessary 

and appropriate to effectively carry out 

the Government Responsibilities or 

other responsibilities or obligations of 

the Government under or in furtherance 

of this Compact during the Compact 

Term and through the completion of any 

post-Compact Term activities, audits or 

other responsibilities. 

(b) If at any time during the Compact 

Term, the Government materially 

reallocates or reduces the allocation in 

its national budget or any other 

Georgian governmental authority at a 

departmental, municipal, regional or 

other jurisdictional level materially 

reallocates or reduces the allocation of 

its respective budget, of the normal and 

expected resources that the Government 

or such other governmental authority, as 

applicable, would have otherwise 

received or budgeted, from external or 

domestic sources, for the activities 

contemplated herein, the Government 

shall notify MCC in writing within 

fifteen (15) days of such reallocation or 

reduction, such notification to contain 

information regarding the amount of the 

reallocation or reduction, the affected 

activities, and an explanation for the 

reduction. In the event that MCC 

independently determines upon review 

of the executed national annual budget 

that such a material reallocation or 

reduction of resources has occurred, 

MCC shall notify the Government and, 

following such notification, the 

Government shall provide a written 

explanation for such reallocation or 

reduction and MCC may (i) reduce, in 

its sole discretion, the total amount of 

MCC Funding or any MCC 

Disbursement by an amount equal to the 

amount estimated in the applicable 

Detailed Financial Plan for the activity 

for which funds were reduced or 

reallocated or (ii) otherwise suspend or 

terminate MCC Funding in accordance 

with Section 5.4(b). 

(c) The Government shall use its best 

efforts to ensure that all MCC Funding 

is fully reflected and accounted for in 

the annual budget of Georgia on a multiyear basis. 

Section 2.3 Limitations on the Use 

or Treatment of MCC Funding. 

(a) Abortions and Involuntary 

Sterilizations. The Government shall 

ensure that MCC Funding shall not be 

used to undertake, find or otherwise 

support any activity that is subject to 

prohibitions on use of funds contained 

in (i) paragraphs (1) through (3) of 

section 104(f) of the Foreign Assistance 

Act of 1961 (22 U.S.C. 2151b(f)(1)–(3)), 

a United States statute, which 

prohibitions shall apply to the same 

extent and in the same manner as such 

prohibitions apply to funds made 

available to carry out Part I of such Act; 

or (ii) any provision of law comparable 

to the eleventh and fourteenth provisos 

under the heading ‘‘Child Survival and 

Health Programs Fund’’ of division E of 

Public Law 108–7 (117 Stat. 162), a 

United States statute. 

(b) United States Job Loss or 

Displacement of Production. The 

Government shall ensure that MCC 

Funding shall not be used to undertake, 

fund or otherwise support any activity 

that is likely to cause a substantial loss 

of United States jobs or a substantial 

displacement of United States 

production, including: 

(i) Providing financial incentives to 

relocate a substantial number of United 

States jobs or cause a substantial 

Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 58905 

displacement of production outside the 

United States; 

(ii) Supporting investment promotion 

missions or other travel to the United 

States with the intention of inducing 

United States firms to relocate a 

substantial number of United States jobs 

or a substantial amount of production 

outside the United States; 

(iii) Conducting feasibility studies, 

research services, studies, travel to or 

from the United States, or providing 

insurance or technical and management 

assistance, with the intention of 

inducing United States firms to relocate 

a substantial number of United States 

jobs or cause a substantial displacement 

of production outside the United States; 

(iv) Advertising in the United States 

to encourage United States firms to 

relocate a substantial number of United 

States jobs or cause a substantial 

displacement of production outside the 

United States; 

(v) Training workers for firms that 

intend to relocate a substantial number 

of United States jobs or cause a 

substantial displacement of production 

outside the United States; 

(vi) Supporting a United States office 

of an organization that offers incentives 

for United States firms to relocate a 

substantial number of United States jobs 

or cause a substantial displacement of 

production outside the United States; or 

(vii) Providing general budget support 

for an organization that engages in any 

activity prohibited above. 

(c) Military Assistance and Training. 

The Government shall ensure that MCC 

Funding shall not be used to undertake, 

fund or otherwise support the purchase 

or use of goods or services for military 

purposes, including military training, or 

to provide any assistance to the military, 

police, militia, national guard or other 

quasi-military organization or unit. 

(d) Prohibition of Assistance Relating 

to Environmental, Health or Safety 

Hazards. The Government shall ensure 

that MCC Funding shall not be used to 

undertake, fund or otherwise support 

any activity that is likely to cause a 

significant environmental, health, or 

safety hazard. Unless MCC and the 

Government agree otherwise in writing, 

the Government shall ensure that 

activities undertaken or funded in 

whole or in part (directly or indirectly) 

by MCC Funding comply with 

environmental guidelines delivered by 

MCC to the Government or posted by 

MCC on its website or otherwise 

publicly made available, as such 

guidelines may be amended from time 

to time (the ‘‘Environmental 

Guidelines’’), including any definition 

of ‘‘likely to cause a significant 

environmental, health, or safety hazard’’

as may be set forth in such 

Environmental Guidelines. 

(e) Taxation. 

(i) Taxes. As required by applicable 

United States law and consistent with 

the applicable requirement of Georgian 

law that international cooperation 

assistance shall be exempt from taxes, 

all Program Assets, MCC Funding and 

Accrued Interest shall be free from any 

taxes imposed under laws currently or 

hereafter in effect in Georgia during the 

Compact Term. This exemption shall 

apply to any use of any Program Asset, 

MCC Funding and Accrued Interest, 

including any Exempt Uses, and to any 

work performed under or activities 

undertaken in furtherance of this 

Compact by any person or entity 

(including contractors and grantees) 

funded by MCC Funding, and shall 

apply to all taxes, tariffs, duties, and 

other levies (each a ‘‘Tax’’ and 

collectively, ‘‘Taxes’’), including: 

(1) To the extent attributable to MCC 

Funding, income taxes and other taxes 

on profit or businesses imposed on 

organizations or entities, other than 

nationals of Georgia, receiving MCC 

Funding, including taxes on the 

acquisition, ownership, rental, 

disposition or other use of real or 

personal property, taxes on investment 

or deposit requirements and currency 

controls in Georgia, or any other tax, 

duty, charge or fee of whatever nature, 

except fees for specific services 

rendered; for purposes of this Section 

2.3(e), the term ‘‘national’’ refers to 

organizations established under the 

laws of Georgia, other than MCAGeorgia or any other entity established 

solely for purposes of managing or 

overseeing the implementation of the 

Program or any wholly-owned 

subsidiaries, divisions, or Affiliates of 

entities not registered or established 

under the laws of Georgia; 

(2) Customs duties, tariffs, import and 

export taxes, or other levies on the 

importation, use and re-exportation of 

goods, services, or the personal 

belongings and effects, including 

personally-owned automobiles, for 

Program use or the personal use of 

individuals who are neither citizens nor 

permanent residents of Georgia and who 

are present in Georgia for purposes of 

carrying out the Program or their family 

members, including all charges based on 

the value of such imported goods; 

(3) Taxes on the income or personal 

property of all individuals who are 

neither citizens nor permanent residents 

of Georgia, including income and social 

security taxes of all types and all taxes 

on the personal property owned by such 

individuals, to the extent such income 

or property are attributable to MCC 

Funding; and 

(4) Taxes or duties levied on the 

purchase of goods or services funded by 

MCC Funding, including sales taxes, 

tourism taxes, value-added taxes (VAT), 

or other similar charges. 

(ii) This Section 2.3(e) shall apply, but 

is not limited to (A) any transaction, 

service, activity, contract, grant or other 

implementing agreement funded in 

whole or in part by MCC Funding; (B) 

any supplies, equipment, materials, 

property or other goods (referred to 

herein collectively as ‘‘goods’’) or funds 

introduced into, acquired in, used or 

disposed of in, or imported into or 

exported from, Georgia by MCC, or by 

any person or entity (including 

contractors and grantees) as part of, or 

in conjunction with, MCC Funding or 

the Program; (C) any contractor, grantee, 

or other organization carrying out 

activities funded in whole or in part by 

MCC Funding; and (D) any employee of 

such organizations (the uses set forth in 

clauses (A) through (D) are collectively 

referred to herein as ‘‘Exempt Uses’’). 

(iii) If a Tax has been levied and paid 

contrary to the requirements of this 

Section 2.3(e), whether inadvertently, 

due to the impracticality of 

implementation of this provision with 

respect to certain types or amounts of 

taxes, or otherwise, the Government 

shall refund promptly to MCC to an 

account designated by MCC the amount 

of such Tax in the currency of Georgia, 

within thirty (30) days (or such other 

period as may be agreed in writing by 

the Parties) after the Government is 

notified in writing according to 

procedures agreed by the Parties, 

whether by MCC or otherwise, of such 

levy and tax payment; provided, 

however, the Government shall apply 

national funds to satisfy its obligations 

under this Section 2.3(e)(iii) and no 

MCC Funding, Accrued Interest, or any 

assets, goods, or property (real, tangible, 

or intangible) purchased or financed in 

whole or in part (directly or indirectly) 

by MCC Funding (‘‘Program Assets’’) 

may be applied by the Government in 

satisfaction of its obligations under this 

paragraph. 

(iv) The Parties shall memorialize in 

a mutually acceptable Supplemental 

Agreement or other suitable document 

the mechanisms for implementing this 

Section 2.3(e), including (1) a formula 

for determining refunds for Taxes paid, 

the amount of which is not susceptible 

to precise determination, (2) a 

mechanism for ensuring the tax-free 

importation, use, and re-exportation of 

goods, services, or the personal 

belongings of individuals (including all 

Providers) described in paragraph (i)(2) 

58906 Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 

of this Section 2.3(e), and (3) any other 

appropriate Government action to 

facilitate the administration of this 

Section 2.3(e). 

(v) The Government shall ensure that 

the tax exemptions provided by this 

Section 2.3(e) shall apply throughout 

the Compact Term. 

(f) Alteration. The Government shall 

ensure that neither MCC Funding nor 

Accrued Interest or Program Assets shall 

be subject to any impoundment, 

rescission, sequestration or any 

provision of law now or hereafter in 

effect in Georgia that would have the 

effect of requiring or allowing any 

impoundment, rescission or 

sequestration of any MCC Funding, 

Accrued Interest or Program Asset. 

(g) Liens or Encumbrances. The 

Government shall ensure that no MCC 

Funding, Accrued Interest, nor Program 

Assets shall be subject to any lien (each 

a ‘‘Lien,’’ attachment, enforcement of 

judgment, pledge, or encumbrance of 

any kind, except with the prior approval 

of MCC in accordance with Section 3(c) 

of Annex I, and in the event of the 

imposition of any Lien not so approved, 

the Government shall promptly seek the 

release of such Lien and shall promptly 

pay any amounts owed to obtain such 

release; provided, however, the 

Government shall apply national funds 

to satisfy its obligations under this 

Section 2.3(g) and no MCC Funding, 

Accrued Interest, nor Program Assets 

may be applied by the Government in 

satisfaction of its obligations under this 

Section 2.3(g). 

(h) Other Limitations. The 

Government shall ensure that the use or 

treatment of MCC Funding shall be 

subject to such other limitations (i) as 

required by the applicable law of the 

United States of America now or 

hereafter in effect during the Compact 

Term, (ii) as advisable under or required 

by applicable United States Government 

policies now or hereafter in effect 

during the Compact Term, or (iii) to 

which the Parties may otherwise agree 

in writing. 

(i) Utilization of Goods, Services and 

Works. The Government shall ensure 

that any Program Assets, services, 

facilities or works funded in whole or in 

part (directly or indirectly) by MCC 

Funding, unless otherwise agreed by the 

Parties in writing, shall be used solely 

in furtherance of this Compact. 

(j) Notification of Applicable Laws 

and Policies. MCC shall notify the 

Government of any applicable United 

States law or policy affecting the use or 

treatment of MCC Funding, whether or 

not specifically identified in this 

Section 2.3, and shall provide to the 

Government a copy of the text of any 

such applicable law and a written 

explanation of any such applicable 

policy. 

Section 2.4 Incorporation; Notice; 

Clarification. 

(a) The Government shall include, or 

ensure the inclusion of, all of the 

requirements set forth in Section 2.3 in 

all Supplemental Agreements to which 

MCC is not a party and shall use its best 

efforts to ensure that no such 

Supplemental Agreement is 

implemented in violation of the 

prohibitions set forth in Section 2.3. 

(b) The Government shall ensure 

notification of all of the requirements 

set forth in Section 2.3 to any Provider 

and all relevant officers, directors, 

employees, agents, representatives, 

Affiliates, contractors, sub-contractors, 

grantees and sub-grantees of any 

Provider. The term ‘‘Provider’’ shall 

mean (i) MCA-Georgia and any 

Government Affiliate or Permitted 

Designee involved in any activities in 

furtherance of this Compact or (ii) any 

third party who receives at least 

USD$50,000 in the aggregate of MCC 

Funding (other than employees of MCAGeorgia) during the Compact Term or 

such other amount as the Parties may 

agree in writing, whether directly from 

MCC, indirectly through ReDisbursements, or otherwise. 

(c) In the event the Government or 

any Provider requires clarification from 

MCC as to whether an activity 

contemplated to be undertaken in 

furtherance of this Compact violates or 

may violate any provision of Section 

2.3, the Government shall notify, or 

ensure that such Provider notifies, MCC 

in writing and provide in such 

notification a detailed description of the 

activity in question. In such event, the 

Government shall not proceed, and shall 

use its best efforts to ensure that no 

relevant Provider proceeds, with such 

activity, and the Government shall 

ensure that no Re-Disbursements shall 

be made for such activity, until MCC 

advises the Government or such 

Provider in writing that the activity is 

permissible. 

Section 2.5 Refunds; Violation. 

(a) Notwithstanding the availability to 

MCC, or exercise by MCC of, any other 

remedies, including under international 

law, this Compact, or any Supplemental 

Agreement: 

(i) If any amount of MCC Funding or 

Accrued Interest, or any Program Asset, 

is used for any purpose prohibited 

under this Article II or otherwise in 

violation of any of the terms and 

conditions of this Compact, any 

guidance in any Implementation Letter, 

or any Supplemental Agreement 

between the Parties, MCC may require 

the Government to repay promptly to 

MCC to an account designated by MCC 

or to others as MCC may direct the 

amount of such misused MCC Funding 

or Accrued Interest, or the cash 

equivalent of the value of any misused 

Program Asset, in United States Dollars, 

plus any interest that accrued or would 

have accrued thereon, within thirty (30) 

days (or such other period as may be 

agreed in writing by the Parties) after 

the Government is notified, whether by 

MCC or otherwise, of such prohibited 

use; provided, however, the Government 

shall apply national funds to satisfy its 

obligations under this Section 2.5(a)(i) 

and no MCC Funding, Accrued Interest, 

nor Program Assets may be applied by 

the Government in satisfaction of its 

obligations under this Section 2.5(a)(i); 

and 

(ii) If all or any portion of this 

Compact is terminated or suspended 

and upon the expiration of this 

Compact, the Government shall, subject 

to the requirements of Sections 5.4(e) 

and 5.4(f), refund, or ensure the refund, 

to MCC to such account(s) designated by 

MCC the amount of any MCC Funding, 

plus any Accrued Interest, promptly, 

but in no event later than thirty (30) 

days after the Government receives 

MCC’s request for such refund; 

provided, that if this Compact is 

terminated or suspended in part, MCC 

may request a refund for only the 

amount of MCC Funding, plus any 

Accrued Interest, then allocated to the 

terminated or suspended portion; 

provided, further, that any refund of 

MCC Funding or Accrued Interest shall 

be to such account(s) as designated by 

MCC. 

(b) Notwithstanding any other 

provision in this Compact or any other 

agreement to the contrary, MCC’s right 

under this Section 2.5 for a refund shall 

continue during the Compact Term and 

for a period of (i) five (5) years thereafter 

or (ii) one (1) year after MCC receives 

actual knowledge of such violation, 

whichever is later. 

(c) If MCC determines that any 

activity or failure to act violates, or may 

violate, any Section in this Article II, 

MCC may refuse any further MCC 

Disbursements for or conditioned upon 

such activity, and may take any action 

to prevent any Re-Disbursement related 

to such activity. 

Article III. Implementation 

Section 3.1 Implementation 

Framework. This Compact shall be 

implemented by the Parties in 

accordance with this Article III and as 

further specified in the Annexes and in 

relevant Supplemental Agreements. 

Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 58907 

Section 3.2 Government 

Responsibilities. 

(a) The Government shall have 

principal responsibility for oversight 

and management of the implementation 

of the Program (i) in accordance with 

the terms and conditions specified in 

this Compact and relevant 

Supplemental Agreements, (ii) in 

accordance with all applicable laws 

then in effect in Georgia, and (iii) in a 

timely and cost-effective manner and in 

conformity with sound technical, 

financial and management practices 

(collectively, the ‘‘Government 

Responsibilities’’). Unless otherwise 

expressly provided, any reference to the 

Government Responsibilities or any 

other responsibilities or obligations of 

the Government herein shall be deemed 

to apply to any Government Affiliate 

and any of their respective directors, 

officers, employees, contractors, subcontractors, grantees, sub-grantees, 

agents or representatives. 

(b) The Government shall ensure that 

no person or entity shall participate in 

the selection, award, administration or 

oversight of a contract, grant or other 

benefit or transaction funded in whole 

or in part (directly or indirectly) by 

MCC Funding, in which (i) the entity, 

the person, members of the person’s 

immediate family or household or his or 

her business partners, or organizations 

controlled by or substantially involving 

such person or entity, has or have a 

financial or other interest or (ii) the 

person or entity is negotiating or has 

any arrangement concerning prospective 

employment, unless such person or 

entity has first disclosed in writing to 

the Government the conflict of interest 

and, following such disclosure, the 

Parties agreed in writing to proceed 

notwithstanding such conflict. The 

Government shall ensure that no person 

or entity involved in the selection, 

award, administration, oversight or 

implementation of any contract, grant or 

other benefit or transaction funded in 

whole or in part (directly or indirectly) 

by MCC Funding shall solicit or accept 

from or offer to a third party or seek or 

be promised (directly or indirectly) for 

itself or for another person or entity any 

gift, gratuity, favor or benefit, other than 

items of de minimis value and 

otherwise consistent with such 

guidance as MCC may provide from 

time to time. 

(c) The Government shall not 

designate any person or entity, 

including any Government Affiliate, to 

implement, in whole or in part, this 

Compact or any Supplemental 

Agreement between the Parties 

(including any Government 

Responsibilities or any other 

responsibilities or obligations of the 

Government under this Compact or any 

Supplemental Agreement between the 

Parties) or to exercise any rights of the 

Government under this Compact or any 

Supplemental Agreement between the 

Parties, except as expressly provided 

herein or with the prior written consent 

of MCC; provided, however, the 

Government may designate MCAGeorgia or, with the prior written 

consent of MCC, such other mutually 

acceptable persons or entities, to 

implement some or all of the 

Government Responsibilities or any 

other responsibilities or obligations of 

the Government or to exercise any rights 

of the Government under this Compact 

or any Supplemental Agreement 

between the Parties (referred to herein 

collectively as ‘‘Designated Rights and 

Responsibilities’’), in accordance with 

the terms and conditions set forth in 

this Compact or such Supplemental 

Agreement (each, a ‘‘Permitted 

Designee’’). Notwithstanding any 

provision herein or any other agreement 

to the contrary, no such designation 

shall relieve the Government of such 

Designated Rights and Responsibilities, 

for which the Government shall retain 

ultimate responsibility. In the event that 

the Government designates any person 

or entity, including any Government 

Affiliate, to implement any portion of 

the Government Responsibilities or 

other responsibilities or obligations of 

the Government, or to exercise any 

rights of the Government under this 

Compact or any Supplemental 

Agreement between the Parties, in 

accordance with this Section 3.2(c), 

then the Government shall (i) cause 

such person or entity to perform such 

Designated Rights and Responsibilities 

in the same manner and to the full 

extent to which the Government is 

obligated to perform such Designated 

Rights and Responsibilities, (ii) ensure 

that such person or entity does not 

assign, delegate, or contract (or 

otherwise transfer) any of such 

Designated Rights and Responsibilities 

to any other person or entity and (iii) 

cause such person or entity to certify to 

MCC in writing that it will so perform 

such Designated Rights and 

Responsibilities and will not assign, 

delegate, or contract (or otherwise 

transfer) any of such Designated Rights 

and Responsibilities to any person or 

entity without the prior written consent 

of MCC. 

(d) The Government shall, upon a 

request from MCC, execute, or ensure 

the execution of, an assignment to MCC 

of any cause of action which may accrue 

to the benefit of the Government, a 

Government Affiliate or any Permitted 

Designee including MCA-Georgia in 

connection with or arising out of any 

activities funded in whole or in part 

(directly or indirectly) by MCC Funding. 

(e) The Government shall ensure that 

(i) no decision of MCA-Georgia is 

modified, supplemented, unduly 

influenced or rescinded by any 

governmental authority, except by a 

non-appealable judicial decision or any 

judicial decision which MCA-Georgia, 

with the agreement of MCC, decides not 

to appeal, and (ii) the authority of MCAGeorgia shall not be expanded, 

restricted, or otherwise modified, except 

in accordance with this Compact, the 

Governance Agreement, the Governing 

Documents or any other Supplemental 

Agreement of the Parties. 

(f) The Government shall ensure that 

all persons and individuals that enter 

into agreements to provide goods, 

services or works under the Program or 

in furtherance of this Compact shall do 

so in accordance with the Procurement 

Guidelines and shall obtain all 

necessary immigration, business and 

other permits, licenses, consents and 

approvals to enable them and their 

personnel to fully perform under such 

agreements. 

Section 3.3 Government Deliveries. 

The Government shall proceed, and 

cause others to proceed, in a timely 

manner to deliver to MCC all 

Government deliveries required to be 

delivered by the Government under this 

Compact or any Supplemental 

Agreement between the Parties, in form 

and substance as set forth in this 

Compact or in any such Supplemental 

Agreement. 

Section 3.4 Government Assurances. 

The Government hereby provides the 

following assurances to MCC that as of 

the date this Compact is signed: 

(a) The information contained in the 

Proposal and any agreement, report, 

statement, communication, document or 

otherwise delivered or otherwise 

communicated to MCC by or on behalf 

of the Government on or after the date 

of the submission of the Proposal (i) are 

true, correct and complete in all 

material respects and (ii) do not omit 

any fact known to the Government that 

if disclosed would (1) alter in any 

material respect the information 

delivered, (2) likely have a material 

adverse effect on the Government’s 

ability to effectively implement, or 

ensure the effective implementation of, 

the Program or any Project or to 

otherwise carry out its responsibilities 

or obligations under or in furtherance of 

this Compact, or (3) have likely 

adversely affected MCC’s determination 

to enter into this Compact or any 

58908 Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 

Supplemental Agreement between the 

Parties. 

(b) Unless otherwise disclosed in 

writing to MCC, the MCC Funding made 

available hereunder is in addition to the 

normal and expected resources that the 

Government usually receives or budgets 

for the activities contemplated herein 

from external or domestic sources. 

(c) This Compact does not conflict 

and will not conflict with any 

international agreement or obligation to 

which the Government is a party or by 

which it is bound. 

(d) No payments have been (i) 

received by any official of the 

Government or any other government 

body in connection with the 

procurement of goods, services or works 

to be undertaken or funded in whole or 

in part (directly or indirectly) by MCC 

Funding, except fees, taxes, or similar 

payments legally established in Georgia 

or (ii) made to any third party, in 

connection with or in furtherance of this 

Compact, in violation of the United 

States Foreign Corrupt Practices Act of 

1977, as amended (15 U.S.C. 78a et 

seq.). 

Section 3.5 Implementation Letters; 

Supplemental Agreements. 

(a) MCC may, from time to time, issue 

one or more letters to furnish additional 

information or guidance to assist the 

Government in the implementation of 

this Compact (each, an ‘‘Implementation 

Letter’’). The Government shall apply 

such guidance in implementing this 

Compact. 

(b) The details of any funding, 

implementing and other arrangements 

in furtherance of this Compact may be 

memorialized in one or more 

agreements between (i) the Government 

(or any Government Affiliate or 

Permitted Designee) and MCC, (ii) MCC 

and/or the Government (or any 

Government Affiliate or Permitted 

Designee) and any third party, including 

any of the Providers or Permitted 

Designee or (iii) any third parties where 

neither MCC nor the Government is a 

party, before, on or after the Entry into 

Force of this Compact (each, a 

‘‘Supplemental Agreement’’). The 

Government shall deliver, or cause to be 

delivered, to MCC within five (5) days 

of its execution a copy of any 

Supplemental Agreement to which MCC 

is not a party. 

Section 3.6 Procurement; Awards of 

Assistance. 

(a) The Government shall ensure that 

the procurement of all goods, services 

and works by the Government or any 

Provider in furtherance of this Compact 

shall be consistent with the 

procurement guidelines (the 

‘‘Procurement Guidelines’’) reflected in 

a Supplemental Agreement between the 

Parties (the ‘‘Procurement Agreement’’) 

which Procurement Guidelines shall 

include the following requirements: 

(i) Internationally accepted 

procurement rules with open, fair and 

competitive procedures are used in a 

transparent manner to solicit, award and 

administer contracts, grants, and other 

agreements and to procure goods, 

services and works; 

(ii) Solicitations for goods, services, 

and works shall be based upon a clear 

and accurate description of the goods, 

services or works to be acquired; 

(iii) Contracts shall be awarded only 

to qualified and capable contractors that 

have the capability and willingness to 

perform the contracts in accordance 

with the terms and conditions of the 

applicable contracts and on a cost 

effective and timely basis; and 

(iv) No more than a commercially 

reasonable price, as determined, for 

example, by a comparison of price 

quotations and market prices, shall be 

paid to procure goods, services, and 

works. 

(b) The Government shall maintain, 

and shall use its best efforts to ensure 

that all Providers maintain, records 

regarding the receipt and use of goods, 

services and works acquired in 

furtherance of this Compact, the nature 

and extent of solicitations of prospective 

suppliers of goods, services and works 

acquired in furtherance of this Compact, 

and the basis of award of contracts, 

grants and other agreements in 

furtherance of this Compact. 

(c) The Government shall use its best 

efforts to ensure that information, 

including solicitations, regarding 

procurement, grant and other agreement 

actions funded (or to be funded) in 

whole or in part (directly or indirectly) 

by MCC Funding shall be made publicly 

available in the manner outlined in the 

Procurement Guidelines or in any other 

manner agreed upon by the Parties in 

writing. 

(d) No goods, services or works may 

be funded in whole or in part (directly 

or indirectly) by MCC Funding which 

are procured pursuant to orders or 

contracts firmly placed or entered into 

prior to the Entry into Force, except as 

the Parties may otherwise agree in 

writing. 

(e) The Government shall ensure that 

MCA-Georgia and any other Permitted 

Designee follows, and uses its best 

efforts to ensure that all Providers 

follow, the Procurement Guidelines in 

procuring (including soliciting) goods, 

services and works and in awarding and 

administering contracts, grants and 

other agreements in furtherance of this 

Compact, and shall furnish MCC 

evidence of the adoption of the 

Procurement Guidelines by MCAGeorgia no later than the time specified 

in the Disbursement Agreement. 

(f) The Government shall include, or 

ensure the inclusion of, the 

requirements of this Section 3.6 into all 

Supplemental Agreements between the 

Government or any Government 

Affiliate or Permitted Designee or any of 

their respective directors, officers, 

employees, Affiliates, contractors, subcontractors, grantees, sub-grantees, 

representatives or agents, on the one 

hand, and a Provider, on the other hand. 

Section 3.7 Policy Performance; 

Policy Reforms. In addition to the 

specific policy and legal reform 

commitments identified in Annex I and 

the Schedules thereto, the Government 

shall seek to maintain and improve its 

level of performance under the policy 

criteria identified in Section 607 of the 

Millennium Challenge Act of 2003, as 

amended (the ‘‘Act’’), and the MCA 

selection criteria and methodology 

published by MCC pursuant to Section 

607 of the Act from time to time (‘‘MCA 

Eligibility Criteria’’). 

Section 3.8 Records and 

Information; Access; Audits; Reviews. 

(a) Reports and Information. The 

Government shall furnish to MCC, and 

shall use its best efforts to ensure that 

all Providers and any other third party 

receiving MCC Funding, as appropriate, 

furnish to the Government (and the 

Government shall provide to MCC), any 

records and other information required 

to be maintained under this Section 3.8 

and such other information, documents 

and reports as may be necessary or 

appropriate for the Government to 

effectively carry out its obligations 

under this Compact, including under 

Section 3.12. 

(b) Government Books and Records. 

The Government shall maintain, and 

shall use its best efforts to ensure that 

all Providers maintain, accounting 

books, records, documents and other 

evidence relating to this Compact 

adequate to show, to the satisfaction of 

MCC, without limitation, the use of all 

MCC Funding, including all costs 

incurred by the Government and the 

Providers in furtherance of this 

Compact, the receipt, acceptance and 

use of goods, services and works 

acquired in furtherance of this Compact 

by the Government and the Providers, 

agreed-upon cost sharing requirements, 

the nature and extent of solicitations of 

prospective suppliers of goods, services 

and works acquired by the Government 

and the Providers in furtherance of this 

Compact, the basis of award of 

Government and other contracts and 

orders in furtherance of this Compact, 

Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 58909 

the overall progress of the 

implementation of the Program, and any 

documents required by this Compact or 

any Supplemental Agreement between 

the Parties or reasonably requested by 

MCC upon reasonable notice (‘‘Compact 

Records’’). The Government shall 

maintain, and shall use its best efforts 

to ensure that all Covered Providers 

maintain, Compact Records in 

accordance with generally accepted 

accounting principles prevailing in the 

United States, or at the Government’s 

option and with the prior written 

approval by MCC, other accounting 

principles, such as those (i) prescribed 

by the International Accounting 

Standards Committee (an affiliate of the 

International Federation of 

Accountants) or (ii) then prevailing in 

Georgia. Compact Records shall be 

maintained for at least five (5) years 

after the end of the Compact Term or for 

such longer period, if any, required to 

resolve any litigation, claims or audit 

findings or any statutory requirements. 

(c) Access. The Government, at all 

reasonable times, shall permit, or cause 

to be permitted, authorized 

representatives of MCC, the Inspector 

General, the United States Government 

Accountability Office, any auditor 

responsible for an audit contemplated 

herein or otherwise conducted in 

furtherance of this Compact, and any 

agents or representatives engaged by 

MCC or a Permitted Designee to conduct 

any assessment, review or evaluation of 

the Program, at all reasonable times the 

opportunity to audit, review, evaluate or 

inspect activities funded in whole or in 

part (directly or indirectly) by MCC 

Funding or undertaken in connection 

with the Program, the utilization of 

goods and services purchased or funded 

in whole or in part (directly or 

indirectly) by MCC Funding, and 

Compact Records, including of the 

Government or any Provider, relating to 

activities funded or undertaken in 

furtherance of, or otherwise relating to, 

this Compact, and shall use its best 

efforts to ensure access by MCC, the 

Inspector General, the United States 

Government Accountability Office or 

relevant auditor, reviewer or evaluator 

or their respective representatives or 

agents to all relevant directors, officers, 

employees, Affiliates, contractors, 

representatives and agents of the 

Government or any Provider. 

(d) Audits. 

(i) Government Audits. The 

Government shall, on at least an annual 

basis and as the Parties may otherwise 

agree in writing, conduct, or cause to be 

conducted, financial audits of all MCC 

Disbursements and Re-Disbursements 

during the year since the Entry into 

Force or since the prior anniversary of 

the Entry into Force in accordance with 

the following terms, except as the 

Parties may otherwise agree in writing. 

As requested by MCC in writing, the 

Government shall use, or cause to be 

used, or select, or cause to be selected, 

an auditor named on the approved list 

of auditors in accordance with the 

Guidelines for Financial Audits 

Contracted by Foreign Recipients (the 

‘‘Audit Guidelines’’) issued by the 

Inspector General of the United States 

Agency for International Development 

(the ‘‘Inspector General’’), and as 

approved by MCC, to conduct such 

annual audits. Such audits shall be 

performed in accordance with such 

Guidelines and be subject to quality 

assurance oversight by the Inspector 

General in accordance with such 

Guidelines. An audit shall be completed 

no later than 90 days after the first 

anniversary of the Entry into Force of 

this Compact and no later than 90 days 

after each anniversary of the Entry into 

Force of this Compact thereafter, or such 

other period as the Parties may 

otherwise agree in writing. 

(ii) Audits of U.S. Entities. The 

Government shall ensure that 

Supplemental Agreements between the 

Government or any Provider, on the one 

hand, and a United States nonprofit 

organization, on the other hand, state 

that the United States organization is 

subject to the applicable audit 

requirements contained in OMB 

Circular A–133, notwithstanding any 

other provision of this Compact to the 

contrary. The Government shall ensure 

that Supplemental Agreements between 

the Government or any Provider, on the 

one hand, and a United States for-profit 

Covered Provider, on the other hand, 

state that the United States organization 

is subject to audit by the cognizant 

United States Government agency, 

unless the Government and MCC agree 

otherwise in writing. 

(iii) Audit Plan. The Government 

shall submit, or cause to be submitted, 

to MCC, no later than twenty (20) days 

prior to the date of its adoption, in form 

and substance satisfactory to MCC, a 

plan, in accordance with the Audit 

Guidelines, for the audit of the 

expenditures of any Covered Providers, 

which audit plan, in the form and 

substance as approved by MCA-Georgia, 

the Government shall adopt, or cause to 

be adopted, no later than sixty (60) days 

prior to the end of the first anniversary 

of the Entry into Force of this Compact 

or prior to the end of the first period to 

be audited. 

(iv) Covered Provider. A ‘‘Covered 

Provider’’ is (1) a non-United States 

Provider that receives (other than 

pursuant to a direct contract or 

agreement with MCC) USD $300,000 or 

more of MCC Funding in any MCAGeorgia fiscal year or any other nonUnited States person or entity that 

receives (directly or indirectly) USD 

$300,000 or more of MCC Funding from 

any Provider in such other party’s fiscal 

year or (2) any United States Provider 

that receives (other than pursuant to a 

direct contract or agreement with MCC) 

USD $500,000 or more of MCC Funding 

in any MCA-Georgia fiscal year or any 

other United States person or entity that 

receives(directly or indirectly) USD 

$500,000 or more of MCC Funding from 

any provider in any such fiscal year. 

(v) Corrective Actions. The 

Government shall use its best efforts to 

ensure that Covered Providers take, 

where necessary, appropriate and timely 

corrective actions in response to audits, 

consider whether a Covered Provider’s 

audit necessitates adjustment of its own 

records, and require each such Covered 

Provider to permit independent auditors 

to have access to its records and 

financial statements as necessary. 

(vi) Audit Reports. The Government 

shall furnish, or use its best efforts to 

cause to be furnished, to MCC an audit 

report in a form satisfactory to MCC for 

each audit required by this Section 3.8, 

other than audits arranged for by MCC, 

no later than 90 days after the end of the 

period under audit, or such other time 

as may be agreed by the Parties from 

time to time. 

(vii) Other Providers. For Providers 

who receive MCC Funding under this 

Compact pursuant to direct contracts or 

agreements with MCC, MCC shall 

include appropriate audit requirements 

in such contracts or agreements and 

shall, on behalf of the Government, 

unless otherwise agreed by the Parties, 

conduct the follow-up activities with 

regard to the audit reports furnished 

pursuant to such requirements. 

(viii) Audit by MCC. MCC retains the 

right to perform, or cause to be 

performed, the audits required under 

this Section 3.8 by utilizing MCC 

Funding or other resources available to 

MCC for this purpose, and to audit, 

conduct a financial review, or otherwise 

ensure accountability of any Provider or 

any other third party receiving MCC 

Funding, regardless of the requirements 

of this Section 3.8. 

(e) Application to Providers. The 

Government shall include, or ensure the 

inclusion of, at a minimum, the 

requirements of: 

(i) Paragraphs (a), (b), (c), (d)(ii), 

(d)(iii), (d)(v), (d)(vi), and (d)(viii) of this 

Section 3.8 into all Supplemental 

Agreements between the Government, 

any Government Affiliate, any Permitted 

58910 Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 

Designee or any of their respective 

directors, officers, employees, Affiliates, 

contractors, sub-contractors, grantees, 

sub-grantees, representatives or agents 

(each, a ‘‘Government Party’’), on the 

one hand, and a Covered Provider that 

is not a non-profit organization 

domiciled in the United States, on the 

other hand; 

(ii) Paragraphs (a), (b), (c), (d)(ii), and 

(d)(viii) of this Section 3.8 into all 

Supplemental Agreements between a 

Government Party and a Provider that 

does not meet the definition of a 

Covered Provider; and 

(iii) Paragraphs (a), (b), (c), (d)(ii), 

(d)(v) and (d)(viii) of this Section 3.8 

into all Supplemental Agreements 

between a Government Party and a 

Covered Provider that is a non-profit 

organization domiciled in the United 

States. 

(f) Reviews or Evaluations. The 

Government shall conduct, or cause to 

be conducted, such performance 

reviews, data quality reviews, 

environmental audits, or program 

evaluations during the Compact Term or 

otherwise and in accordance with the 

M&E Plan or as otherwise agreed in 

writing by the Parties. 

(g) Cost of Audits, Reviews or 

Evaluations. MCC Funding may be used 

to finance the costs of any Audits, 

reviews or evaluations required under 

this Compact, including as reflected on 

Exhibit A to Annex II, and in no event 

shall the Government be responsible for 

the costs of any such Audits, reviews or 

evaluations from financial sources other 

than MCC Funding. 

Section 3.9 Insurance. The 

Government shall, to MCC’s satisfaction, 

insure or cause to be insured all 

Program Assets and shall obtain or 

cause to be obtained such other 

appropriate insurance and other 

protections to cover against risks or 

liabilities associated with the operations 

of the Program, including by requiring 

Providers to obtain adequate insurance 

and post adequate performance bonds or 

other guarantees. MCA-Georgia shall be 

named as the insured party on any such 

insurance and the beneficiary of any 

such guarantee, including performance 

bonds. MCC shall be named as 

additional insured on any such 

insurance or other guarantee, to the 

extent permissible under applicable 

laws. The Government shall ensure that 

any proceeds from claims paid under 

such insurance or any other form of 

guarantee shall be used to replace or 

repair any loss of Program Assets or to 

pursue the procurement of the covered 

goods, services or works; provided, 

however, at MCC’s election, such 

proceeds shall be deposited in a 

Permitted Account as designated by 

MCA-Georgia and acceptable to MCC or 

otherwise as directed by MCC. To the 

extent MCA-Georgia is held liable under 

any indemnification or other similar 

provision of any agreement between 

MCA-Georgia, on the one hand, and any 

other Provider or other third party, on 

the other hand, the Government shall 

pay in full on behalf of MCA-Georgia 

any such obligation; provided, further, 

the Government shall apply national 

funds to satisfy its obligations under 

this Section 3.9 and no MCC Funding, 

Accrued Interest, or Program Asset may 

be applied by the Government in 

satisfaction of its obligations under this 

Section 3.9. 

Section 3.10 Domestic 

Requirements. The Government shall 

proceed in a timely manner to seek any 

required ratification of this Compact or 

similar domestic requirement, which 

process the Government shall initiate 

promptly after the conclusion of this 

Compact. Notwithstanding anything to 

the contrary in this Compact, this 

Section 3.10 shall provisionally apply 

prior to the Entry into Force. 

Section 3.11 No Conflict. The 

Government shall undertake not to enter 

into any agreement in conflict with this 

Compact or any Supplemental 

Agreement during the Compact Term. 

Section 3.12 Reports. The 

Government shall provide, or cause to 

be provided, to MCC at least on each 

anniversary of the Entry Into Force and 

otherwise within thirty (30) days of any 

written request by MCC, or as otherwise 

agreed in writing by the Parties, the 

following information: 

(a) The name of each entity to which 

MCC Funding has been provided; 

(b) The amount of MCC Funding 

provided to such entity; 

(c) A description of the Program and 

each Project funded in furtherance of 

this Compact, including: 

(i) A statement of whether the 

Program or any Project was solicited or 

unsolicited; and 

(ii) A detailed description of the 

objectives and measures for results of 

the Program or Project; 

(d) The progress made by Georgia 

toward achieving the Compact Goal and 

Objectives; 

(e) A description of the extent to 

which MCC Funding has been effective 

in helping Georgia to achieve the 

Compact Goal and Objectives; 

(f) A description of the coordination 

of MCC Funding with other United 

States foreign assistance and other 

related trade policies; 

(g) A description of the coordination 

of MCC Funding with assistance 

provided by other donor countries; 

(h) Any report, document or filing 

that the Government, any Government 

Affiliate or any Permitted Designee 

submits to any government body in 

connection with this Compact; 

(i) Any report or document required 

to be delivered to MCC under the 

Environmental Guidelines, any audit 

plan, or any component of the 

Implementation Plan; and 

(j) Any other report, document or 

information requested by MCC or 

required by this Compact or any 

Supplemental Agreement between the 

Parties. 

Article IV. Conditions Precedent; 

Deliveries 

Section 4.1 Conditions Prior to the 

Entry into Force and Deliveries. As 

conditions precedent to the Entry into 

Force, the Parties shall satisfy the 

conditions set forth in this Section 4.1. 

(a) The Government (or a mutually 

acceptable Government Affiliate) and 

MCC shall execute a Disbursement 

Agreement, which agreement shall be in 

full force and effect as of the Entry into 

Force. 

(b) The Government (or a mutually 

acceptable Government Affiliate) and 

MCC shall execute one or more term 

sheets that set forth the material and 

principal terms and conditions of each 

of the Supplemental Agreements 

identified in Exhibit B attached hereto 

(the ‘‘Supplemental Agreement Term 

Sheets’’). 

(c) The Government (or mutually 

acceptable Government Affiliate) and 

MCC shall execute a Procurement 

Agreement, which agreement shall be in 

full force and effect as of the Entry into 

Force. 

(d) The Government shall deliver a 

written statement as to the incumbency 

and specimen signature of the Principal 

Representative and each Additional 

Representative executing any document 

under this Compact, such written 

statement to be signed by a duly 

authorized official of the Government 

other than the Principal Representative 

or any such Additional Representative. 

(e) The Government shall deliver a 

letter signed and dated by the Principal 

Representative of the Government 

certifying: 

(i) That the Government has 

completed all of its domestic 

requirements for this Compact to be 

fully enforceable under Georgian law; 

and 

(ii) That attached thereto are true, 

correct and complete copies of any 

decree, legislation, regulation or other 

governmental document relating to its 

domestic requirements for this Compact 

to enter into force, which MCC may post 

Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 58911 

on its website or otherwise make 

publicly available. 

(f) The Government shall have 

amended the Charter of MCA-Georgia to 

the satisfaction of MCC to provide for, 

among other things, waiver of control by 

the state controlling body over the 

operations and management of MCAGeorgia. 

(g) MCC shall deliver a letter signed 

and dated by the Principal 

Representative of MCC certifying that 

MCC has completed its domestic 

requirements for this Compact to enter 

into force. 

(h) MCC shall deliver a written 

statement as to the incumbency and 

specimen signature of the Principal 

Representative and each Additional 

Representative executing any document 

under this Compact such written 

statement to be signed by a duly 

authorized officer of MCC other than the 

Principal Representative or any such 

Additional Representative. 

Section 4.2 Conditions Precedent to 

MCC Disbursements or ReDisbursements. Prior to, and as 

condition precedent to, any MCC 

Disbursement or Re-Disbursement, the 

Government shall satisfy, or ensure the 

satisfaction of, all applicable conditions 

precedent in the Disbursement 

Agreement. 

Article V. Final Clauses 

Section 5.1 Communications. Unless 

otherwise expressly stated in this 

Compact or otherwise agreed in writing 

by the Parties, any notice, certificate, 

request, report, document or other 

communication required, permitted, or 

submitted by either Party to the other 

under this Compact shall be: (a) in 

writing; (b) in English; and (c) deemed 

duly given: (i) upon personal delivery to 

the Party to be notified; (ii) when sent 

by confirmed facsimile or electronic 

mail, if sent during normal business 

hours of the recipient Party, if not, then 

on the next business day; or (iii) two (2) 

business days after deposit with an 

internationally recognized overnight 

courier, specifying next day delivery, 

with written verification of receipt to 

the Party to be notified at the address 

indicated below, or at such other 

address as such Party may designate: 

To MCC: 

Millennium Challenge Corporation, 

Attention: Vice President for Country 

Programs (with a copy to the Vice 

President and General Counsel), 875 

Fifteenth Street, NW., Washington, DC 

20005, United States of America, 

Facsimile: (202) 521–3700, Email: 

VPCountryPrograms@mcc.gov (Vice 

President for Country Programs); 

VPGeneralCounsel@mcc.gov (Vice 

President and General Counsel) 

To the Government: 

Office of the Prime Minister, 

Attention: Prime Minister, 7 Pavle 

Ingorokva Str., Tbilisi, 0134 Tbilisi 

Georgia, Tel: (995–32) 92–22–43, Fax: 

(995–32) 92–10–69 

With a copy to: 

Chief Executive Officer, Millennium 

Challenge Georgia Fund, 4 Sanapiro 

St.,Tbilisi, 0105 Georgia, Tel: (995–32) 

93–91–12; 93–91–13; 93–91–33, Fax: 

(995–32) 93–91–44, Email: 

lashanidze@mcg.ge. 

Notwithstanding the foregoing, any 

audit report delivered pursuant to 

Section 3.8, if delivered by facsimile or 

electronic mail, shall be followed by an 

original in overnight express mail. This 

Section 5.1 shall not apply to the 

exchange of letters contemplated in 

Section 1.3 or any amendments under 

Section 5.3. 

Section 5.2 Representatives. Unless 

otherwise agreed in writing by the 

Parties, for all purposes relevant to this 

Compact, the Government shall be 

represented by the individual holding 

the position of, or acting as, Prime 

Minister of Georgia, and MCC shall be 

represented by the individual holding 

the position of, or acting as, Vice 

President for Country Programs (each, a 

‘‘Principal Representative’’), each of 

whom, by written notice, may designate 

one or more additional representatives 

(each, an ‘‘Additional Representative’’) 

for all purposes other than signing 

amendments to this Compact. The 

names of the Principal Representative 

and any Additional Representative of 

each of the Parties shall be provided, 

with specimen signatures, to the other 

Party, and the Parties may accept as 

duly authorized any instrument signed 

by such representatives relating to the 

implementation of this Compact, until 

receipt of written notice of revocation of 

their authority. A Party may change its 

Principal Representative to a new 

representative of equivalent or higher 

rank upon written notice to the other 

Party, which notice shall include the 

specimen signature of the new Principal 

Representative. 

Section 5.3 Amendments. The 

Parties may amend this Compact only 

by a written agreement signed by the 

Principal Representatives of the Parties 

and subject to the domestic approval 

requirements to which this Compact 

was subject. 

Section 5.4 Termination; 

Suspension. 

(a) Subject to Section 2.5 and 

paragraphs (e) through (h) of this 

Section 5.4, either Party may terminate 

this Compact in its entirety by giving 

the other Party thirty (30) days’ written 

notice. 

(b) Notwithstanding any other 

provision of this Compact, including 

Section 2.1, or any Supplemental 

Agreement between the Parties, MCC 

may suspend or terminate this Compact 

or MCC Funding, in whole or in part, 

and any obligation or sub-obligation 

related thereto, upon giving the 

Government written notice, if MCC 

determines, in its sole discretion that: 

(i) Any use or proposed use of MCC 

Funding or Program Assets or continued 

implementation of the Compact would 

be in violation of applicable law or U.S. 

Government policy, whether now or 

hereafter in effect; 

(ii) The Government, any Provider, or 

any other third party receiving MCC 

Funding or using Program Assets is 

engaged in activities that are contrary to 

the national security interests of the 

United States; 

(iii) The Government or any Permitted 

Designee has committed an act or 

omission or an event has occurred that 

would render Georgia ineligible to 

receive United States economic 

assistance under Part I of the Foreign 

Assistance Act of 1961, as amended (22 

U.S.C 2151 et seq.), by reason of the 

application of any provision of the 

Foreign Assistance Act of 1961 or any 

other provision of law; 

(iv) The Government or any Permitted 

Designee has engaged in a pattern of 

actions or omissions inconsistent with 

the MCA Eligibility Criteria, or there has 

occurred a significant decline in the 

performance of Georgia on one or more 

of the eligibility indicators contained 

therein; 

(v) The Government or any Provider 

has materially breached one or more of 

its assurances or any covenants, 

obligations or responsibilities under this 

Compact or any Supplemental 

Agreement; 

(vi) An audit, review, report or any 

other document or other evidence 

reveals that actual expenditures for the 

Program or any Project or any Project 

Activity were greater than the projected 

expenditure for such activities 

identified in the applicable Detailed 

Financial Plan or are projected to be 

greater than projected expenditures for 

such activities; 

(vii) If the Government (1) materially 

reduces the allocation in its national 

budget or any other Government budget 

of the normal and expected resources 

that the Government would have 

otherwise received or budgeted, from 

external or domestic sources, for the 

activities contemplated herein; (2) fails 

to contribute or provide the amount, 

level, type and quality of resources 

58912 Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 

required to effectively carry out the 

Government Responsibilities or any 

other responsibilities or obligations of 

the Government under or in furtherance 

of this Compact; or (3) fails to pay any 

of its obligations as required under this 

Compact or any Supplemental 

Agreement, including such obligations 

which shall be paid solely out of 

national funds; (viii)If the Government, 

any Provider, or any other third party 

receiving MCC Funding or using 

Program Assets, or any of their 

respective directors, officers, employees, 

Affiliates, contractors, sub-contractors, 

grantees, sub-grantees, representatives 

or agents, is found to have been 

convicted of a narcotics offense or to 

have been engaged in drug trafficking; 

(ix) Any MCC Funding or Program 

Assets are applied (directly or 

indirectly) to the provision of resources 

and support to, individuals and 

organizations associated with terrorism, 

sex trafficking or prostitution; 

(x) An event or condition of any 

character has occurred that: (1) 

Materially and adversely affects, or is 

likely to materially and adversely affect, 

the ability of the Government or any 

other party to effectively implement, or 

ensure the effective implementation of, 

the Program or any Project or to 

otherwise carry out its responsibilities 

or obligations under or in furtherance of 

this Compact or any Supplemental 

Agreement or to perform its obligations 

under or in furtherance of this Compact 

or any Supplemental Agreement or to 

exercise its rights thereunder; (2) makes 

it improbable that the Objectives will be 

achieved during the Compact Term; (3) 

materially and adversely affects the 

Program Assets or any Permitted 

Account; or (4) constitutes misconduct 

injurious to MCC, or constitutes a fraud 

or a felony, by the Government, any 

Government Affiliate, Permitted 

Designee or Provider, or any officer, 

director, employee, agent, 

representative, Affiliate, contractor, 

grantee, subcontractor or sub-grantee 

thereof; 

(xi) The Government or any Permitted 

Designee or Provider has taken any 

action or omission or engaged in any 

activity in violation of, or inconsistent 

with, the requirements of this Compact 

or any Supplemental Agreement to 

which the Government or any Permitted 

Designee or Provider is a party; 

(xii) There has occurred a failure to 

meet a condition precedent or series of 

conditions precedent or any other 

requirements or conditions in 

connection with MCC Disbursement as 

set out in and in accordance with any 

Supplemental Agreement between the 

Parties; or (xiii) Any MCC Funding, 

Accrued Interest or Program Asset 

becomes subject to a Lien without the 

prior approval of MCC, and the 

Government fails to (i) obtain the release 

of such Lien and (ii) pay solely with 

national funds (and not with MCC 

Funding, Accrued Interest or Program 

Assets) any amounts owed to obtain 

such release, all within 30 days after the 

imposition of such Lien. 

(c) MCC may reinstate any suspended 

or terminated MCC Funding under this 

Compact or any Supplemental 

Agreement if MCC determines, in its 

sole discretion, that the Government or 

other relevant party has demonstrated a 

commitment to correcting each 

condition for which MCC Funding was 

suspended or terminated. 

(d) The authority to suspend or 

terminate this Compact or any MCC 

Funding under this Section 5.4 includes 

the authority to suspend or terminate 

any obligations or sub-obligations 

relating to MCC Funding under any 

Supplemental Agreement without any 

liability to MCC whatsoever. 

(e) All MCC Funding shall terminate 

upon expiration or termination of the 

Compact Term; provided, however, 

reasonable expenditures for goods, 

services and works that are properly 

incurred under or in furtherance of this 

Compact before expiration or 

termination of the Compact Term may 

be paid from MCC Funding, provided 

that the request for such payment is 

properly submitted within sixty (60) 

days after such expiration or 

termination. 

(f) Except for payments which the 

Parties are committed to make under 

noncancelable commitments entered 

into with third parties before such 

suspension or termination, the 

suspension or termination of this 

Compact or any Supplemental 

Agreement, in whole or in part, shall 

suspend, for the period of the 

suspension, or terminate, or ensure the 

suspension or termination of, as 

applicable, any obligation or subobligation of the Parties to provide 

financial or other resources under this 

Compact or any Supplemental 

Agreement, or to the suspended or 

terminated portion of this Compact or 

such Supplemental Agreement, as 

applicable. In the event of such 

suspension or termination, the 

Government shall use its best efforts to 

suspend or terminate, or ensure the 

suspension or termination of, as 

applicable, all such noncancelable 

commitments related to the suspended 

or terminated MCC Funding. Any 

portion of this Compact or any such 

Supplemental Agreement that is not 

suspended or terminated shall remain in 

full force and effect. 

(g) Upon the full or partial suspension 

or termination of this Compact or any 

MCC Funding, MCC may, at its expense, 

direct that title to Program Assets be 

transferred to MCC if such Program 

Assets are in a deliverable state; 

provided, for any Program Asset(s) 

partially purchased or funded (directly 

or indirectly) by MCC Funding, the 

Government shall reimburse to a U.S. 

Government account designated by 

MCC the cash equivalent of the portion 

of the value of such Program Asset(s). 

(h) Prior to the expiration of this 

Compact or upon the termination of this 

Compact, the Parties shall consult in 

good faith with a view to reaching an 

agreement in writing on (i) the postCompact Term treatment of MCAGeorgia, (ii) the process for ensuring the 

refunds of MCC Disbursements that 

have not yet been released from a 

Permitted Account through a valid ReDisbursement nor otherwise committed 

in accordance with Section 5.4(e), or 

(iii) any other matter related to the 

winding up of the Program and this 

Compact. 

Section 5.5 Privileges and 

Immunities. MCC is an agency of the 

Government of the United States of 

America and its personnel assigned to 

Georgia will be notified pursuant to the 

Vienna Convention on Diplomatic 

Relations as members of the mission of 

the Embassy of the United States of 

America. The Government shall ensure 

that any personnel of MCC, including 

individuals detailed to or contracted by 

MCC, and the members of the families 

of such personnel, while such personnel 

are performing duties in Georgia, shall 

enjoy the privileges and immunities that 

are enjoyed by a member of the United 

States Foreign Service, or the family of 

a member of the United States Foreign 

Service, as appropriate, of comparable 

rank and salary of such personnel, if 

such personnel or the members of the 

families of such personnel are not a 

national of, or permanently resident in 

Georgia. 

Section 5.6 Attachments. Any 

annex, schedule, exhibit, table, 

appendix or other attachment expressly 

attached hereto (collectively, the 

‘‘Attachments’’) is incorporated herein 

by reference and shall constitute an 

integral part of this Compact. 

Section 5.7 Inconsistencies. 

(a) Conflicts or inconsistencies 

between any parts of this Compact shall 

be resolved by applying the following 

descending order of precedence: 

(i) Articles I through V; and 

(ii) Any Attachments. 

Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 58913 

(b) In the event of any conflict or 

inconsistency between this Compact 

and any Supplemental Agreement 

between the Parties, the terms of this 

Compact shall prevail. In the event of 

any conflict or inconsistency between 

any Supplemental Agreement between 

the Parties and any other Supplemental 

Agreement, the terms of the 

Supplemental Agreement between the 

Parties shall prevail. In the event of any 

conflict or inconsistency between 

Supplemental Agreements between any 

parties, the terms of a more recently 

executed Supplemental Agreement 

between such parties shall take 

precedence over a previously executed 

Supplemental Agreement between such 

parties. In the event of any 

inconsistency between a Supplemental 

Agreement between the Parties and any 

component of the Implementation Plan, 

the terms of the relevant Supplemental 

Agreement shall prevail. 

Section 5.8 Indemnification. The 

Government shall indemnify and hold 

MCC and any MCC officer, director, 

employee, Affiliate, contractor, agent or 

representative (each of MCC and any 

such persons, an ‘‘MCC Indemnified 

Party’’) harmless from and against, and 

shall compensate, reimburse and pay 

such MCC Indemnified Party for, any 

liability or other damages which (i) are 

(directly or indirectly) suffered or 

incurred by such MCC Indemnified 

Party, or to which any MCC Indemnified 

Party may otherwise become subject, 

regardless of whether or not such 

damages relate to any third-party claim, 

and (ii) arise from or as a result of the 

negligence or willful misconduct of the 

Government, any Government Affiliate, 

or any Permitted Designee, (directly or 

indirectly) connected with, any 

activities (including acts or omissions) 

undertaken in furtherance of this 

Compact; provided, however, the 

Government shall apply national funds 

to satisfy its obligations under this 

Section 5.8 and no MCC Funding, 

Accrued Interest, or Program Asset may 

be applied by the Government in 

satisfaction of its obligations under this 

Section 5.8. 

Section 5.9 Headings. The Section 

and Subsection headings used in this 

Compact are included for convenience 

only and are not to be considered in 

construing or interpreting this Compact. 

Section 5.10 Interpretation; 

Definitions. 

(a) Any reference to the term 

‘‘including’’ in this Compact shall be 

deemed to mean ‘‘including without 

limitation’’ except as expressly provided 

otherwise. 

(b) Any reference to activities 

undertaken ‘‘in furtherance of this 

Compact’’ or similar language shall 

include activities undertaken by the 

Government, any Government Affiliate 

or Permitted Designee, any Provider or 

any other third party receiving MCC 

Funding involved in carrying out the 

purposes of this Compact or any 

Supplemental Agreement, including 

their respective directors, officers, 

employees, Affiliates, contractors, subcontractors, grantees, sub-grantees, 

representatives or agents, whether 

pursuant to the terms of this Compact, 

any Supplemental Agreement or 

otherwise. 

(c) References to ‘‘day’’ or ‘‘days’’

shall be calendar days unless provided 

otherwise. 

(d) The term ‘‘U.S. Government’’

shall, for the purposes of this Compact, 

mean any branch, agency, bureau, 

government corporation, government 

chartered entity or other body of the 

Federal government of the United 

States. 

(e) The term ‘‘Affiliate’’ of a party is 

a person or entity that controls, is 

controlled by, or is under the same 

control as the party in question, whether 

by ownership or by voting, financial or 

other power or means of influence. 

(f) The term ‘‘Government Affiliate’’ is 

an Affiliate, ministry, bureau, 

department, agency, government 

corporation or any other entity 

chartered or established by the 

Government. 

(g) References to any Affiliate or 

Government Affiliate herein shall 

include any of their respective directors, 

officers, employees, affiliates, 

contractors, sub-contractors, grantees, 

sub-grantees, representatives, and 

agents. 

(h) Any references to ‘‘Supplemental 

Agreement between the Parties’’ shall 

mean any agreement between MCC on 

the one hand, and the Government or 

any Government Affiliate or Permitted 

Designee on the other hand. 

Section 5.11 Signatures. Other than 

a signature to this Compact or an 

amendment to this Compact pursuant to 

Section 5.3, a signature delivered by 

facsimile or electronic mail in 

accordance with Section 5.1 shall be 

deemed an original signature, and the 

Parties hereby waive any objection to 

such signature or to the validity of the 

underlying document, certificate, 

notice, instrument or agreement on the 

basis of the signature’s legal effect, 

validity or enforceability solely because 

it is in facsimile or electronic form. 

Such signature shall be accepted by the 

receiving Party as an original signature 

and shall be binding on the Party 

delivering such signature. 

Section 5.12 Designation. MCC may 

designate any Affiliate, agent, or 

representative to implement, in whole 

or in part, its obligations, and exercise 

any of its rights, under this Compact or 

any Supplemental Agreement between 

the Parties. 

Section 5.13 Survival. Any 

Government Responsibilities, 

covenants, or obligations or other 

responsibilities to be performed by the 

Government after the Compact Term 

shall survive the termination or 

expiration of this Compact and expire in 

accordance with their respective terms. 

Notwithstanding the termination or 

expiration of this Compact, the 

following provisions shall remain in 

force: Sections 2.2, 2.3, 2.5, 3.2, 3.3, 3.4, 

3.5, 3.8, 3.9 (for one year), 3.12, 5.1, 5.2, 

5.4(d), 5.4(e) (for sixty days), 5.4(f), 

5.4(g), 5.4(h), 5.5, 5.6, 5.7, 5.8, 5.9, 5.10, 

5.11, 5.12, this Section 5.13, 5.14, and 

5.15. 

Section 5.14 Consultation. Either 

Party may, at any time, request 

consultations relating to the 

interpretation or implementation of this 

Compact or any Supplemental 

Agreement between the Parties. Such 

consultations shall begin at the earliest 

possible date. The request for 

consultations shall designate a 

representative for the requesting Party 

with the authority to enter consultations 

and the other Party shall endeavor to 

designate a representative of equal or 

comparable rank. If such representatives 

are unable to resolve the matter within 

20 days from the commencement of the 

consultations then each Party shall 

forward the consultation to the 

Principal Representative or such other 

representative of comparable or higher 

rank. The consultations shall last no 

longer than 45 days from date of 

commencement. If the matter is not 

resolved within such time period, either 

Party may terminate this Compact 

pursuant to Section 5.4(a). The Parties 

shall enter any such consultations 

guided by the principle of achieving the 

Compact Goal in a timely and costeffective manner. 

Section 5.15 MCC Status. MCC is a 

United States government corporation 

acting on behalf of the United States 

Government in the implementation of 

this Compact. As such, MCC has no 

liability under this Compact, is immune 

from any action or proceeding arising 

under or relating to this Compact and 

the Government hereby waives and 

releases all claims related to any such 

liability. In matters arising under or 

relating to this Compact, MCC is not 

subject to the jurisdiction of the courts 

or other body of Georgia. 

58914 Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 

Section 5.16 Language. This 

Compact is prepared in English and in 

the event of any ambiguity or conflict 

between this official English version 

and any other version translated into 

any language for the convenience of the 

Parties, this official English version 

shall prevail. 

Section 5.17 Publicity; Information 

and Marking. The Government shall 

give appropriate publicity to this 

Compact as a program to which the 

United States, through MCC, has 

contributed, including by posting this 

Compact, and any amendments thereto, 

on the MCA-Georgia Website, 

identifying Program activity sites, and 

marking Program Assets; provided, any 

announcement, press release or 

statement regarding MCC or the fact that 

MCC is funding the Program or any 

other publicity materials referencing 

MCC, including the publicity described 

in this Section 5.17, shall be subject to 

prior approval by MCC and shall be 

consistent with any instructions 

provided by MCC from time to time in 

relevant Implementation Letters. Upon 

the termination or expiration of this 

Compact, MCC may request the removal 

of, and the Government shall, upon 

such request, remove, or cause the 

removal of, any such markings and any 

references to MCC in any publicity 

materials or on the MCA-Georgia 

Website. 

In Witness Whereof, the undersigned, 

duly authorized by their respective 

governments, have signed this Compact 

this 12th day of September, 2005 and 

this Compact shall enter into force in 

accordance with Section 1.3. 

Done at New York, NY in the English 

language. 

For the United States of America, 

acting through the Millennium 

Challenge Corporation, Name: Charles 

O. Sethness, Title: Vice President. 

For the Government of Georgia, Name: 

Salome Zourabichvili, Title: Minister of 

Foreign Affairs of Georgia. 

Exhibit A—Compendium of Defined 

Terms 

The following compendium of 

capitalized terms that are used herein is 

provided for the convenience of the 

reader. To the extent that there is a 

conflict or inconsistency between the 

definitions in this Exhibit A and the 

definitions elsewhere in the text of this 

Compact, the definition elsewhere in 

this Compact shall prevail over the 

definition in this Exhibit A. 

Accrued Interest is any interest or 

other earnings on MCC Funding that 

accrues or are earned. 

Act means the Millennium Challenge 

Act of 2003, as amended. 

ADA means the Agribusiness 

Development Activity, a Project Activity 

under the Enterprise Development 

Project described in Section 2(b) of 

Schedule 2 of Annex I. 

ADA Manager means the manager 

who will be selected to set up and 

manage the Agribusiness Development 

Activity. 

Additional Representative is a 

representative as may be designated by 

a Principal Representative, by written 

notice, for all purposes other than 

signing amendments to this Compact. 

Affiliate means the affiliate of a party, 

which is a person or entity that controls, 

is controlled by, or is under the same 

control as the party in question, whether 

by ownership or by voting, financial or 

other power or means of influence. 

References to Affiliate herein shall 

include any of their respective directors, 

officers, employees, affiliates, 

contractors, sub-contractors, grantees, 

sub-grantees, representatives, and 

agents. 

Agreed Standards shall have the 

meaning set forth in Section 

6(a)(ii)(4)(A) of Schedule 1 of Annex I. 

Attachments are any annex, schedule, 

exhibit, table, appendix or other 

attachment expressly attached to this 

Compact. 

Audit Guidelines means the 

‘‘Guidelines for Financial Audits 

Contracted by Foreign Recipients’’

issued by the Inspector General of the 

United States Agency for International 

Development. 

Auditor means the auditor(s) as 

defined in, and engaged pursuant to, 

Section 3(h) of Annex I and as required 

by Section 3.8(d) of the Compact. 

Auditor/Reviewer Agreement is an 

agreement between MCA-Georgia and 

each Auditor or Reviewer, in form and 

substance satisfactory to MCC, that sets 

forth the roles and responsibilities of the 

Auditor or Reviewer with respect to the 

audit, review or evaluation, including 

access rights, required form and content 

of the applicable audit, review or 

evaluation and other appropriate terms 

and conditions such as payment of the 

Auditor or Reviewer. 

Bank(s) means each individually and 

collectively, any bank holding an 

account referenced in Section 4(d) of 

Annex I. 

Bank Agreement means an agreement 

between MCA-Georgia and a Bank, 

satisfactory to MCC, that sets forth the 

signatory authority, access rights, antimoney laundering and anti-terrorist 

financing provisions, and other terms 

related to the Permitted Account. 

Beneficiaries means the intended 

beneficiaries identified in accordance 

with Annex I. 

Chair means the Chair of the 

Supervisory Board. 

Chief Executive Officer means the 

Chief Executive Officer of MCA–

Georgia. 

Civil Observer is a representative of 

civil society nominated by the 

Stakeholders’ Committee (as described 

in Section 3(d)(ii)(2)(B)(ii) of Annex I) to 

serve as a non-voting Observer on the 

Supervisory Board. 

Compact means the Millennium 

Challenge Compact made between the 

United States of America, acting 

through the Millennium Challenge 

Corporation, and the Government of the 

Republic of Georgia. 

Compact Goal means advancing 

economic growth and poverty reduction 

in Georgia. 

Compact Records shall have the 

meaning set forth in Section 3.8(b). 

Compact Reports are any documents 

or reports delivered to MCC in 

satisfaction of the Government’s 

reporting requirements under this 

Compact or any Supplemental 

Agreement between the Parties. 

Compact Term means the term for 

which this Compact shall remain in 

force, which shall be the five (5) year 

period from the Entry into Force, unless 

earlier terminated in accordance with 

Section 5.4. 

Covered Provider shall have the 

meaning set forth in Section 3.8(d)(iv). 

Designated Rights and 

Responsibilities shall have the meaning 

set forth in Section 3.2(c). 

Detailed Financial Plan means the 

financial plans that detail the annual 

and quarterly budget and projected cash 

requirements for the Program (including 

administrative costs) and each Project, 

projected both on a commitment and 

cash requirement basis. 

Disbursement Agreement is a 

Supplemental Agreement that MCC, the 

Government (or a mutually acceptable 

Government Affiliate and MCA–Georgia 

shall enter into that (i) further specifies 

the terms and conditions of any MCC 

Disbursements and Re-Disbursements, 

(ii) is in a form and substance mutually 

satisfactory to the Parties, and (iii) is 

signed by the Principal Representative 

of each Party (or in the case of the 

Government, the principal 

representative of the applicable 

Government Affiliate) and of MCA–

Georgia. 

EBRD means European Bank for 

Reconstruction and Development. 

Eligible Governmental Entity means 

each regional government, local 

government, local self-government, 

municipal utility or the central 

government (to the extent that it owns 

or operates assets in the Regions) that 

Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 58915 

will receive RID Grants under a subactivity of the Regional Infrastructure 

Development Activity as described in 

Section 2(c)(i) of Schedule 2 of Annex 

I. 

Energy Advisorsmeans the firm(s) that 

will be engaged to support the Ministry 

of Energy under a sub-activity of the 

Energy Rehabilitation Activity described 

in Section 2(b) of Schedule 1of Annex 

I. 

Energy Rehabilitation Activity is the 

Project Activity related to energy 

rehabilitation described in Section 2(b) 

of Schedule 1 of Annex I. 

Enterprise Development Project is the 

project described in Schedule 2 of 

Annex I, that the Parties intend to 

implement in furtherance of the 

Enterprises in Regions Developed 

Objective. 

Enterprises in Regions Developed 

Objective is the Project Objective of the 

Enterprise Development Project. 

Entry into Force means the entry into 

force of this Compact, which shall be on 

the date of the last letter in an exchange 

of letters between the Principal 

Representatives of each Party 

confirming that all conditions set forth 

in Section 4.1 have been satisfied by the 

Government and MCC. 

Environmental Guidelines means the 

environmental guidelines delivered by 

MCC to the Government or posted by 

MCC on its website or otherwise 

publicly made available, as such 

guidelines may be amended from time 

to time. 

ESI Manager means the 

environmental and social impact 

manager described in Section 5 of 

Schedule 1 of Annex 1. 

Evaluation Component means the 

component of the M&E Plan that 

specifies a methodology, process and 

timeline for the evaluation of planned, 

ongoing, or completed Project Activities 

to determine their efficiency, 

effectiveness, impact and sustainability. 

Exempt Uses shall have the meaning 

set forth in Section 2.3(e)(ii). 

Final Evaluation shall have the 

meaning set forth in Section 3(a) of 

Annex III. 

Final Fund Documents shall have the 

meaning set forth in Section 2(a)(i) of 

Schedule 2 of Annex I. 

Financial Plan means collectively, the 

Multi-Year Financial Plan and each 

Detailed Financial Plan, each 

amendment, supplement or other 

change thereto. 

Financial Plan Annex means Annex II 

of this Compact, which summarizes the 

Multi-Year Financial Plan for the 

Program. 

Fiscal Accountability Plan shall have 

the meaning set forth in Section 4(c) of 

Annex I. 

Fiscal Agent shall have the mean set 

forth in Section 3(g) of Annex I. 

Fiscal Agent Agreement is an 

agreement between MCA-Georgia and 

each Fiscal Agent, in form and 

substance satisfactory to MCC, that sets 

forth the roles and responsibilities of the 

Fiscal Agent and other appropriate 

terms and conditions, such as payment 

of the Fiscal Agent. 

GEL means Georgian Lari. 

Georgia Regional Development Fund 

is an independently managed 

investment fund that will be created 

under the Investment Fund Activity of 

the Enterprise Development Project. 

GGIC means Georgia Gas International 

Corporation. 

Governance Regulations means the 

governance regulations promulgated in 

furtherance of the Compact and 

applicable law, which shall be in a form 

and substance satisfactory to MCC and 

which specify how MCA-Georgia shall 

be organized and what its roles and 

responsibilities are. 

Government means the Government of 

Georgia. 

Government Affiliate is an Affiliate, 

ministry, bureau, department, agency, 

government, corporation or any other 

entity chartered or established by the 

Government. References to Government 

Affiliate shall include any of their 

respective directors, officers, employees, 

affiliates, contractors, sub-contractors, 

grantees, sub-grantees, representatives, 

and agents. 

Government Board Members are the 

government members identified in 

Section 3(d)(ii)(2)(A)(i–ii) of Annex I 

serving as voting members on the 

Supervisory Board, and any 

replacements thereof in accordance with 

Section 3(d)(ii)(2)(A) of Annex I. 

Government Party means the 

Government, any Government Affiliate, 

any Permitted Designee or any of their 

respective directors, officers, employees, 

Affiliates, contractors, sub-contractors, 

grantees, sub-grantees, representatives 

or agents. 

Government Responsibilities shall 

have the meaning set forth in Section 

3.2(a). 

GRDF means the Georgia Regional 

Development Fund as described in 

Section 2 of Schedule 2 of Annex I. 

GRDF Governing Board means the 

governing board of the GRDF. 

IFAD means the International Fund 

for Agricultural Development. 

IFC means the International Finance 

Corporation. 

Implementation Letter is a letter that 

may be issued by MCC from time to 

time to furnish additional information 

or guidance to assist the Government in 

the implementation of this Compact. 

Implementation Plan is a detailed 

plan for the implementation of the 

Program and each Project, which will be 

memorialized in one or more documents 

and shall consist of: (i) a Financial Plan, 

(ii) a Fiscal Accountability Plan, (iii) a 

Procurement Plan, (iv) Program and 

Project Work Plans, and (v) an M&E 

Plan. 

Implementing Entity means a 

Government agency, nongovernmental 

organization or other public-or privatesector entity or persons to which MCA–

Georgia may provide MCC funding 

(directly or indirectly) through an 

Outside Project Manager, to implement 

and carry out the Projects or any other 

activities to be carried out in 

furtherance of this Compact. 

Implementing Entity Agreement is an 

agreement between MCA-Georgia (or the 

appropriate Outside Project Manager) 

and an Implementing Entity, in form 

and substance satisfactory to MCC, that 

sets forth the roles and responsibilities 

of such Implementing Entity and other 

appropriate terms and conditions, such 

as payment of the Implementing Entity. 

Indicative Term Sheet is a term sheet 

containing the indicative proposed 

terms of the GRDF as described in 

Section 2 of Schedule 2 of Annex I. 

Indicator Baseline means the value of 

an Indicator for a Project Activity and 

Objective prior to it being affected by 

the Program. 

Indicators means the quantitative, 

objective and reliable data that the M&E 

Plan will use to measure the results of 

the Program. 

Inspector General means the Inspector 

General of the United States Agency for 

International Development. 

Investment Committee is a committee 

of the GRDF as described in Section 2 

of Schedule 2 of Annex I. 

Investment Manager is the manager 

that will manage the GRDF as described 

in Section 2 of Schedule 2 of Annex I. 

Investment Period means the 

investment period of the GRDF, which 

shall run for five years from the Entry 

into Force, subject to an earlier 

termination upon termination of the 

Compact as described in Section 2 of 

Schedule 2 of Annex I. 

Key Regional Infrastructure 

Rehabilitated Objective is the Project 

Objective of the Regional Infrastructure 

Rehabilitation Project. 

KfW means Kreditanstalt fur 

Wiederaufbau. 

Lien means any lien, attachment, 

enforcement of judgment, pledge, or 

encumbrance of any kind. 

58916 Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 

Local Account is an interest-bearing 

local currency of Georgia account at the 

commercial bank to which the Fiscal 

Agent may authorize transfer from any 

U.S. Dollar Permitted Account for the 

purpose of making Re-Disbursements 

payable in local currency. 

M&E Annex means Annex III of this 

Compact, which generally describes the 

components of the M&E Plan for the 

Program. 

M&E Plan means the plan to measure 

and evaluate progress toward 

achievement of the Compact Goal and 

Objectives of this Compact. 

Management Team means the 

management team of MCA-Georgia to 

have overall management responsibility 

for the implementation of this Compact 

and further described in Section 3(d)(iii) 

of Annex I. 

Material Agreement shall have the 

meaning set forth in Section 3(c)(i)(3) of 

Annex I. 

Material Re-Disbursement means any 

Re-Disbursement that requires MCC 

approval under applicable law, the 

Governance Regulations, the 

Procurement Agreement, Procurement 

Guidelines, or any Supplemental 

Agreement. 

Material Terms of Reference means 

any terms of reference for the 

procurement of goods, services or works 

that require MCC approval under 

applicable law, the Governance 

Regulations, the Procurement 

Agreement, Procurement Guidelines, or 

any Supplemental Agreement. 

MCA means the 2004 and 2005 

Millennium Challenge Account. 

MCA–Georgia shall have the meaning 

set forth in the Recitals. 

MCA–Georgia Website means the 

website operated by MCA-Georgia. 

MCA Eligibility Criteria means the 

MCA selection criteria and methodology 

published by MCC pursuant to Section 

607 of the Act from time to time. 

MCC means the Millennium 

Challenge Corporation. 

MCC Disbursement means the 

disbursement of MCC Funding by MCC 

to a Permitted Account or through such 

other mechanism agreed by the Parties 

as defined in and in accordance with 

Section 2.1(b)(i) of this Compact. 

MCC Disbursement Request means the 

applicable request that the Government 

and MCA-Georgia will jointly submit for 

an MCC Disbursement as may be 

specified in the Disbursement 

Agreement. 

MCC Funding shall have the meaning 

set forth in Section 2.1(a). 

MCC Indemnified Party means MCC 

and any MCC officer, director, 

employee, Affiliate, contractor, agent or 

representative. 

MCC Representative is a 

representative designated by MCC to 

serve as an Observer on the Supervisory 

Board. 

MDDPII means the World Bank’s 

Municipal Development and 

Decentralization Project II. 

MDF means the Municipal 

Development Fund, an entity that will 

implement the Regional Infrastructure 

Development Activity and further 

described in Section 2(c)(iv) of Schedule 

1 of Annex I. 

Monitoring Component means the 

component of the M&E Plan that 

specifies how progress toward the 

Objectives and Project Activity 

Outcomes will be monitored. 

Multi-Year Financial Plan means the 

multi-year financial plan for the 

Program and for each Project, which is 

summarized in Annex II. 

Multi-Year Financial Plan Summary 

means a multi-year Financial plan 

summary attached to this Compact as 

Exhibit A of Annex II. 

Non-Transfer Condition shall have the 

meaning set forth in Section 6(a)(ii)(3) of 

Schedule 1 of Annex I. 

Objective(s) are the following 

objectives of this Compact that have 

been identified by the Parties, each of 

which is (i) key to advancing the 

Compact Goal and (ii) described in more 

detail in the Annexes attached hereto: 

(a) the Key Regional Infrastructure 

Rehabilitated Objective and (b) the 

Enterprises in Regions Developed 

Objective. 

Objective Indicator means the 

Indicator for each Objective that will 

measure the final results of the Projects 

in order to monitor their success in 

meeting each of the Objectives. A table 

of Objective Indicator definitions is set 

forth at Section 2(b)(i) of Annex III. 

Observers means the non-voting 

observers of the Supervisory Board. 

OPIC means the Overseas Private 

Investment Corporation. 

Outside Project Manager means the 

qualified persons or entities engaged by 

MCA-Georgia, to serve as outside project 

managers in accordance with Section 

3(e) of Annex I. 

Parliament Board Member is the 

member of Parliament identified in 

Section 3(d)(ii)(2)(A)(iii) of Annex I 

serving as voting members on the 

Supervisory Board, and any 

replacements thereof in accordance with 

Section 3(d)(ii)(A) of Annex I. 

Parties means the United States, 

acting through MCC, and the 

Government. 

Party means (i) the United States, 

acting through MCC or (ii) the 

Government. 

Permitted Account(s) shall have the 

meaning set forth in Section 4(d) of 

Annex I. 

Permitted Designee shall have the 

meaning set forth in Section 3.2(c). 

Permitted SMEs shall have the 

meaning set forth in Section 2(a)(i)(3) of 

Schedule 2 of Annex I. 

Pipeline means the north-south gas 

pipeline which is Georgia’s main 

trunkline for the transmission of natural 

gas. 

Pledge means any pledge of any MCC 

Funding or any Program Assets, or any 

guarantee (directly or indirectly) of any 

indebtedness. 

Portfolio Company TA Facility means 

the Portfolio Company Technical 

Assistance Facility and further 

described in Section 2(a)(ii) of Schedule 

2 of Annex I. 

Principal Representative means (i) for 

the Government, the individual holding 

the position of, or acting as, the Prime 

Minister of Georgia, and (ii) for MCC, 

the individual holding the position of, 

or acting as, the Vice President for 

Country Programs. 

Procurement Agent(s) are the 

procurement agents that MCA–Georgia 

will engage to carry out and/or certify 

specified procurement activities in 

furtherance of this Compact on behalf of 

the Government, MCA–Georgia, any 

Outside Project Manager or 

Implementing Entity. 

Procurement Agent Agreement is the 

agreement that MCA–Georgia enters into 

with the Procurement Agent, in form 

and substance satisfactory to MCC, that 

sets forth the roles and responsibilities 

of the Procurement Agent with respect 

to the conduct, monitoring and review 

of procurements and other appropriate 

terms and conditions, such as payment 

of the Procurement Agent. 

Procurement Agreement is a 

Supplemental Agreement between the 

Parties, which includes the Procurement 

Guidelines, and governs the 

procurement of all goods, services and 

works by the Government or any 

Provider in furtherance of this Compact. 

Procurement Guidelines shall have 

the meaning set forth in Section 3.6(a). 

Procurement Plan means a 

procurement plan adopted by MCA–

Georgia, which plan shall forecast the 

upcoming six month procurement 

activities and be updated every six 

months. 

Program means a program, to be 

implemented under this Compact, using 

MCC Funding to advance Georgia’s 

progress towards economic growth and 

poverty reduction. 

Program Annex means Annex I to this 

Compact, which generally describes the 

Program that MCC Funding will support 

Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 58917 

in Georgia during the Compact Term 

and the results to be achieved from the 

investment of MCC Funding. 

Program Assets means (i) MCC 

Funding, (ii) Accrued Interest, or (iii) 

any assets, goods, or property (real, 

tangible, or intangible) purchased or 

financed in whole or in part by MCC 

Funding. 

Program Objective means the overall 

objective of this Compact, which is to 

increase economic growth and poverty 

reduction in the regions of Georgia 

outside of Tbilisi, which is key to 

advancing the Compact Goal. 

Project(s) are the Regional 

Infrastructure Rehabilitation Project and 

the Enterprise Development Project, and 

the policy reforms and other activities 

related thereto that the Government will 

carry out, or cause to be carried out in 

furtherance of this Compact to achieve 

the Objectives and the Compact Goal. 

Project Activity means the activities 

that will be undertaken in furtherance of 

each Project. 

Project Activity Outcome means the 

outcomes of each Project Activity, 

which are described in more detail in 

Annex III. 

Project Activity Outcome Indicator is 

an indicator that will measure the 

intermediate results achieved under 

each of the Project Activities, each of 

which is described in more detail 

Annex III. 

Project Objective(s) means the projectlevel objectives that will advance the 

program objective, each of which is 

described in more detail in Annex III. 

Project Road means each of several 

sub-activities of the Road Rehabilitation 

Activity described in Section 2(a) of 

Schedule 1 of Annex I. 

Proposal is the proposal for use of 

MCA assistance submitted to MCC by 

the Government on September 24, 2004. 

Provider shall have the meaning set 

forth in Section 2.4(b). 

PRSP is the Poverty Reduction 

Strategy that Georgia developed in 2003 

that describes the macroeconomic, 

structural and social policies and 

programs needed to boost economic 

growth and reduce rates of extreme 

poverty. 

RDMED means the Road Department 

of the Ministry of Economic 

Development. 

Re-Disbursement is the release of 

MCC Funding from a Permitted 

Account. 

Regional Infrastructure Development 

Activity is the Project Activity described 

in Section 2(c) of Schedule 1 of Annex 

I under the Regional Infrastructure 

Rehabilitation Project. 

Regional Infrastructure Rehabilitation 

Project is the Project described in 

Schedule 1 of Annex I, that the Parties 

intend to implement in furtherance of 

the Key Regional Infrastructure 

Rehabilitated Objective. 

Regions means regions outside the 

capital city of Tbilisi. 

Reviewer shall have the meaning set 

forth in Section 3(h) of Annex I. 

RID Grants are the grants that will be 

made to Eligible Governmental Entities 

under a sub-activity of the Regional 

Infrastructure Development Activity, as 

described in Section 2(c)(i) of Schedule 

1 of Annex I. 

RID Operations Manual is an 

operations manual of the Regional 

Infrastructure Development Activity and 

further described in Section 2(c)(iii) of 

Schedule 1 of Annex I. 

RID Projects are projects of the 

Regional Infrastructure Development 

Activity and described in Section 2(c)(i) 

of Schedule 1 to Annex I. 

Road Rehabilitation Activity is the 

Samtskhe-Javakheti Road Project 

Activity described in Section 2(a) of 

Schedule 1 of Annex I. 

Rural Enterprise Grants are grants that 

will be given to groups of farmers and 

to private enterprises under the 

Agribusiness Development Activity as 

described in Section 2(b)(iii) of 

Schedule 2 of Annex I. 

Service Providers are third-party 

consultants and other service providers. 

SMEs means small and medium 

enterprises. 

Special Account means a single, 

completely separate U.S. Dollar interestbearing account at a commercial bank to 

receive MCC Disbursements. 

Stakeholders’ Committee means the 

committee of MCA-Georgia to provide 

feedback on Program activities to the 

Supervisory Board and the Management 

Team and further described in Section 

3(d)(iv) of Annex I. 

Strategic Vision means the 

Government’s Strategic Vision and 

Urgent Financing priorities, 2004–2006. 

Supervisory Board means the 

independent board of directors of MCAGeorgia to oversee MCA-Georgia’s 

responsibilities and obligations under 

this Compact and further described in 

Section 3(d)(ii) of Annex I. 

Supplemental Agreement shall have 

the meaning set forth in Section 3.5(b). 

Supplemental Agreement Between the 

Parties means any agreement between 

MCC on the one hand, and the 

Government or any Government 

Affiliate or Permitted Designee on the 

other hand. 

Supplemental Agreement Term 

Sheets means one or more term sheets 

that the Government (or mutually 

acceptable Government Affiliate) and 

MCC shall execute that set forth the 

material and principal terms and 

conditions of each of the Supplemental 

Agreements identified in Exhibit B 

attached hereto. 

Target means one or more expected 

results that specify the expected value 

and the expected time by which that 

result will be achieved. 

Tax(es) shall have the meaning set 

forth in Section 2.3(e)(i). 

UNDP means the United Nations 

Development Programme. 

USAID means the United States 

Agency for International Development. 

USDA means the United States 

Department of Agriculture. 

U.S. Government shall mean any 

branch, agency, bureau, government 

corporation, government chartered 

entity or other body of the Federal 

government of the United States. 

United States Dollars (USD) means 

the currency of the United States of 

America. 

Voting Members are the voting 

members on the Supervisory Board 

described in Section 3(d)(ii)(2) of Annex 

I. 

Work Plans means work plans for the 

overall administration of the Program 

and for each Project. 

Exhibit B—List of Certain Supplemental 

Agreements 

1. Governance Agreement. 

2. Form of Fiscal Agent Agreement. 

3. Form of Implementing Entity 

Agreement. 

4. Form of Bank Agreement. 

Annex I—Program Description 

This Annex I to the Compact (the 

‘‘Program Annex’’) generally describes 

the Program that MCC Funding will 

support in Georgia during the Compact 

Term and the results to be achieved 

from the investment of MCC Funding. 

Prior to any MCC Disbursement or ReDisbursement, including for the Projects 

described herein, MCC, the Government 

(or a mutually acceptable Government 

Affiliate) and MCA-Georgia shall enter 

into a Supplemental Agreement that (i) 

further specifies the terms and 

conditions of such MCC Disbursements 

and Re-Disbursements, (ii) is in a form 

and substance mutually satisfactory to 

the Parties, and (iii) is signed by the 

Principal Representative of each Party 

(or in the case of the Government, the 

principal representative of the 

applicable Government Affiliate) and of 

MCA-Georgia (the ‘‘Disbursement 

Agreement’’). 

Except as specifically provided 

herein, the Parties may amend this 

Program Annex only by written 

agreement signed by the Principal 

Representative of each Party. Each 

58918 Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 

capitalized term in this Program Annex 

shall have the same meaning given such 

term elsewhere in this Compact. Unless 

otherwise expressly stated, each Section 

reference herein is to the relevant 

Section of the main body of the 

Compact. 

1. Background; Consultative Process 

(a) Background and Georgia 

Development Strategy. Since the 

collapse of the Soviet Union, Georgia 

has faced regional instability, civil 

conflict, deterioration of infrastructure, 

decline of enterprises and investments, 

and a decrease in human productivity. 

Since the Rose Revolution in November 

2003, the Government has taken 

decisive steps to promote stability, good 

government and private enterprise 

development. Georgia is working to 

build a stronger, more integrated 

national economy and to stimulate 

economic growth in the regions outside 

the capital city of Tbilisi (the 

‘‘Regions’’), where poor infrastructure 

and a poor business environment 

represent major obstacles to 

development. Rural Georgia has been 

affected by rising poverty and weak 

economic growth. More than 2 million 

people, or about 40% of the country’s 

total population, live in the Regions, 

and poverty in rural Georgia grew by 

16% per year, rising from 13.4% in 1997 

to 20.9% in 2000. In some parts of the 

Regions, more than 50% of rural 

households live below the official 

poverty line. 

Georgia’s 2003 Poverty Reduction 

Strategy Paper (‘‘PRSP’’) describes the 

macroeconomic, structural and social 

policies and programs needed to boost 

economic growth and reduce rates of 

extreme poverty. Among its priorities, 

the PRSP specifically targets the 

development of priority sectors of the 

economy, namely energy, transport, 

communications, agriculture and 

tourism. These sectors are vital to the 

functioning of a sound economy. The 

PRSP notes that poverty in the Regions 

is closely tied to the lack of financial 

resources and the underdevelopment of 

infrastructure, which together reduce 

the ability of the poor to access jobs and 

services such as energy, healthcare, and 

education. In June 2004, the 

Government presented its Strategic 

Vision and Urgent Financing Priorities, 

2004–2006 (‘‘Strategic Vision’’) to the 

Donor’s Conference in Brussels. The 

Strategic Vision reinforces the priorities 

set out in the PRSP, with five main areas 

of action. Of particular note among them 

are efforts to rehabilitate the energy 

sector, stimulate private sector 

development, and promote sustainable 

development in the Regions through a 

focus on infrastructure, trade and 

transport and agriculture. 

The PRSP and the Strategic Vision 

served as the foundation from which the 

Government launched a broad 

consultative effort to develop the MCC 

Proposal. 

(b) Consultative Process. Building on 

the PRSP process, the consultative 

process for developing the MCC 

Proposal involved several steps. Shortly 

after being informed of its eligibility for 

MCA funding, the Government 

developed a list of priority areas for 

economic development and began 

soliciting feedback from a wide variety 

of civil society actors. MCA-Georgia 

organized eight community roundtable 

sessions, including one in each of 

Georgia’s five regions, one with the 

country’s business community, and two 

with a cross-section of nongovernmental organizations (NGOs). 

MCA-Georgia also sponsored public 

comment boxes, television 

advertisements, radio and television talk 

show programs, brochures and a 

documentary film. This public outreach 

generated 2,100 calls, 1,500 web hits, 

500 walk-ins, and 400 e-mails and 

ultimately resulted in 531 specific 

proposals and more than 140 written 

inquiries. Following initial outreach, 

MCA-Georgia staff prioritized specific 

proposals on the basis of their likely 

economic impact, role in reducing 

poverty and connection to policy reform 

goals. MCA-Georgia found a strong 

consensus in favor of interventions in 

agriculture and food processing, 

infrastructure and tourism, areas around 

which an initial Proposal was then 

developed. MCA-Georgia posted an 

abridged proposal on its website, 

appointed a public outreach officer and 

continued to hold public outreach 

sessions. In March 2005, MCA-Georgia 

held a public meeting for small and 

medium enterprises with the Georgian 

Federation of Businesses, then reached 

out in April to explain its proposal for 

the Samtskhe-Javakheti road, gas supply 

pipeline, and the regional infrastructure 

development facility directly to 

stakeholders in those project activities. 

2. Overview 

(a) Program Objectives. The Program 

involves a series of specific and 

complementary interventions that the 

Parties expect will achieve the Program 

Objective of increased economic growth 

and poverty reduction in the regions of 

Georgia and the Project Objectives of 

rehabilitating key regional infrastructure 

and developing enterprises in the 

Regions. 

(b) Projects. The Parties have 

identified, for each Objective, Projects 

that they intend for the Government to 

implement, or cause to be implemented, 

using MCC Funding, each of which is 

described in the Schedules to this 

Program Annex. The Schedules to this 

Program Annex identify the activities 

that will be undertaken in furtherance of 

each Project (each, a ‘‘Project Activity’’). 

Notwithstanding anything to the 

contrary in this Compact, the Parties 

may agree to amend, terminate or 

suspend these Projects or Project 

Activities or create a new project by 

written agreement signed by the 

Principal Representative of each Party 

without amending this Compact; 

provided, however, any such 

amendment of a Project or Project 

Activity or creation of a new project is 

(i) consistent with the Objectives; (ii) 

does not cause the amount of MCC 

Funding to exceed the aggregate amount 

specified in Section 2.1(a) of this 

Compact; (iii) does not cause the 

Government’s responsibilities or 

contribution of resources to be less than 

specified in Section 2.2 of this Compact 

or elsewhere in this Compact; and (iv) 

does not extend the Compact Term. 

(c) Beneficiaries. The intended 

beneficiaries of each Project are 

described in the respective Schedule to 

this Program Annex to the extent 

identified as of the date hereof. The 

intended beneficiaries shall be 

identified more precisely during the 

initial phases of the implementation of 

the Program. The Parties shall agree 

upon the description of the intended 

beneficiaries of the Program, including 

publishing such description on the 

website operated by MCA-Georgia. 

(d) Civil Society. Civil society will 

participate in overseeing the 

implementation of the Program through 

its representation through an Observer 

to the Supervisory Board and through 

the role of the Stakeholders’ Committee, 

as provided in Section 3(d) of this 

Program Annex. In addition, the Work 

Plans and/or Procurement Plans for 

each Project shall note the extent to 

which civil society will have a role in 

the implementation of a particular 

Project Activity. 

(e) Monitoring and Evaluation. Annex 

III of this Compact generally describes 

the plan to measure and evaluate 

progress toward achievement of the 

Objectives of this Compact (the ‘‘M&E 

Plan’’). As outlined in the Disbursement 

Agreement and other Supplemental 

Agreements, continued payment of MCC 

Funding under this Compact will be 

contingent on successful achievement of 

targets set forth in the M&E Plan. 

Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 58919 

3. Implementation Framework 

The implementation framework and 

the plan for ensuring adequate 

governance, oversight, management, 

monitoring, evaluation and fiscal 

accountability for the use of MCC 

Funding is summarized below and in 

the Schedules attached to this Program 

Annex, or as may otherwise be agreed 

in writing by the Parties. 

(a) General. The elements of the 

implementation framework will be 

further described in relevant 

Supplemental Agreements and in a 

detailed plan for the implementation of 

the Program and each Project (the 

‘‘Implementation Plan’’), which will be 

memorialized in one or more documents 

and shall consist of a Financial Plan, a 

Fiscal Accountability Plan, a 

Procurement Plan, Program and Project 

Work Plans, and an M&E Plan. MCAGeorgia shall adopt each component of 

the Implementation Plan in accordance 

with the requirements and timeframe as 

may be specified in this Program Annex, 

the Disbursement Agreement or as may 

otherwise be agreed by the Parties from 

time to time. MCA-Georgia may amend 

the Implementation Plan or any 

component thereof without amending 

this Compact, provided any material 

amendment of the Implementation Plan 

or any component thereof has been 

approved by MCC and is otherwise 

consistent with the requirements of this 

Compact and any relevant 

Supplemental Agreement between the 

Parties. By such time as may be 

specified in the Disbursement 

Agreement or as may otherwise be 

agreed by the Parties from time to time, 

MCA-Georgia shall adopt one or more 

work plans for the overall 

administration of the Program and for 

each Project (collectively, the ‘‘Work 

Plans’’). The Work Plan(s) shall set forth 

the details of each activity to be 

undertaken or funded by MCC Funding 

as well as the allocation of roles and 

responsibilities for specific Project 

activities, or other programmatic 

guidelines, performance requirements, 

targets, or other expectations for a 

Project. 

(b) Government. The Government 

shall promptly take all necessary and 

appropriate actions to carry out the 

Government Responsibilities and other 

obligations or responsibilities of the 

Government under and in furtherance of 

this Compact, including undertaking or 

pursuing such legal, legislative or 

regulatory actions, procedural changes 

and contractual arrangements as may be 

necessary or appropriate to achieve the 

Objectives, to successfully implement 

the Program, and to establish a legal 

entity, in a form mutually agreeable to 

the Parties, MCA-Georgia, which shall 

be responsible for the oversight and 

management of the implementation of 

this Compact on behalf of the 

Government. The Government shall 

ensure that MCA-Georgia is duly 

authorized and sufficiently organized, 

staffed and empowered to fully carry 

out the Designated Rights and 

Responsibilities. Without limiting the 

generality of the preceding sentence, 

MCA-Georgia shall be organized, and 

have such roles and responsibilities, as 

described in Section 3(d) of this 

Program Annex and as provided in the 

Governance Agreement and any 

Governing Documents and in applicable 

law and in governance regulations 

promulgated in furtherance thereof 

(‘‘Governance Regulations’’), which 

shall be in a form and substance 

satisfactory to MCC; provided, however, 

the Government may, subject to MCC 

approval, carry out any of the roles and 

responsibilities designated to be carried 

out by MCA-Georgia and described in 

Section 3(d) of this Program Annex or 

elsewhere in this Program Annex, 

applicable law, the Governance 

Regulations, or any Supplemental 

Agreement prior to and during the 

initial period of the establishment and 

staffing of MCA-Georgia, but in no event 

longer than the earlier of (i) the 

formation of the Supervisory Board and 

the engagement of each of the Officers 

and (ii) six months from the Entry into 

Force, unless otherwise agreed by the 

Parties in writing. 

(c) MCC. 

(i) Notwithstanding Section 3.1 of this 

Compact or any provision in this 

Program Annex to the contrary, and 

except as may be otherwise agreed upon 

by the Parties from time to time, MCC 

must approve in writing each of the 

following transactions, activities, 

agreements and documents prior to the 

execution or carrying out of such 

transaction, activity, agreement or 

document and prior to MCC 

Disbursements or Re-Disbursements in 

connection therewith: 

(1) MCC Disbursements; 

(2) The Financial Plan and any 

amendments and supplements thereto; 

(3) Agreements (i) between the 

Government and MCA-Georgia, (ii) 

between the Government, MCA-Georgia 

or other Government Affiliate, on the 

one hand, and any Provider or Affiliate 

of a Provider, on the other hand, which 

require such MCC approval under 

applicable law, the Governance 

Regulations, the Procurement 

Agreement, Procurement Guidelines or 

any Supplemental Agreement, or (iii) in 

which the Government, MCA-Georgia or 

other Government Affiliate appoints, 

hires or engages any of the following in 

furtherance of this Compact: 

(A) Auditor; 

(B) Fiscal Agent; 

(C) Bank; 

(D) Procurement Agent; 

(E) Outside Project Manager; 

(F) Implementing Entity; and 

(G) Director, Observer, Officer and/or 

other key employee or contractor of 

MCA-Georgia, including any 

compensation for such person. 

(Any agreement described in clause (i) 

through (iii) of this Section 3(c)(i)(3) and any 

amendments and supplements thereto, each, 

a ‘‘Material Agreement’’); 

(4) Any modification, termination or 

suspension of a Material Agreement, or 

any action that would have the effect of 

such a modification, termination or 

suspension of a Material Agreement; 

(5) Any agreement that is (i) not at 

arm’s length or (ii) with a party related 

to the Government, including MCAGeorgia, or any of their respective 

Affiliates; 

(6) Any Re-Disbursement (each, a 

‘‘Material Re-Disbursement’’) that 

requires such MCC approval under 

applicable law, the Governance 

Regulations, the Procurement 

Agreement, Procurement Guidelines or 

any Supplemental Agreement; 

(7) Terms of reference for the 

procurement of goods, services or works 

that require such MCC approval under 

applicable law, the Governance 

Regulations, the Procurement 

Agreement, Procurement Guidelines or 

any Supplemental Agreement (each, a 

‘‘Material Terms of Reference’’); 

(8) The Implementation Plan, 

including each component plan thereto, 

and any material amendments and 

supplements to the Implementation 

Plan or any component thereto; 

(9) Any pledge of any MCC Funding 

or any Program Assets or any guarantee 

(directly or indirectly) of any 

indebtedness (each, a ‘‘Pledge’’); 

(10) Any decree, legislation, 

contractual arrangement or other 

document establishing or governing 

MCA-Georgia, including the Governance 

Regulations, and any disposition (in 

whole or in part), liquidation, 

dissolution, winding up, reorganization 

or other change of (A) MCA-Georgia, 

including any revocation or 

modification of, or supplement to, any 

decree, legislation, contractual 

arrangement or other document 

establishing MCA-Georgia, or (B) any 

subsidiary or Affiliate of MCA-Georgia; 

(11) Any change in character or 

location of any Permitted Account; 

(12) Formation or acquisition of any 

subsidiary (direct or indirect) or other 

Affiliate of MCA-Georgia; 

58920 Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 

(13) Any (A) change of a Director, 

Observer, Officer or other key employee 

or contractor of MCA-Georgia, or in the 

composition of the Supervisory Board, 

including approval of the nominee for 

Chair, or (B) filling of any vacant seat of 

the Chair, a Director or an Observer or 

vacant position of an Officer or other 

key employee or contractor of MCAGeorgia; 

(14) The management information 

system to be developed and maintained 

by the Management Team of MCAGeorgia, and any material modifications 

to such system; 

(15) Any decision to amend, 

supplement, replace, terminate or 

otherwise change any of the foregoing; 

and 

(16) Any other activity, agreement, 

document or transaction requiring the 

approval of MCC in this Compact, 

applicable law, the Governance 

Regulations, the Procurement 

Agreement, Procurement Guidelines, 

the Disbursement Agreement, or any 

other Supplemental Agreement between 

the Parties. 

The Chair of the Supervisory Board 

(the ‘‘Chair’’) and/or the Chief Executive 

Officer of MCA-Georgia (the ‘‘Chief 

Executive Officer’’) or other designated 

officer, as provided in applicable law 

and the Governance Regulations, shall 

certify any documents or reports 

delivered to MCC in satisfaction of the 

Government’s reporting requirements 

under this Compact or any 

Supplemental Agreement between the 

Parties (the ‘‘Compact Reports’’). 

(ii) MCC shall have the authority to 

exercise its approval rights set forth in 

this Section 3(c) in its sole discretion 

and independent of any participation or 

position taken by the MCC 

Representative at a meeting of the 

Supervisory Board. MCC retains the 

right to revoke its approval of a matter 

if MCC concludes that its approval was 

issued on the basis of incomplete, 

inaccurate or misleading information 

furnished by the Government or MCAGeorgia. 

(d) MCA-Georgia. 

(i) General. Unless otherwise agreed 

by the Parties in writing, MCA-Georgia 

shall be responsible for the oversight 

and management of the implementation 

of this Compact. MCA-Georgia shall be 

governed by the terms and conditions 

set forth in applicable law and in the 

Governance Regulations based on the 

following principles: 

(1) The Government shall ensure that 

MCA-Georgia shall not assign, delegate 

or contract any of the Designated Rights 

and Responsibilities without the prior 

written consent of the Government and 

MCC. MCA-Georgia shall not establish 

any Affiliates or subsidiaries (direct or 

indirect) without the prior written 

consent of the Government and MCC; 

and 

(2) Unless otherwise agreed by the 

Parties in writing, MCA-Georgia shall 

consist of (A) an independent board of 

directors (the ‘‘Supervisory Board’’) to 

oversee MCA-Georgia’s responsibilities 

and obligations under this Compact 

(including any Designated Rights and 

Responsibilities), (B) a management 

team (the ‘‘Management Team’’) to have 

overall management responsibility for 

the implementation of this Compact, 

and (C) a Stakeholders’ Committee to 

provide feedback on Program activities 

to the Supervisory Board and the 

Management Team. 

(ii) Supervisory Board. 

(1) Formation. The Government shall 

ensure that the Supervisory Board shall 

be formed, constituted, governed, 

maintained and operated in accordance 

with applicable law and the terms and 

conditions set forth in this Section 3(d), 

the Governance Regulations and 

relevant Supplemental Agreements. As 

a condition for Entry into Force, the 

Government shall have amended the 

charter of MCA-Georgia, to the 

satisfaction of MCC, to provide for 

waiver of the control of the State 

Controlling Body over the management 

and operations of MCA-Georgia. The 

charter of MCA-Georgia shall also be 

amended to reflect the composition of 

the Supervisory Board. 

(2) Composition. Unless otherwise 

agreed by the Parties in writing, the 

Supervisory Board shall consist of (i) 

eight (8) voting members (the ‘‘Voting 

Members’’), (ii) the Chief Executive of 

MCA-Georgia, who shall be a non-voting 

member, and (iii) two (2) non-voting 

observers (the ‘‘Observers’’), each of 

which must be acceptable to MCC, 

taking into consideration appropriate 

gender and ethnic representation. 

(A) The Voting Members shall be as 

follows: 

(i) Three (3) members of the executive 

branch of Government representing 

Ministries of the Government (one of 

whom shall be the Prime Minister); 

(ii) One (1) member who shall be the 

head of the President’s administration 

(together with the three members listed 

in (i) above, the ‘‘Government Board 

Members’’); 

(iii) Two (2) members of Parliament 

(‘‘Parliament Board Member’’); 

(iv) One (1) representative of a civil 

society organization; and 

(v) One (1) representative from the 

business sector. 

The following provisions apply to the 

Voting Members: 

a. The Voting Members may, by a 

majority vote, expand the Supervisory 

Board with the approval of MCC; 

b. Each Government Board Member 

may be replaced by another government 

official, subject to approval by the 

Government and MCC; 

c. Subject to the Governance 

Agreement, the Parties contemplate that 

the Prime Minister shall initially fill the 

seat of Chair; and 

d. Each Government Board Member 

position shall be filled by the individual 

then holding the office identified and 

such individuals shall serve in their 

capacity as the applicable Government 

official and not in their personal 

capacity. In the event that a Government 

Board Member or a Parliament Board 

Member is unable to participate in a 

meeting of the Supervisory Board such 

member’s principal deputy or 

equivalent (or in the case of a 

Parliament Board Member, another 

member of Parliament) may participate 

in the member’s stead. 

(B) The Observers shall be: 

(i) A representative (the ‘‘MCC 

Representative’’) appointed by MCC; 

and 

(ii) One representative of civil society 

nominated by the Stakeholders’

Committee (the ‘‘Civil Observer’’). The 

initial Civil Observer shall serve for a 

period of one year from the date of the 

first Supervisory Board meeting after the 

Entry into Force, and on each 

anniversary thereof, the Stakeholders’

Committee shall appoint another of its 

members to serve as a Civil Observer for 

the subsequent year. The Civil Observer 

may nominate an alternate from among 

the Stakeholders’ Committee to attend 

one or more meetings of the Supervisory 

Board in the event that the Civil 

Observer is unable to attend. 

The following provision applies to the 

Observers: 

a. Each Observer shall have the right 

to attend all meetings of the Supervisory 

Board, participate in discussions of the 

Supervisory Board, and receive all 

information and documents provided to 

the Supervisory Board, together with 

any other rights of access to records, 

employees or facilities as would be 

granted to a member of the Supervisory 

Board under the Governance Agreement 

and any Governing Document. 

(3) Role and Responsibilities. 

(A) The Supervisory Board shall 

oversee the overall implementation of 

the Program and the performance of the 

Designated Rights and Responsibilities. 

(B) Certain actions may be taken, and 

certain agreements and other documents 

may be executed and delivered, by 

MCA-Georgia only upon the approval 

and authorization of the Supervisory 

Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 58921 

Board as provided under applicable law 

and in the Governance Regulations, 

including each MCC Disbursement 

Request, selection or termination of 

certain Providers, any component of the 

Implementation Plan, certain ReDisbursements and certain terms of 

reference. 

(C) The Chair shall certify the 

approval by the Supervisory Board of all 

Compact Reports or any other 

documents or reports from time to time 

delivered to MCC by MCA-Georgia 

(whether or not such documents or 

reports are required to be delivered to 

MCC), and that such documents or 

reports are true, accurate and complete. 

(D) Without limiting the generality of 

the Designated Rights and 

Responsibilities, and subject to MCC’s 

contractual rights of approval as set 

forth in Section 3(c) of this Program 

Annex or elsewhere in this Compact or 

any relevant Supplemental Agreement, 

the Supervisory Board shall have the 

exclusive authority for all actions 

defined for the Supervisory Board under 

applicable law and in the Governance 

Regulations and which are expressly 

designated therein as responsibilities 

that cannot be delegated further. 

(4) Meetings. The Supervisory Board 

shall hold at least quarterly meetings as 

well as such other periodic meetings or 

subcommittee meetings as may be 

necessary from time to time. 

(5) Indemnification of Civil Observer; 

MCC Representative. The Government 

shall ensure, at the Government’s sole 

cost and expense, that appropriate 

insurance is obtained and appropriate 

indemnifications and protections are 

provided, acceptable to MCC, to ensure 

that Civil Observers shall not be held 

personally liable for the actions or 

omissions of the Supervisory Board. 

Pursuant to Section 5.5 and Section 5.8 

of this Compact, the Government and 

MCA-Georgia shall hold harmless the 

MCC Representative for any liability or 

action arising out of the MCC 

Representative’s role as a non-voting 

observer on the Supervisory Board. The 

Government hereby waives and releases 

all claims related to any such liability. 

In matters arising under or relating to 

the Compact, the MCC Representative is 

not subject to the jurisdiction of the 

courts or other body of Georgia. 

(iii) Management Team. Unless 

otherwise agreed in writing by the 

Parties, the Management Team shall 

report, through the Chief Executive 

Officer or other Officer as designated in 

the Governance Agreement, directly to 

the Supervisory Board and to the 

Stakeholders’ Committee, and shall 

have the composition, roles and 

responsibilities described below and set 

forth more particularly in the 

Governance Agreement and any 

Governing Document. 

(1) Composition. The Government 

shall ensure that the Management Team 

shall be composed of qualified experts 

from the public or private sectors, 

including such offices and staff as may 

be necessary to carry out effectively its 

responsibilities, each with such powers 

and responsibilities as set forth in the 

Governance Agreement, any Governing 

Document, and from time to time in any 

Supplemental Agreement between the 

Parties, including without limitation the 

following: (i) Chief Executive Officer, 

(ii) a deputy director, (iii) five project 

directors, (iv) an environment and social 

impact director, (v) chief financial 

officer, (vi) a procurement director, (vii) 

a public outreach director, (viii) a 

monitoring and evaluation director, and 

(ix) a general counsel. The Management 

Team will be supported by an office 

manager and appropriate administrative 

and support personnel. 

(2) Appointment of Management 

Team. Unless otherwise specified in the 

Governance Agreement or any 

Governing Documents, the Management 

Team shall be selected and hired by the 

Chief Executive Officer after an open 

and competitive recruitment and 

selection process, which appointment 

shall be subject to the approval of the 

Supervisory Board and MCC. 

(3) Role and Responsibilities. 

(A) The Management Team shall 

assist the Supervisory Board in 

overseeing the implementation of the 

Program and shall have principal 

responsibility (subject to the direction 

and oversight of the Supervisory Board 

and subject to MCC’s contractual rights 

of approval as set forth in Section 3(c) 

of this Program Annex or elsewhere in 

this Compact or any relevant 

Supplemental Agreement) for the 

overall management of the 

implementation of the Program. 

(B) The Management Team shall 

report to and meet with, on a quarterly 

basis, the Stakeholders’ Committee, and 

shall include a report on the feedback 

provided by the Stakeholders’

Committee and the ways in which that 

feedback has informed the activities of 

MCA-Georgia in the next following 

quarterly report to the Supervisory 

Board. 

(C) Without limiting the foregoing 

general responsibilities or the generality 

of Designated Rights and 

Responsibilities that the Government 

may designate MCA-Georgia, the 

Management Team shall develop the 

components of the Implementation 

Plan, oversee the implementation of the 

Projects, manage and coordinate 

monitoring and evaluation, maintain 

internal accounting records, conduct 

and oversee certain procurements, and 

such other responsibilities as set out in 

the Governance Agreement or delegated 

to the Management Team by the 

Supervisory Board from time to time. 

(D) Appropriate Officers shall have 

the authority to contract on behalf of 

MCA-Georgia under any procurement 

under the Program. 

(E) The Management Team shall have 

the obligation and right to approve 

certain actions and documents or 

agreements, including certain ReDisbursements, MCC Disbursement 

Requests, Compact Reports, certain 

human resources decisions, and certain 

procurement actions, as provided in the 

Governance Agreement. 

(iv) Stakeholders’ Committee. 

(1) Composition. The Government 

shall ensure the establishment of a 

stakeholders’ committee (the 

‘‘Stakeholders Committee’’) consisting 

of at least eight (8) members, taking into 

consideration appropriate gender and 

ethnic representation, unless otherwise 

agreed by the Parties, and comprised of 

the following individuals: 

(A) Three (3) representatives of civil 

societies, (one of whom shall come from 

an organization in the SamtskeJavakheti region and one of whom shall 

come from an environmental 

organization) identified through a 

process that provides widespread notice 

of the formation of the Stakeholders’

Committee; 

(B) The head of the Agrarian 

Committee of Parliament; 

(C) The head of the Road Department 

of the Ministry of Economic 

Development; 

(D) One (1) senior representative from 

the Ministry of the Environment; and 

(E) Two (2) senior representatives of 

the business community, one of which 

should have experience in agribusiness 

and one of which should have 

experience in the financial sector. Each 

Stakeholders’ Committee member may 

appoint an alternate, approved by 

majority vote of the other members, to 

serve when he or she is unable to 

participate in a meeting of the 

Stakeholders’ Committee. 

(2) Formation. The Government shall 

take all action necessary and 

appropriate actions to ensure the 

Stakeholders’ Committee is established 

consistent with this Schedule and as 

otherwise specified in the Governance 

Agreement or otherwise agreed in 

writing by the Parties. The composition 

of the Stakeholders’ Committee may be 

adjusted by agreement of the Parties 

from time to time to ensure, among 

other things, a cross-section 

58922 Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 

representative of the intended 

beneficiaries. The number of members 

of the Stakeholders’ Committee may be 

increased, but in no event to more than 

twelve (12) members, upon the majority 

vote of the then existing members and 

the vacancies created by such increase 

shall be filled by the majority vote of the 

then existing members, subject to the 

approval of MCA-Georgia and MCC. 

(3) Role and Responsibilities. 

(A) The Stakeholders’ Committee 

shall be a mechanism to provide 

representatives of the private sector, 

civil society and local and regional 

governments the opportunity to provide 

advice and input to MCA-Georgia 

regarding the implementation of the 

Compact. 

(B) During quarterly meetings of the 

Stakeholders’ Committee, the 

Management Team shall present an 

update on the implementation of this 

Compact and progress towards 

achievement of the Objectives. The 

Management Team shall provide copies 

of the M&E Plan, the Implementation 

Plan, and reports on the Projects and 

Project Activities. The Stakeholders’

Committee will have an opportunity to 

regularly provide to the Chief Executive 

Officer and to the Supervisory Board its 

views and recommendations. The 

Supervisory Board may, in response to 

the Stakeholders’ Committee, require 

the Management Team to provide such 

other information and documents as the 

Supervisory Board deems advisable. 

(C) The Management Team shall 

include in its quarterly reports to the 

Supervisory Board, a report on the 

Stakeholders’ Committee meetings that 

occurred during the period covered by 

such report. 

(D) The Stakeholders’ Committee 

shall appoint one of their members to be 

the secretary to, among other things, 

take official minutes of the meetings of 

the Stakeholders’ Committee. 

(4) Meetings. The Stakeholders’

Committee shall hold quarterly 

meetings of the full Stakeholders’

Committee as well as such other 

periodic meetings of the Stakeholders’

Committee or subcommittees thereof 

designated along sectoral, regional, or 

other lines, as may be necessary or 

appropriate from time to time. 

(5) Accessibility; Transparency. 

Stakeholders’ Committee members will 

be accessible to the beneficiaries they 

represent to receive the beneficiaries’

comments or suggestions regarding the 

Program. The minutes of all meetings of 

the Stakeholders’ Committee and any 

subcommittees shall be made public on 

the MCA-Georgia Web site in a timely 

manner. 

(e) Outside Project Manager. MCAGeorgia shall have the authority to 

engage qualified entities to serve as 

outside project managers (each, an 

‘‘Outside Project Manager’’) in the event 

that it is advisable to do so for the 

proper and efficient day-to-day 

management of a Project; provided, 

however, that the appointment or 

engagement of any Outside Project 

Manager after a competitive selection 

process shall be subject to approval by 

the Supervisory Board and MCC prior to 

such appointment or engagement. Upon 

Supervisory Board approval, MCAGeorgia may delegate, assign, or contract 

to the Outside Project Managers such 

duties and responsibilities as it deems 

appropriate with respect to the 

management of the Implementing 

Entities and the implementation of the 

specific Projects; and provided, further, 

that the Management Team shall remain 

accountable for those duties and 

responsibilities and all reports delivered 

by the Outside Project Manager 

notwithstanding any such delegation, 

assignment or contract and the Outside 

Project Manager shall be subject to the 

oversight of the Fiscal Agent and 

Procurement Agent. The Supervisory 

Board may determine that it is advisable 

to engage one or more Outside Project 

Managers and instruct MCA-Georgia 

and, where appropriate, a Procurement 

Agent to commence and conduct the 

competitive selection process for such 

Outside Project Manager. The key 

provisions relating to Outside Project 

Managers for certain of the Project 

Activities are set out in the Schedule to 

this Annex. 

(f) Implementing Entities. Subject to 

the terms and conditions of this 

Compact and any other Supplemental 

Agreement between the Parties, MCAGeorgia may provide MCC Funding, 

(directly or indirectly) through an 

Outside Project Manager, to one or more 

Government Affiliates or to one or more 

nongovernmental or other public- or 

private-sector entities or persons to 

implement and carry out the Projects or 

any other activities to be carried out in 

furtherance of this Compact (each, an 

‘‘Implementing Entity’’). The 

Government shall ensure that MCAGeorgia (or the appropriate Outside 

Project Manager) enters into an 

agreement with each Implementing 

Entity, in form and substance 

satisfactory to MCC, that sets forth the 

roles and responsibilities of such 

Implementing Entity and other 

appropriate terms and conditions, such 

as payment of the Implementing Entity 

(the ‘‘Implementing Entity Agreement’’). 

An Implementing Entity shall report 

directly to MCA-Georgia or the Outside 

Project Manager, as designated in the 

applicable Implementing Entity 

Agreement or as otherwise agreed by the 

Parties. The key provisions relating to 

Implementing Entity Agreements for 

certain of the Project Activities are set 

out in the Schedules to this Annex. 

(g) Fiscal Agent. The Government 

shall ensure that MCA-Georgia engages 

one or more fiscal agents (each, a 

‘‘Fiscal Agent’’), who shall be 

responsible for, among other things, (i) 

ensuring and certifying that ReDisbursements are properly authorized 

and documented in accordance with 

established control procedures set forth 

in the Disbursement Agreement, the 

Fiscal Agent Agreement and other 

relevant Supplemental Agreements, (ii) 

instructing a Bank to make ReDisbursements from a Permitted 

Account, following applicable 

certification by the Fiscal Agent, (iii) 

providing applicable certifications for 

MCC Disbursement Requests, (iv) 

maintaining proper accounting of all 

MCC Funding financial transactions, 

and (v) producing reports on MCC 

Disbursements and Re-Disbursements 

(including any requests therefore) in 

accordance with established procedures 

set forth in the Disbursement 

Agreement, the Fiscal Agent Agreement 

or any other relevant Supplemental 

Agreements. Upon the written request of 

MCC, the Government shall ensure that 

MCA-Georgia terminates a Fiscal Agent, 

without any liability to MCC, and the 

Government shall ensure that MCAGeorgia engages a new Fiscal Agent, 

subject to the approval by the 

Supervisory Board and MCC. The 

Government shall ensure that MCAGeorgia enters into an agreement with 

each Fiscal Agent, in form and 

substance satisfactory to MCC, that sets 

forth the roles and responsibilities of the 

Fiscal Agent and other appropriate 

terms and conditions, such as payment 

of the Fiscal Agent (‘‘Fiscal Agent 

Agreement’’). 

(h) Auditors and Reviewers. The 

Government shall ensure that MCAGeorgia carries out the Government’s 

audit responsibilities as provided in 

Sections 3.8(d), (e) and (f), including 

engaging one or more auditors (each, an 

‘‘Auditor’’) required by Section 3.8(d). 

As requested by MCC in writing from 

time to time, the Government shall 

ensure that MCA-Georgia shall also 

engage an independent (i) reviewer to 

conduct reviews of performance and 

compliance under this Compact 

pursuant to Section 3.8(f), which 

reviewer shall have the capacity to (1) 

conduct general reviews of performance 

or compliance, (2) conduct 

Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 58923 

environmental audits, and (3) conduct 

data quality assessments in accordance 

with the M&E Plan, as described more 

fully in Annex III, and/or (ii) evaluator 

to assess performance as required under 

the M&E Plan (each, a ‘‘Reviewer’’). 

MCA-Georgia shall select the Auditor(s) 

or Reviewers in accordance with the 

Governance Regulations or relevant 

Supplemental Agreement. The 

Government shall ensure that MCAGeorgia enters into an agreement with 

each Auditor or Reviewer, in form and 

substance satisfactory to MCC, that sets 

forth the roles and responsibilities of the 

Auditor or Reviewer with respect to the 

audit, review or evaluation, including 

access rights, required form and content 

of the applicable audit, review or 

evaluation and other appropriate terms 

and conditions such as payment of the 

Auditor or Reviewer (the ‘‘Auditor/ 

Reviewer Agreement’’). In the case of a 

financial audit required by Section 

3.8(f), such Auditor/Reviewer 

Agreement shall be effective no later 

than 120 days prior to the end of the 

relevant fiscal year or other period to be 

audited; provided, however, if MCC 

requires concurrent audits of financial 

information or reviews of performance 

and compliance under this Compact, 

then such Auditor/Reviewer Agreement 

shall be effective no later than a date 

agreed by the Parties. 

(i) Procurement Agent. If requested by 

MCC, the Government shall ensure that 

MCA-Georgia engages one or more 

procurement agents (each, a 

‘‘Procurement Agent’’) to carry out and/ 

or certify specified procurement 

activities in furtherance of this Compact 

on behalf of the Government, MCAGeorgia, any Outside Project Manager or 

Implementing Entity. The role and 

responsibilities of such Procurement 

Agent and the criteria for selection of a 

Procurement Agent shall be as set forth 

in the applicable Implementation Letter 

or Supplemental Agreement. The 

Government shall ensure that MCAGeorgia enters into an agreement with 

the Procurement Agent, in form and 

substance satisfactory to MCC, that sets 

forth the roles and responsibilities of the 

Procurement Agent with respect to the 

conduct, monitoring and review of 

procurements and other appropriate 

terms and conditions, such as payment 

of the Procurement Agent (the 

‘‘Procurement Agent Agreement’’). Any 

Procurement Agent shall adhere to the 

procurement standards set forth in the 

Procurement Agreement and 

Procurement Guidelines and ensure 

procurements are consistent with the 

procurement plan (the ‘‘Procurement 

Plan’’) adopted by MCA-Georgia, which 

plan shall forecast the upcoming six 

month procurement activities and be 

updated every six months. 

4. Finances and Fiscal Accountability 

(a) Financial Plan. 

(i) Financial Plan. The multi-year 

financial plan for the Program and for 

each Project (the ‘‘Multi-Year Financial 

Plan’’) is summarized in Annex II to this 

Compact. 

(ii) Detailed Financial Plan. During 

the Compact Term, the Government 

shall ensure that MCA-Georgia delivers 

to MCC for approval timely financial 

plans that detail the annual and 

quarterly budget and projected cash 

requirements for the Program (including 

administrative costs) and each Project, 

projected both on a commitment and 

cash requirement basis (each, a 

‘‘Detailed Financial Plan’’). Each 

Detailed Financial Plan shall be 

delivered by such time as specified in 

the Disbursement Agreement or as may 

otherwise be agreed by the Parties. The 

Multi-Year Financial Plan and each 

Detailed Financial Plan and each 

amendment, supplement or other 

change thereto are collectively, the 

‘‘Financial Plan.’’

(iii) Expenditures. No financial 

commitment involving MCC Funding 

shall be made, no obligation of MCC 

Funding shall be incurred, and no ReDisbursement shall be made or MCC 

Disbursement Request submitted for any 

activity or expenditure, unless the 

expense is provided for in the Detailed 

Financial Plan and unless uncommitted 

funds exist in the balance of the 

Detailed Financial Plan for the relevant 

period or unless the Parties otherwise 

agree in writing. 

(iv) Modifications to Financial Plan. 

Notwithstanding anything to the 

contrary in this Compact, MCA-Georgia 

may amend or supplement the Financial 

Plan or any component thereof without 

amending this Compact, provided any 

material amendment or supplement has 

been approved by MCC and is otherwise 

consistent with the requirements of this 

Compact and any relevant 

Supplemental Agreement between the 

Parties. 

(b) Disbursement and ReDisbursement. The Disbursement 

Agreement (and disbursement schedules 

thereto), as amended from time to time, 

shall specify the terms, conditions and 

procedures on which MCC 

Disbursements and Re-Disbursements 

shall be made. The obligation of MCC to 

make MCC Disbursements or approve 

Re-Disbursements is subject to the 

fulfillment or waiver of any such terms 

and conditions. The Government and 

MCA-Georgia shall jointly submit the 

applicable request for an MCC 

Disbursement (the ‘‘MCC Disbursement 

Request’’) as may be specified in the 

Disbursement Agreement. MCC will 

make MCC Disbursements in tranches to 

a Permitted Account from time to time 

as provided in the Disbursement 

Agreement or as may otherwise be 

agreed by the Parties, subject to Program 

requirements and performance by the 

Government, MCA-Georgia and other 

relevant parties in furtherance of this 

Compact. Re-Disbursements will be 

made from time to time based on 

requests by an authorized representative 

of the appropriate party designated for 

the size and type of Re-Disbursement in 

accordance with the Governance 

Regulations and Disbursement 

Agreement; provided, however, unless 

otherwise agreed by the Parties in 

writing, no Re-Disbursement shall be 

made unless and until the written 

approvals specified herein or in the 

Governance Regulations and 

Disbursement Agreement for such ReDisbursement have been obtained and 

delivered to the Fiscal Agent. 

(c) Fiscal Accountability Plan. By 

such time as specified in the 

Disbursement Agreement or as 

otherwise agreed by the Parties, MCAGeorgia shall adopt as part of the 

Implementation Plan a fiscal 

accountability plan that identifies the 

principles and mechanisms to ensure 

appropriate fiscal accountability for the 

use of MCC Funding provided under 

this Compact, including the process to 

ensure that open, fair, and competitive 

procedures will be used in a transparent 

manner in the administration of grants 

or cooperative agreements and the 

procurement of goods and services for 

the accomplishment of the Objectives 

(the ‘‘Fiscal Accountability Plan’’). The 

Fiscal Accountability Plan shall set 

forth, among other things, requirements 

with respect to the following matters: (i) 

Funds control and documentation; (ii) 

separation of duties and internal 

controls; (iii) accounting standards and 

systems; (iv) content and timing of 

reports; (v) policies concerning public 

availability of all financial information; 

(vi) cash management practices; (vii) 

procurement and contracting practices, 

including timely payment to vendors; 

(viii) the role of independent auditors; 

and (ix) the roles of fiscal agents and 

procurement agents. 

(d) Permitted Accounts. The 

Government shall establish, or cause to 

be established, such accounts (each, a 

‘‘Permitted Account,’’ and collectively 

‘‘Permitted Accounts’’) as may be agreed 

by the Parties in writing from time to 

time, including: 

58924 Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 

(i) A single, completely separate U.S. 

Dollar interest-bearing account (the 

‘‘Special Account’’) at a commercial 

bank that is procured through a 

competitive process to receive MCC 

Disbursements; 

(ii) If necessary, an interest-bearing 

local currency of Georgia account (the 

‘‘Local Account’’) at the commercial 

bank to which the Fiscal Agent may 

authorize transfer from any U.S. Dollar 

Permitted Account for the purpose of 

making Re-Disbursements payable in 

local currency; and 

(iii) Such other interest-bearing 

accounts to receive MCC Disbursements 

in such banks as the Parties mutually 

agree upon in writing. 

No other funds shall be commingled 

in a Permitted Account other than MCC 

Funding and Accrued Interest thereon. 

All MCC Funding held in an interestbearing Permitted Account shall earn 

interest at a rate of no less than such 

amount as the Parties may agree in the 

respective Bank Agreement or 

otherwise. MCC shall have the right, 

among other things, to view any 

Permitted Account statements and 

activity directly on-line or at such other 

frequency as the Parties may otherwise 

agree. By such time as shall be specified 

in the Disbursement Agreement or as 

otherwise agreed by the Parties, the 

Government shall ensure that MCAGeorgia enters into an agreement with 

each Bank, respectively, satisfactory to 

MCC, that sets forth the signatory 

authority, access rights, anti-money 

laundering and anti-terrorist financing 

provisions, and other terms related to 

the Permitted Account, respectively 

(each, a ‘‘Bank Agreement’’). For 

purposes of this Compact, any bank 

holding an account referenced in 

Section 4(d) of this Program Annex are 

each a ‘‘Bank’’ and, are collectively 

referred to as the ‘‘Banks.’’

(e) Currency Exchange. The Bank 

shall convert MCC Funding to the 

currency of Georgia at a rate to which 

the Parties mutually agree with the Bank 

in the Bank Agreement. 

5. Transparency; Accountability 

Transparency and accountability to 

MCC and to the beneficiaries are 

important aspects of the Program and 

Projects. Without limiting the generality 

of the foregoing, in an effort to achieve 

the goals of transparency and 

accountability, the Government shall 

ensure that MCA-Georgia: 

(a) Establishes an e-mail suggestion 

box as well as a means for other written 

comments that interested persons may 

use to communicate ideas, suggestions 

or feedback to MCA-Georgia; 

(b) Considers as a factor in its 

decision-making the recommendations 

of the Observers; 

(c) Develops and maintains a website 

(the ‘‘MCA-Georgia Website’’) in a 

timely, accurate and appropriately 

comprehensive manner, such MCAGeorgia Website to include postings of 

information and documents in English 

and Georgian and other languages where 

relevant; and 

(d) Posts on the MCA-Georgia Website 

and otherwise makes publicly available 

from time to time the following 

documents or information: 

(i) The Compact and all Compact 

Reports; 

(ii) All minutes of the meetings of the 

Supervisory Board and Stakeholders’

Committee; 

(iii) The M&E Plan, as amended from 

time to time, along with periodic reports 

on Program performance; 

(iv) All relevant Environmental 

Impact Assessments and supporting 

documents; 

(v) The Compact and all Compact 

Reports; 

(vi) All audit reports by an Auditor 

and any periodic reports or evaluations 

by a Reviewer; 

(vii) Disbursement Agreement, as 

amended from time to time; 

(viii) All procurement agreements 

(including policies, standard 

documents, procurement plans, and 

required procedures), requests for 

proposals, and notices of awarded 

contracts; and 

(ix) A copy of any legislation and 

other documents related to the 

formation, organization and governance 

of MCA-Georgia, including the 

Governance Regulations, and any 

amendments thereto. 

Schedule 1 to Annex I—Regional 

Infrastructure Rehabilitation Project 

This Schedule 1 describes and 

summarizes the key elements of a 

regional infrastructure rehabilitation 

Project that the Parties intend to 

implement in furtherance of the Key 

Regional Infrastructure Rehabilitated 

Objective (the ‘‘Regional Infrastructure 

Rehabilitation Project’’). Additional 

details regarding the implementation of 

the Regional Infrastructure 

Rehabilitation Project will be included 

in the Implementation Plan and in 

relevant Supplemental Agreements. 

1. Background 

Dilapidated infrastructure, especially 

the poor condition of the roads, 

unreliable gas and electricity supply, 

and deteriorating municipal services, 

has been consistently identified through 

the consultative process as a major 

impediment to economic growth in 

Georgia. The Government recognizes the 

importance of adequate and reliable 

infrastructure services to support 

manufacturing and commerce, for 

improved health and the direct impacts 

on well-being; hence, for economic 

development more generally. 

(a) Samtskhe-Javakheti Road 

The Samtskhe-Javakheti region is one 

of the poorest regions of Georgia, with 

a per capita income significantly below 

the national average and a high 

dependency on subsistence agriculture. 

In southern Georgia, deterioration of the 

roads has cut the region of SamtskheJavakheti off from the rest of the 

country. With high costs to transport 

produce out of the region, regional 

farmers are unable to compete with 

farmers from other regions. Moreover, 

the poor road infrastructure also creates 

significant obstacles to importing high 

quality agricultural inputs and other 

goods. Rehabilitation of roads in the 

Samtskhe-Javakheti area is expected to 

foster economic development in 

Samtskhe-Javakheti through (i) 

increasing exports of agricultural 

products from the region; (ii) increasing 

social, political and economic 

integration of the local population in 

Samtskhe-Javakheti, including ethnic 

minorities, with the rest of Georgia; (iii) 

expanding international trade, by 

providing a more direct transport link 

from Tbilisi and eastern and southern 

Georgia to Turkey and by rehabilitating 

the existing road from Ninotsminda to 

Armenia; (iv) developing the tourism 

potential of Vardzia, a World Heritage 

site; and (v) complementing other road 

development projects. 

(b) Energy Rehabilitation 

Georgia’s main trunkline for the 

transmission of natural gas is the northsouth gas pipeline system (the 

‘‘Pipeline’’). The Pipeline receives gas at 

Georgia’s northern border with Russia, 

transports gas to Georgian wholesale 

customers and transits gas to Armenia. 

In order to secure additional sources of 

supply for domestic use in Georgia, 

plans are also underway for the Pipeline 

to transport gas from Azerbaijan. 

Following the break-up of the Soviet 

Union and with the decline of the 

Georgian economy, the Pipeline has not 

been properly maintained. As a 

consequence, over the past five years, 

gas losses have amounted to 5% to 9% 

annually. In addition, the Pipeline 

suffers from several flaws that put it in 

jeopardy of catastrophic failure, 

potentially cutting off the main source 

of heating for some 300,000 households 

and over 5,000 businesses in 46 cities 

Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 58925 

and 230 villages throughout the country, 

as well as the source of fuel to generate 

approximately 30% to 35% of the 

electricity consumed in the country. 

The pipeline operating company, 

Georgia Gas International Corporation 

(‘‘GGIC’’), has incurred substantial 

commercial losses to a point where 

maintenance is no longer financially 

possible. The Pipeline has degraded to 

such an extent that it no longer provides 

an acceptable level of supply security 

for Georgia, hindering further economic 

development. The Pipeline requires a 

comprehensive rehabilitation program. 

The Pipeline plays an important but 

only a partial role in the country’s 

overall energy balance. In order to 

support the Ministry of Energy to 

further develop and implement its 

energy sector strategy, the Government 

requires immediate and expert advice in 

a number of areas. 

(c) Regional Infrastructure 

Development. In the Regions, many 

governing bodies have been unable to 

deliver safe, reliable, affordable and 

accessible public and utility services. It 

is estimated that more than half the 

water and sewage systems are beyond 

their service lives, and similar problems 

face other services. Local and municipal 

governments need funding for 

improvements in regional infrastructure, 

particularly in water supply, sanitation, 

irrigation, municipal gasification, roads 

and solid waste. 

2. Summary of Project Activities 

The objective of the Regional 

Infrastructure Rehabilitation Project is 

to rehabilitate key regional 

infrastructure. The Regional 

Infrastructure Rehabilitation Project 

includes three Project Activities. 

• Samtskhe-Javakheti Road Project 

Activity (the ‘‘Road Rehabilitation 

Activity’’). The objective of the Road 

Rehabilitation Activity is improved 

transportation for regional trade. The 

Activity will rehabilitate or construct 

approximately 245 km of the main road 

that traverses the Samtskhe-Javakehti 

region and provide technical assistance 

for development of a road master plan, 

maintenance planning and contracting. 

• Energy Rehabilitation Project 

Activity (the ‘‘Energy Rehabilitation 

Activity’’). The objective of the Energy 

Rehabilitation Activity is increased 

reliability of energy supply and reduced 

losses. The Activity will rehabilitate the 

Pipeline and provide advisory service to 

the Government to support the Ministry 

of Energy to further develop and 

implement its energy sector strategy. 

• Regional Infrastructure 

Development Project Activity (the 

‘‘Regional Infrastructure Development 

Activity’’). The objective of the Regional 

Infrastructure Development Activity is 

improved regional and municipal 

service delivery. The Activity will 

provide grants to fund regional and 

municipal physical infrastructure such 

as water supply, sanitation, irrigation, 

municipal gasification, roads and solid 

waste. 

The M&E Plan (described in Annex 

III) will set forth anticipated results and, 

where appropriate, regular benchmarks 

at the Regional Infrastructure 

Rehabilitation Project level and at each 

Project Activity level that may be used 

to monitor implementation progress. 

Performance against these benchmarks 

and the overall impact of the Regional 

Infrastructure Rehabilitation Project and 

each Project Activity will be assessed 

and reported at regular intervals to be 

specified in the M&E Plan or otherwise 

agreed by the Parties from time to time. 

The Parties expect that additional 

benchmarks will be identified during 

implementation of each Project Activity. 

Estimated amounts of MCC Funding for 

each Project Activity within the 

Regional Infrastructure Rehabilitation 

Project are identified in Annex II of this 

Compact. Conditions precedent to each 

Project Activity and sequencing of the 

Project Activities shall be set forth in 

the Disbursement Agreement or other 

relevant Supplemental Agreements. 

(a) Road Rehabilitation Activity. 

(i) Sub-Activities. MCC Funding will 

be used to: 

(1) Rehabilitate or construct, as 

applicable, the road sections set out 

below (the ‘‘Project Road’’), as well as (i) 

Rehabilitate and improve existing 

bridges along the Project Road 

alignment, (ii) improve existing 

drainage facilities along the road 

alignment, (iii) provide road safety 

features, and (iv) provide local access 

and ancillary structures: 

(A) Teleti-Koda-Tsalka; 

(B) Tsalka—Ninotsminda; 

(C) Akhalkalaki—Ninotsminda—the 

Armenian border, and connection to the 

Turkish border; and 

(D) Khertvisi to Vardzia. 

(2) Provide technical assistance to the 

Road Department of the Ministry of 

Economic Development (‘‘RDMED’’) for 

the formulation of a road master plan to 

prioritize investments in the road sector 

and for maintenance planning and 

contracting. 

(ii) Outside Project Manager. MCC 

Funding will be used to engage, through 

a competitive international tender 

process acceptable to MCC, a project 

management firm as an Outside Project 

Manager to manage and supervise the 

Road Rehabilitation Activity. 

(b) Activity: Energy Rehabilitation. 

(i) Sub-Activities. MCC Funding will 

be used to: 

(1) Rehabilitate the Pipeline by: 

(A) Inspecting the Pipeline to identify 

weaknesses and defects and formulate a 

prioritized rehabilitation plan 

addressing the security and integrity of 

the Pipeline; 

(B) Repairing the most urgent defects 

on a priority basis to bring the Pipeline 

back to an acceptable level of technical 

integrity for the required throughput 

capacity; and 

(C) Repairing leaks in the Pipeline to 

reduce technical losses. 

(2) Engage one or more firms (the 

‘‘Energy Advisors’’) to support the 

Ministry of Energy to further develop 

and implement its energy sector 

strategy, including, but not limited to, 

providing technical and feasibility 

studies essential for investment in 

regional transmission, gas-fired 

generation, and hydropower. 

(ii) Outside Project Manager. MCC 

Funding will be used to engage, through 

a competitive international tender 

process acceptable to MCC, a project 

management firm as an Outside Project 

Manager to manage and supervise the 

rehabilitation of the Pipeline. 

(c) Regional Infrastructure 

Development Activity. 

(i) Sub-Activities. MCC Funding will 

be used to make grants (‘‘RID Grants’’) 

to regional governments, local 

governments, local self-government 

units, municipal utilities and the central 

government (to the extent that it owns 

or operates assets in the Regions) (each 

an ‘‘Eligible Governmental Entity’’) for 

the following types of projects (‘‘RID 

Projects’’): 

(1) For investment to improve and/or 

develop regional and/or municipal 

public infrastructure (including through 

cooperation with international and/or 

regional financial institutions) primarily 

in the water supply, sanitation, 

irrigation, municipal gasification, roads 

and solid waste sectors. Other sectors 

may be considered on a case-by-case 

basis; and 

(2) For technical assistance to ensure 

sustainability of newly improved or 

installed infrastructure facilities by (A) 

addressing issues including tariff 

design, tariff collection, metering and 

general utility operations training in 

order to ensure adequate funding for 

operation and maintenance of the 

installed/rehabilitated infrastructure; 

and (B) building technical capacity of 

owners of the new or rehabilitated 

infrastructure assets. 

(ii) RID Grant Size. MCC Funding for 

each RID Grant will be allocated in an 

amount not to exceed USD $7,000,000, 

with the exception of RID Grants for 

58926 Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 

technical assistance for which the 

maximum amount may not exceed USD 

$500,000, except as may be otherwise 

agreed by MCC. With the exception of 

grants for technical assistance, the 

minimum amount of each RID Grant 

will be USD $500,000. Pooling of 

similar and contiguous projects will be 

allowed to meet the minimum allowable 

grant value. In instances where MCC 

Funding is used in parallel with other 

international and regional financial 

institutions, the MCC Funding portion 

shall not exceed the lesser of 35% of the 

total cost, or USD $7,000,000 per 

project. 

(iii) RID Project Selection Criteria. To 

be eligible for MCC Funding, each 

proposal for a RID Grant must: 

(1) Be submitted by an Eligible 

Governmental Entity and clearly show 

contribution to the economic and social 

development in the Regions; 

(2) Be a priority for the Eligible 

Governmental Entity, the targeted area 

and the local population, as evidenced 

by citizen input through public hearings 

and/or other appropriate mechanisms 

for identifying needs and priorities; 

(3) Be restricted to rehabilitation and 

repair of existing service infrastructure 

and/or development of new 

infrastructure required for service 

delivery. No funding will be provided 

for commercial enterprises, land 

acquisition, working capital or other 

operating budget support, or operations 

and maintenance; 

(4) Outline a technically feasible, least 

cost approach to addressing a specific 

problem or need; 

(5) Be projected to have a minimum 

real economic rate of return of not less 

than 15% or yield benefits that, using an 

agreed evaluation methodology 

acceptable to MCC, can be quantified or 

otherwise identified with an acceptable 

degree of certainty, as in the case of 

technical assistance projects; 

(6) Be supported by an operations and 

maintenance plan and budget for a 

period of at least five years after 

completion of such RID Project; 

(7) Be accompanied by a funding plan 

demonstrating that the ongoing costs of 

operations and maintenance for the 

proposed RID Project will be met: 

(A) In whole or in part from user fees 

or similar charges generated by the 

proposed RID Project; and/or 

(B) In whole or in part by the 

sponsoring Eligible Governmental Entity 

from its budget; and/or 

(C) In whole or in part by the 

Government from its budget as set out 

in a commitment letter from the 

Government to the Eligible 

Governmental Entity or other 

satisfactory documentation. 

The Eligible Governmental Entity may 

apply for technical assistance to assist it 

to satisfy this criterion; 

(8) Be in full compliance with all 

relevant provisions of Georgian law and 

regulations, including environmental 

legislation; 

(9) Be in compliance with MCC 

Environmental Guidelines; 

(10) Be in compliance with MCC 

limitations on the use of funding; and 

(11) Be in compliance with the 

operations manual (the ‘‘RID Operations 

Manual’’) acceptable to MCC. 

(iv) Implementing Entity 

Arrangement. The Municipal 

Development Fund (‘‘MDF’’), the entity 

currently serving as the project 

implementation unit for the World 

Bank’s Municipal Development and 

Decentralization Project II (‘‘MDDPII’’), 

will implement the Regional 

Infrastructure Development Activity. 

MCA-Georgia will enter into an 

Implementing Entity Agreement, called 

a Collaboration Agreement, with MDF 

through which it will retain approval 

rights necessary for it to ensure 

compliance with limitations on the use 

of MCC Funding, including approval of 

the RID Operations Manual. MCAGeorgia will also enter into a separate 

Service Agreement with the World Bank 

that sets out certain supervisory and 

technical support services to be 

provided by the World Bank in 

furtherance of the Collaboration 

Agreement. MCA-Georgia will approve 

the RID Operations Manual which will 

provide the MDF supervisory board and 

the management of MDF with the 

policies and procedures to be followed 

during implementation of the Activity. 

The Government will ensure that MCAGeorgia will obtain and maintain a seat 

on the MDF supervisory board. 

3. Beneficiaries 

(a) Road Rehabilitation Activity 

The principal beneficiaries of the 

Road Rehabilitation Activity are 

expected to be the rural/regional 

population located in and near the 

Samtskhe-Javakheti region through 

which the majority of the road traverses. 

Specific beneficiaries include (i) farmers 

who use the road to get products to 

market, (ii) domestic commercial freight 

transport operators, (iii) international 

shippers, (iv) users of public transport, 

(v) private business and tourist 

travelers, and (vi) service industries 

supporting transportation and tourism. 

The population of this region is 

expected to benefit from enhanced 

agricultural and trade opportunities 

afforded them by an improved road. 

Other benefits include improved access 

to education, healthcare and 

employment. The entire population is 

expected to benefit from improved 

decision-making, planning and policymaking that may result from the road 

master plan and RDMED technical 

assistance. 

(b) Energy Rehabilitation Activity 

Beneficiaries include households, 

businesses and industrial enterprises 

throughout Georgia that consume gas or 

electricity. Rehabilitation will improve a 

situation which currently endangers the 

environment as well as the health and 

safety of the population. Another benefit 

may be carbon credit revenue which 

may be secured as a result of reduced 

greenhouse gas emissions related to 

Pipeline rehabilitation. In addition, the 

financial condition of GGIC, the 

Pipeline operating company, will be 

improved through reduced technical 

losses and improved cash flow. All 

energy consumers located throughout 

Georgia are expected to benefit from 

implementation of the Government’s 

energy strategy with the assistance of 

the Energy Advisors’ services. 

(c) Regional Infrastructure Development 

Activity 

The immediate beneficiaries of the 

Regional Infrastructure Development 

Activity are expected to be Eligible 

Governmental Entities, which will 

manage the provision of improved 

services to their citizens through local 

infrastructure projects such as water 

supply, sanitation, irrigation, municipal 

gasification, roads and solid waste. The 

long-term principal beneficiaries of the 

Activity include the users of the 

services in localities in which the 

Activity funds investment. 

4. Donor Coordination; Private Sector; 

Civil Society 

(a) Road Rehabilitation Activity. 

(i) World Bank. The World Bank is 

currently financing a Secondary and 

Local Roads Project for approximately 

USD $40,000,000 with a USD 

$15,000,000 contribution from the 

Government focused on rehabilitating 

500–750 kilometers of paved secondary 

and local roads. Included in the current 

and previous World Bank road sector 

projects is (1) a component to strengthen 

the management, supervisory and road 

maintenance capacity of the RDMED; (2) 

institution building, policy reform, and 

restructuring of the Ministry of 

Transport; (3) improving access on the 

primary road network and (4) 

institutional strengthening of the 

Georgian transport agencies. The Road 

Rehabilitation Activity will complement 

Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 58927 

the World Bank project by further 

improving the Georgian road network. 

(ii) European Bank for Reconstruction 

and Development (‘‘EBRD’’). EBRD is 

contemplating parallel financing of the 

rehabilitation of certain road segments 

(such as Akhalkalaki to Lake Tabatskuri 

and Lake Tabatskuri to Bakuriani) in the 

Samtskhe-Javakheti region that connect 

with segments to be funded under the 

Road Rehabilitation Activity, which 

would deepen the potential for 

economic growth in the region. EBRD 

may also provide technical assistance 

for commercialization of operations and 

maintenance for RDMED. 

(iii) Other Donors. The Kuwait Fund 

for Arab Economic Development has 

provided Kuwait Dinar 5,000,000 

(approximately USD $15,000,000) for 

the upgrade, rehabilitation, and 

reconstruction of approximately 100 km 

of international roads in Georgia. The 

Kuwait Fund is currently evaluating an 

additional assistance program for the 

upgrade of roads in Tbilisi, which 

would complement the Road 

Rehabilitation Activity network outside 

of Tbilisi. 

(b) Energy Rehabilitation Activity 

The possible availability of MCC 

Funding has raised the interest of the 

donor community in participating in 

rehabilitation of the Pipeline. 

(i) World Bank. The World Bank is 

currently implementing an Energy 

Transit Institution Building Project. 

From this, the World Bank is 

contemplating providing approximately 

USD $830,000 to the Government for 

project preparation activities related to 

the Pipeline. 

(ii) EBRD and IFC. In 2003, EBRD and 

IFC provided upwards of USD 

$220,000,000 each in syndicated loans 

to the private sector developers of the 

Baku-Tibilisi-Ceyhan Crude Oil Pipeline 

and the South Caucasus Pipeline, both 

of which traverse Georgia. EBRD has 

expressed interest in providing 

additional assistance related to the 

Pipeline rehabilitation, if MCC Funding 

is realized. 

(iii) Other Donors and Sources of 

Funding. If MCC Funding is realized, 

additional World Bank and/or other 

funding to support further rehabilitation 

may be available from the purchase of 

carbon credits associated with the 

reduction of methane leakage resulting 

from the rehabilitation of the Pipeline. 

BP, an international oil and gas 

company with investments in Georgia, 

is expected to participate in the 

preparatory surveys for the Pipeline 

rehabilitation under a separate grant 

(approximately USD $500,000). 

In addition to the World Bank and 

EBRD, many other donors such as 

USAID and KfW have supported the 

electricity sector for the past decade. 

Assistance has been provided to support 

sector reform and restructuring, creation 

of a regulatory body, rehabilitation of 

plant and equipment and purchase of 

emergency energy supply. The 

engagement of Energy Advisors with 

MCC Funding represents an extension 

of such assistance and is 

complementary to the ongoing work of 

a very active and energy-focused donor 

group. 

(c) Regional Infrastructure Development 

Activity 

(i) USAID. USAID/Georgia currently 

does not undertake large infrastructure 

projects in Georgia. Their efforts in 

infrastructure have been primarily in 

the energy sector and rehabilitation of 

small, local community infrastructure, 

such as schools and health care 

facilities, as part of their rural programs. 

(ii) World Bank. The World Bank 

currently funds small scale 

infrastructure projects proposed by local 

governments through its credit facility, 

MDDPII. This credit is based on an 

assessment of the creditworthiness of 

municipalities and thus has limited 

applicability to poorer regions. The 

Regional Infrastructure Development 

Activity would increase the availability 

and reach of financing through its grant 

mechanism and also ensure close 

coordination on local infrastructure 

investments, as the MCC Funding and 

the World Bank loans would be 

managed by the same administrative 

unit, the MDF. 

(iii) EBRD. EBRD’s main operational 

objectives in Georgia for 2004–2005 

complement those of the Regional 

Infrastructure Development Activity and 

EBRD has prepared a number of projects 

which may be candidates for parallel 

funding under this Activity. 

(iv) Other Donors. The World Bank, 

USAID, KfW and UNDP are working in 

the water sector through the Georgian 

Social Investment Fund. Efforts will be 

made to coordinate the Regional 

Infrastructure Development Project 

Activity and Georgia Social Investment 

Fund activities in the cities where both 

organizations are working. 

5. Sustainability 

(a) Institutional Sustainability 

The implementation of the Regional 

Infrastructure Rehabilitation Project is 

designed to support the development of 

local capacity by providing Georgian 

professionals and institutions with 

experience in implementing the 

infrastructure projects, where 

appropriate, while maintaining tight 

fiduciary risk controls. It is anticipated 

that Georgian construction firms will be 

competitive as contractors or 

subcontractors in the bidding for 

construction packages in all three 

Project Activities. 

The RDMED has received and 

continues to receive technical assistance 

from the World Bank to strengthen its 

capacity in engineering standards and 

data collection, works monitoring, road 

maintenance, traffic safety, and 

interaction and responsiveness with 

local communities. Such efforts will 

ensure the effectiveness of this body in 

overseeing and maintaining the Road as 

the ultimate owner and responsible 

entity once the Road Rehabilitation 

Activity is completed. MCC will provide 

technical assistance to the RDMED to 

build capacity in maintenance planning 

and contracting. The Road 

Rehabilitation Activity will also provide 

funding for the commissioning and 

development of a road master plan to 

aid in the prioritization of future road 

investment. The development of GGIC 

capacity to prioritize and carry out 

Pipeline rehabilitation and maintenance 

works is an essential feature of the 

design of the Energy Rehabilitation 

Activity. Close coordination between 

MCC-funded contractors and GGIC staff 

during the Pipeline rehabilitation is 

expected to enhance capacity through 

on-the-job training. Energy sector 

generation and transmission 

sustainability will also be addressed by 

the Energy Advisors through supporting 

the Government to further develop and 

implement its energy sector strategy. 

With respect to the Regional 

Infrastructure Development Activity, 

institutional capacity may be 

strengthened through direct technical 

assistance to the Eligible Governmental 

Entities applying for RID Grants. This 

assistance will allow for the 

establishment or improvement of 

service provision and could come in the 

form of assistance in the areas of 

financial management capability, tariff 

design, tariff collection, metering or 

general utility operations training. 

(b) Financial Sustainability 

Proper budgeting and funding of 

maintenance activities is the key to 

financial sustainability of the Regional 

Infrastructure Rehabilitation Project. 

Lack of maintenance on the SamtskheJavakheti Road has resulted in its 

current dilapidated state and need for 

major rehabilitation; therefore, regular 

maintenance and a proper drainage 

system will be critical to ensuring the 

long-term impact and realization of 

58928 Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 

benefits from the Road Rehabilitation 

Activity. As a condition precedent to 

the first disbursement for the Road 

Rehabilitation Activity in any fiscal 

year, MCC will require that a minimum 

budget be approved for the maintenance 

of all maintainable national roads and 

that prior year budgeted amounts have 

been spent for the intended purpose. 

Similarly, the present condition of the 

Pipeline may be attributed, in large part, 

to the lack of maintenance over the last 

decade. The Pipeline rehabilitation and 

the satisfaction of the associated 

conditions are intended to improve the 

financial sustainability of GGIC through 

reduced losses, increased revenue and 

improved cash flow. To promote 

financial sustainability of GGIC, MCC 

requires that: (i) in view of GGIC’s 

outstanding tax liabilities, the Georgia 

Tax Restructuring Committee grant tax 

relief for past tax liabilities accrued 

through June 30, 2005 in the form of a 

fifteen year restructuring plan for such 

tax liabilities (including a five-year 

freeze and a ten-year payment period); 

and (ii) beginning in July 2007, the 

Georgian National Energy Regulatory 

Commission permits GGIC to withhold 

gas as payment in kind from its nonpaying customers for transmission 

charges owed to GGIC, and GGIC will 

utilize this in-kind payment mechanism 

to the extent needed to ensure that 

collection rates (for all services 

provided) are at least 95% throughout 

the remainder of the Compact Term. 

A lack of attention to maintenance is 

also seen at the level of local 

infrastructure where municipalities 

have consistently been unable to fund 

maintenance. The Regional 

Infrastructure Development Activity is 

intended to improve the financial 

sustainability of regional and municipal 

assets through the condition that MCC 

Funding will be provided only once it 

is evident that the necessary operations 

and maintenance of proposed 

investments will be funded either 

through user fees or similar charges 

generated from the RID Project, by the 

applicable Eligible Government Entity 

or by the Government. 

Funding from MCC for the Regional 

Infrastructure Rehabilitation Project will 

depend on the satisfaction of all 

conditions precedent as set forth in the 

Disbursement Agreement for road 

maintenance, maintenance of the 

Pipeline, and the maintenance of other 

infrastructure assets funded through the 

Regional Infrastructure Development 

Activity. 

(c) Environmental and Social 

Sustainability 

Overall environmental and social 

sustainability depend on proper 

implementation of Project safeguards. 

MCA-Georgia’s Management Team will 

include an Environmental and Social 

Impact Manager (‘‘ESI Manager’’) whose 

job will be to ensure that environmental 

and social mitigation measures 

(including occupational health and 

safety issues) are followed for all Project 

Activities in accordance with the 

provisions set forth in the Compact and 

other documents. The ESI Manager will 

serve as the point of contact for 

comments and concerns of Project 

affected parties regarding the 

implementation of all Project Activities 

under the Compact and lead the effort 

to find feasible resolutions to those 

problems. The ESI Manager will 

convene periodic public meetings to 

provide implementation updates and to 

identify and address public concerns. 

Should the issue of involuntary 

resettlement arise, the Regional 

Infrastructure Rehabilitation Project will 

be conducted in compliance with the 

World Bank Policy on Involuntary 

Resettlement. 

6. Policy and Legal Reform; Procedural 

Changes or Regulatory Actions 

(a) The Parties have identified the 

following policy, legal and regulatory 

reforms and actions that the 

Government shall pursue in support, 

and to reach the full benefits, of the 

Regional Infrastructure Rehabilitation 

Project, the satisfactory implementation 

of which will be conditions precedent to 

certain MCC Disbursements as provided 

in the Disbursement Agreement: 

(i) Related to the Road Rehabilitation 

Activity: 

(1) Authorization of the use of road 

design and construction standards 

consistent with modern European 

geometrical and physical standards 

having international applicability, 

acceptable to MCC; 

(2) Maintenance of the Project Road in 

accordance with measurable 

performance standards acceptable to 

MCC and the Government, including 

winter maintenance and snow removal 

to keep the Project Road open; and 

(3) Prior to the first disbursement in 

any fiscal year, the Government will 

approve the road maintenance budget 

for routine and periodic maintenance 

for the maintainable road network the 

forthcoming fiscal year providing for 

funding of at least the amount set out 

below, and will expend such amounts 

for the intended purpose and make-up 

any budget shortfall from the prior 

year’s road maintenance budget: 

(A) Fiscal year 2006: Georgian Lari 

(‘‘GEL’’) 60 million; 

(B) Fiscal year 2007: GEL 70 million; 

(C) Fiscal year 2008: GEL 80 million; 

(D) Fiscal year 2009: GEL 90 million; 

and 

(E) Fiscal year 2010: GEL 100 million. 

(ii) Related to the Energy 

Rehabilitation Activity: 

(1) Prior to the first disbursement for 

Pipeline rehabilitation, the Ministry of 

Energy will provide documentation 

satisfactory to MCC outlining the 

Ministry’s plans and strategy for 

resolving the following four issues 

currently facing GGIC: (A) Kazbegigazi 

non-payment to GGIC; (B) Tbilgazi nonpayment to GGIC; (C) Physical gas losses 

by GGIC; and (D) GGIC’s tax liabilities; 

(2) Prior to the first disbursement for 

Pipeline rehabilitation, the Georgia Tax 

Restructuring Committee will have 

granted tax relief to GGIC, acceptable to 

MCC, for past tax liabilities accrued 

through June 30, 2005 in the form of a 

fifteen year restructuring plan for such 

tax liabilities (including a five-year 

freeze and a ten-year payment period); 

(3) The Government shall not sell or 

transfer, or permit to be sold or 

transferred, the Pipeline and/or a 

controlling interest in the GGIC group 

(GGIC and its subsidiaries and affiliates) 

and shall not place or permit to be 

placed any Lien on the Pipeline, in each 

case until the expiration of the Compact 

Term, except as may be otherwise 

agreed by MCC in writing (the ‘‘NonTransfer Condition’’); 

(4) Prior to each disbursement for 

Pipeline rehabilitation on or after July 1, 

2007: 

(A) GGIC will demonstrate in a form 

acceptable to MCC that it is maintaining 

the Pipeline in accordance with 

satisfactory standards agreed by MCC 

and the Government that cover the 

design and construction of gas networks 

(‘‘Agreed Standards’’); and 

(B) GGIC will have obtained 

authorization, in a form acceptable to 

MCC, from the Georgian National 

Energy Regulatory Commission that 

allows GGIC, starting from July 1, 2007, 

to withhold gas as payment in kind from 

its customers for transmission charges 

owed to GGIC to the extent needed to 

ensure that collection rates (for all 

services provided) are at least 95% 

throughout the remainder of Compact 

Term; and GGIC will utilize this in-kind 

payment mechanism to the extent 

needed to ensure that collection rates 

(for all services provided) are at least 

95% throughout the remainder of 

Compact Term; 

(5) In the event that: 

(A) The GGIC collection rate after July 

1, 2007 is below 95% for two 

Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 58929 

consecutive quarters throughout the 

Compact Term; 

(B) GGIC does not maintain the 

Pipeline in accordance with the Agreed 

Standards; and/or 

(C) The Government does not comply 

with the Non-Transfer Condition; then: 

(A) Prior to any further disbursement 

for Pipeline rehabilitation or for any 

other Project Activity, the Government 

agrees to reimburse promptly to MCC, in 

MCC’s discretion, all or a portion of 

Compact Funding disbursed for the 

Pipeline; and/or 

(B) MCC may suspend all or a portion 

of further disbursements in connection 

with the Pipeline rehabilitation and/or 

other Project Activities under the 

Compact. 

(b) To improve its level of 

performance under the policy criteria 

identified in Section 607 of the Act and 

the MCA Eligibility Criteria and to 

support the Regional Infrastructure 

Rehabilitation Project, the Government 

will pursue the following legislative and 

policy reforms: 

(i) Support GGIC to realize the sale of 

emission reductions in order to fund 

additional pipeline rehabilitation 

activities; 

(ii) Undertake policy reform and 

improve legislation governing the 

infrastructure sectors, including 

adoption of user fees, as may be 

appropriate to cover the costs of 

operations and maintenance; 

(iii) Develop, as part of the ongoing 

decentralization process, appropriate 

policies and/or legislation on local 

government budgeting; 

(iv) Undertake measures to safeguard 

the rehabilitated infrastructure from any 

laws, regulations or policies that may 

undermine the results of individual 

projects, including those that adversely 

restrict local control over budgets for 

operations and maintenance; and 

(v) Such other legal or policy reforms 

as may be needed to improve efficiency 

of the infrastructure sectors, including 

those that are identified through the 

ongoing consultative process. 

Schedule 2 to Annex I—Enterprise 

Development Project 

This Schedule 2 describes and 

summarizes the key elements of a 

regional business investment and 

development project in furtherance of 

the Enterprises in Regions Developed 

Objective (the ‘‘Enterprise Development 

Project’’). Additional details regarding 

the implementation of the Enterprise 

Development Project will be included in 

the Implementation Plan and in relevant 

Supplemental Agreements. 

1. Background 

With 53% of Georgia’s population 

living in poverty and a majority of these 

impoverished households living in rural 

areas, the Government is committed to 

encouraging economic growth and 

poverty reduction, primarily in the 

Regions. Agribusiness, in particular, is a 

key driver of growth nationally, 

representing 18% of GDP, and in the 

Regions where farms and small 

enterprises engaged in agribusiness 

constitute an essential source of 

livelihoods. Other sectors, including 

tourism, represent substantial growth 

opportunities in the Regions. However, 

while the economy in Georgia has 

experienced significant growth during 

the past few years, the performance of 

the rural economy has stagnated. 

Of particular concern is the 

agriculture sector, which accounts for 

one-quarter of Georgia’s economic 

output and over 50% of employment. 

Georgia’s diverse climatic zones and 

rich natural resources provide the 

potential for further development of the 

agriculture and agribusiness sectors, 

particularly in the Regions. With 

increased quantity and quality, Georgian 

agricultural products will better 

compete with imported food products, 

thereby improving the living standards 

of the rural poor. Yet businesses face 

problems with poor technology, 

processing, marketing, management 

skills, and credit access. 

The lagging performance of the 

economy in the Regions and past 

political uncertainty have contributed to 

the reluctance of financial institutions 

and other investors to invest in risk 

capital. As a result, firms, particularly 

small and medium enterprises 

(‘‘SMEs’’), may not be able to obtain the 

risk capital they need to grow and may 

not generate enough cash-flow in the 

near-term to pay high interest rates on 

a typical loan (if any long-term loan is 

available) or may not have sufficient 

collateral to obtain a loan. Experience in 

other countries indicates the importance 

of SMEs to economic development and 

job creation. 

The consultative process in Georgia 

identified a number of key constraints to 

growth of small and medium enterprises 

in the Regions. These include (i) 

insufficient access to long term risk 

capital on viable terms, (ii) lack of 

sophisticated company and investment 

management skills and corporate 

governance, (iii) inadequate laws and 

regulations, (iv) poor enforcement and 

(v) the need for improved agribusiness 

productivity, among other items. 

2. Summary of Project Activities 

The Enterprise Development Project is 

designed to provide access to capital on 

viable terms, support policy reforms to 

improve the business environment and 

improve business and technical skills in 

farms and enterprises. 

The Enterprise Development Project 

consists of two Project Activities: 

• The Investment Fund Activity. The 

objective of the Investment Fund 

Activity is to increase investment in and 

improve the performance of SMEs, 

primarily in the Regions. The Project 

Activity will create a professionally and 

independently managed investment 

fund (the ‘‘Georgia Regional 

Development Fund’’ or ‘‘GRDF’’ or such 

other name as may be agreed by the 

Parties) to provide capital to SMEs, 

provide technical assistance for 

portfolio companies and identify legal 

and policy reforms to encourage further 

investment in SMEs. 

• The Agribusiness Development 

Activity (the ‘‘ADA’’). The objective of 

the ADA is to improve economic 

performance of agribusinesses. The 

ADA will accelerate the transformation 

from subsistence to commercial 

agriculture through technical assistance, 

targeted grants and market information. 

The ADA will provide technical 

assistance and grants to farmers and 

agribusinesses in critical value chains 

that supply agricultural products to the 

domestic market, as well as disseminate 

information on regional market prices 

and volumes. 

The GRDF and the ADA will be 

managed separately, but they are 

intended to complement one another. 

For example, GRDF may invest in an 

entity receiving ADA technical 

assistance, or farmers may need 

technical assistance from ADA to take 

advantage of opportunities to supply 

products to a GRDF investee company 

in the processing industry. The 

managers of the GRDF and the ADA will 

meet on a regular basis to discuss 

potential synergies. Any decisionmaking by GRDF or ADA with respect 

to business opportunities with the other 

party will be undertaken as if GRDF and 

ADA were unrelated parties. 

The following summarizes the 

Enterprise Development Project 

Activities. The M&E Plan (described in 

Annex III) will set forth anticipated 

results and, where appropriate, regular 

benchmarks at the Enterprise 

Development Project level and at each 

Project Activity level to monitor 

implementation progress. Performance 

against these benchmarks and the 

overall impact of the Enterprise 

Development Project and each Project 

58930 Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 

Activity will be assessed and reported at 

regular intervals as specified in the M&E 

Plan or otherwise agreed by the Parties 

from time to time. The Parties expect 

that additional benchmarks will be 

identified during implementation of 

each Project Activity. Estimated 

amounts of MCC Funding for each 

Project Activity within the Enterprise 

Development Project are identified in 

Annex II of this Compact. Conditions 

precedent to each Project Activity and 

sequencing of the Project Activities 

shall be set forth in the Disbursement 

Agreement or other relevant 

Supplemental Agreements. 

(a) Investment Fund Activity 

The Investment Fund Activity 

involves three sub-activities: (i) Creation 

and capitalization of the GRDF; (ii) 

portfolio company technical assistance; 

and (iii) legal and policy environment 

support. 

(i) Creation and Capitalization of 

GRDF. 

MCC Funding will be used to 

capitalize a professionally and 

independently managed investment 

vehicle, to be known as the GRDF. 

MCC and MCA-Georgia have agreed to 

an indicative term sheet as of the date 

of this Compact (the ‘‘Indicative Term 

Sheet’’), containing the proposed terms 

of the GRDF (including its investment 

policy guidelines and governance 

structure) and which will form the 

expected basis for preparation of the 

final investment guidelines, governance 

structure and investment management 

selection, compensation and agreement, 

and all other terms of the GRDF (the 

‘‘Final Fund Documents’’). Because the 

Indicative Term Sheet represents 

indicative but non-binding terms, the 

provisions in the Final Fund Documents 

may differ from, and will supersede, 

those in the Indicative Term Sheet. As 

a Condition Precedent to Disbursement 

for the GRDF, the Final Fund 

Documents must be acceptable in form 

and substance to both MCC and MCAGeorgia. 

The GRDF will include the following 

elements: 

(1) Establishment and Term of GRDF. 

(A) Following the satisfaction of 

conditions precedent contained in the 

Disbursement Agreement and in 

accordance with the Final Fund 

Documents, MCC Funding will be used 

to organize and establish the GRDF in a 

legal form and jurisdiction acceptable to 

MCC. All of the ownership interests in 

the GRDF are expected to be held 

initially by a trust (or similar structure 

acceptable to MCC and MCA-Georgia), 

the trustee (or similar) of which will be 

procured through a process acceptable 

to MCC and will be subject to MCC 

approval. MCC will be a third party 

beneficiary to the appropriate Final 

Fund Documents. 

(B) The investment period of the 

GRDF shall run for five years from the 

Entry into Force, subject to an earlier 

termination upon termination of the 

Compact (the ‘‘Investment Period’’). All 

MCC obligations shall terminate at the 

end of the Investment Period. GRDF is 

expected to exist for ten years, including 

a five year wind-down period after the 

termination of the Investment Period. 

(C) Any distributions to the GRDF 

will be held for the benefit of 

beneficiaries to be agreed upon by MCC 

and MCA-Georgia prior to the end of the 

Investment Period. Any beneficiary or 

beneficiaries selected by MCC and 

MCA-Georgia must be a charitable, 

educational or other non-profit 

developmental entity in Georgia that 

benefits, in substantial part, citizens 

working in agribusiness and/or other 

enterprises outside of Tbilisi. 

(2) Investment Objective. The primary 

objective of the GRDF will be to 

maximize developmental impact, as 

well as to earn a reasonable and positive 

financial return, from investments in 

SMEs in agribusiness, tourism and other 

sectors, primarily outside of Tbilisi. 

(3) Permitted and Prohibited 

Investments. The GRDF will invest in 

equity, quasi-equity and debt (subject to 

limits specified in the Final Fund 

Documents) issued by enterprises that 

meet the definition of ‘‘permitted 

investments’’ (‘‘Permitted SMEs’’). The 

Final Fund Documents will have clear 

criteria for which types of investments 

are permitted and prohibited, as well as 

the process by which investment 

decisions are approved by the GRDF. 

These criteria will be set forth in the 

Final Fund Documents. Among the 

provisions that the Final Fund 

Documents must contain are the 

following: 

(A) Permitted sectors. The Final Fund 

Documents will require a majority of 

capital to be invested in agribusiness or 

tourism, with approximately 33% of 

capital invested in agribusiness, unless 

otherwise agreed by the Parties. 

(B) Location of businesses. The GRDF 

will invest primarily outside of Tbilisi; 

accordingly, the Final Fund Documents 

will limit the percentage of GRDF 

capital that can be invested in Tbilisi to 

20% unless otherwise agreed by the 

Parties. 

(C) Developmental and financial 

criteria. The pipeline of potential 

investments by the fund will be 

determined in accordance with criteria 

used to measure the developmental 

impact associated with the investment 

as well as financial rate of return. 

(D) Maximum investment size. The 

Final Fund Documents will limit the 

maximum investment size of any one 

particular investment to 10% of the 

committed capital of the GRDF unless 

otherwise agreed by the Parties. 

(E) Stage of Development of Portfolio 

Companies. The GRDF will invest 

primarily in existing businesses but may 

also invest not more than 15% in startups, unless otherwise agreed by the 

Parties. 

(F) Prohibited Investments. The Final 

Fund Documents will require 

compliance with (1) prohibitions on 

investments, including those that 

conflict with the limitations on the use 

of MCC Funding set forth in the 

Compact, and (2) environmental 

guidelines and environmental screening 

procedures (which will be based on 

MCC’s Environmental Guidelines and 

specified in full in the Final Fund 

Documents). A full list of prohibited 

types of businesses will be included in 

the Final Fund Documents. 

(4) Implementing Entity Arrangement; 

Governance Structure. 

(A) Investment Manager. The GRDF 

will be managed by a professional, 

independent and qualified investment 

manager selected after a competitive 

tender conducted by the Procurement 

Agent (‘‘Investment Manager’’). MCC 

and MCA-Georgia will each have the 

right to approve the selection of the 

Investment Manager and the terms of 

the Investment Manager’s contract, 

including auditing, reporting and 

termination provisions. 

(B) GRDF Governing Board. The 

Investment Manager will report to an 

independent GRDF governing board 

(‘‘GRDF Governing Board’’) comprised 

of individuals with financial and 

development experience acceptable to 

MCC and MCA-Georgia. MCC will be 

entitled to appoint one additional 

member of, or a non-voting observer on, 

the GRDF Governing Board. MCAGeorgia will also be entitled to appoint 

a non-voting observer on the GRDF 

Governing Board. 

(C) Investment Committee. An 

investment committee (‘‘Investment 

Committee’’) acceptable to MCC and 

MCA Georgia will be responsible for 

approving investments suggested by the 

Investment Manager and overseeing the 

monitoring and evaluation of the 

performance of those investments. MCC 

will have the right, in its discretion, to 

appoint one member, or one non-voting 

observer, to the Investment Committee. 

(5) Relationship of GRDF to MCAGeorgia. All investment decisions will 

be made by the GRDF and the 

Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 58931 

Investment Manager independently 

from MCA-Georgia and the Government. 

(6) Operating Policies. The Final Fund 

Documents will include requirements 

for the GRDF’s due diligence/ 

investment process, conflicts policy, 

internal controls and auditing, and 

reporting, in each case acceptable to 

MCC. 

(ii) Portfolio Company Technical 

Assistance Facility. 

(1) Establishment. MCC Funding will 

be used for technical and managerial 

assistance (the ‘‘Portfolio Company TA 

Facility’’) to be applied by the 

Investment Manager to improve the 

performance of portfolio companies 

following investment or to assist 

prospective portfolio companies that 

then become qualified for GRDF 

investments. The financial resources of 

the Portfolio Company TA Facility will 

not be invested in the GRDF or 

considered part of the management fee 

or fund expenses. The Portfolio 

Company TA Facility proceeds will be 

drawn down by the Investment Manager 

through separate disbursement requests. 

(2) Objective. The Portfolio Company 

TA Facility will complement the work 

of the Investment Manager by assisting 

in the growth and development of the 

portfolio investees. The Portfolio 

Company TA Facility is intended to 

pay, on a cost-sharing basis with 

investees, a portion of the costs of thirdparty consultants and other service 

providers (the ‘‘Service Providers’’) that 

would otherwise have been reasonably 

considered beyond the capacity of the 

investee or the obligation of the 

Investment Manager to pay. 

(3) Selection Criteria. Each use of the 

Portfolio Company TA Facility funding 

shall be determined jointly by the 

investee and the Investment Manager on 

a demand-driven basis according to 

selection criteria acceptable to MCC. 

The use of the Portfolio Company TA 

Facility will be subject to the same 

statutory limits on the use of MCC 

Funding as the GRDF. Additional 

detailed Service Provider selection 

criteria, conflict of interest provisions, 

cost-sharing criteria, disbursement and 

reporting procedures, and further 

definitions of permitted and prohibited 

uses of TA Facility resources, shall be 

provided in the Final Fund Documents. 

(iii) Legal and Policy Environment. 

MCC Funding will be used to engage 

an expert to identify and support 

Georgians advocating for key legal and 

policy reforms affecting the investment 

environment and to establish and 

operate a mechanism for this analysis 

and advocacy. This is intended to be 

similar to venture capital industry 

groups in other countries that work with 

local, key stakeholders and donors to 

build consensus and advocate for 

reforms needed for successful risk 

capital investments. The expert would 

be supported by an advisory board of 

key stakeholders acceptable to MCC, 

such as the Investment Manager, other 

private equity funds and financial 

institutions, other private sector 

participants, donors, and others. 

(b) Agribusiness Development Activity 

(i) ADA Establishment and 

Implementation. 

The ADA is expected to contribute to 

poverty alleviation by accelerating 

agriculture sector transformation from 

subsistence production to profitable 

farms and rural enterprises directly 

participating in commercial valuechains. The ADA includes three 

separate sub-activities intended to 

support the development of Georgia’s 

agriculture and agribusiness sectors. 

The ADA will be set up and managed 

by a professional, independent and 

qualified manager, acceptable to MCAGeorgia and MCC, selected after a 

competitive tender (the ‘‘ADA 

Manager’’). The competitive tender will 

be conducted by the Procurement 

Agent, with the assistance of an 

advisory panel, consisting of 

independent experts. MCC and MCAGeorgia will each have the right to 

approve the selection of the ADA 

Manager. 

(ii) Access to Modern Technology. 

MCC Funding will be used to provide 

modern technology to agribusiness 

processors in at least five agribusiness 

value-chains that have domestic market 

growth potential. For example, this 

could include the following types of 

activities: 

(1) Developing the dairy industry 

through set-up of milk collection 

infrastructure to facilitate flow of 

quality raw product from small farms to 

processing plants that can better 

compete in the domestic market; 

(2) Establishing private sector input 

supply centers that service productive 

yet hard to reach rural areas in order to 

increase higher value horticulture 

production for processors and the fresh 

market; 

(3) Developing livestock production 

contracts with slaughter facilities that 

will establish the capacity to offer new, 

high-quality meat products into the 

growing domestic market; 

(4) Facilitating investment in 

livestock feed processing and sales 

coupled with the beneficiary firm’s 

financed livestock production agents to 

improve farm management; and 

(5) Introducing new varieties and 

technology into the potato industry to 

produce and process products in direct 

response to domestic market demands. 

(iii) Grants to Rural Enterprises. 

MCC Funding will be used to provide 

grants (the ‘‘Rural Enterprise Grants’’) to 

groups of farmers and to private 

enterprises to apply innovative business 

solutions and technology to 

significantly increase household and 

agribusiness net revenue through higher 

productivity, better financing, improved 

post harvest processing and marketing. 

(1) Selection Criteria. An application 

for a Rural Enterprise Grant must be 

supported with a sound business plan. 

Applications should be for equipment 

or supplies and matched with direct 

grantee investment in land, facilities, 

labor or additional equipment. Rural 

Enterprise Grants will range in value 

from USD $5,000 to USD $50,000, 

unless otherwise agreed by the 

Government and MCC. Rural Enterprise 

Grants will be made in three categories: 

(A) Primary production. Innovative 

agriculture production technology and 

practices and development of business 

linkages of farmers with processors or 

directly with the market; 

(B) Service providers. Introduction or 

expansion of input provision of seed, 

feed, fertilizer, new varieties, equipment 

leasing, best practices and better farm 

management among cooperatives and 

associations; and 

(C) Value adding enterprises. Transfer 

of technology to add value to raw 

product through small scale processing 

equipment, quality assurance systems, 

processing, packaging, and competitive 

domestic marketing. 

(2) Selection Procedure. A call for 

applications for Rural Enterprise Grants 

will be announced by the ADA Manager 

during the first quarter of each year with 

clear guidelines and evaluation criteria. 

The ADA Manager will be responsible 

for developing award selection criteria, 

subject to MCA-Georgia and MCC 

approval. The ADA Manager will 

establish an independent grant award 

committee acceptable to MCC and MCAGeorgia that will review grant 

applications and make grant awards. 

(iv) Market Information. MCC 

Funding will support a market 

information campaign that disseminates 

information to the agriculture and food 

industry. The market information 

campaign will: 

(1) Inform rural households and 

stakeholders about ADA objectives and 

guidelines for targeted technical 

assistance and grants; 

(2) Broadcast information on 

innovations, best practices, and new 

technology, and highlight ‘‘model’’

farmers’’ or entrepreneurs’ success 

stories; and 

58932 Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 

(3) Produce regular reports on farm 

gate price and volumes of commodity 

sold from several regional marketing 

hubs throughout the country including 

market news/trends of business 

significance. 

3. Beneficiaries 

The principal direct beneficiaries of 

the GRDF are expected to be SMEs in 

agribusiness and other sectors in the 

Regions (and, to a limited extent, 

Tbilisi) needing risk capital to expand, 

agricultural producers and other local 

suppliers doing business with those 

SMEs, and farmers and rural households 

in the Regions employed by SMEs or 

related businesses. Certain activities in 

the GRDF, such as advocacy for legal 

and policy reform, will have national 

scope and impact. The objective of the 

ADA is to significantly improve 

capacities of rural households to engage 

and benefit from direct participation in 

the commercial economy. Therefore, the 

principal direct ADA beneficiaries are 

rural households that are dependent on 

agriculture and agribusiness for their 

livelihood. These are primarily small 

farmers and SMEs that deliver services 

to farmers and process raw product. As 

a result of ADA, over 50,000 rural 

participants are expected to benefit 

either directly or indirectly. 

4. Donor Coordination 

The Enterprise Development Project 

complements other donor supported 

projects, including projects by EBRD, 

IFC, World Bank, USAID and USDA. 

The goal and structure of the GRDF is 

significantly different from those of 

other donor-supported investment 

activities. The GRDF will be encouraged 

to work with other donors’ financial 

institutions to attract capital and 

expertise to the SME sector in the 

Regions, especially to businesses in 

which such institutions may have been 

reluctant to invest in the absence of the 

GRDF in Georgia. The ADA is uniquely 

focused on rural household economic 

growth and will be reinforced by current 

activities that foster economic growth in 

agriculture. Specifically, Enterprise 

Development Project synergies with key 

U.S. agencies and other donors are as 

follows: 

(a) Investment Fund Activity 

(i) IFC. IFC is conducting a business 

development project that focuses on 

areas such as strengthening corporate 

governance and encouraging lease 

financing, as well as an initiative to 

determine the state of SME development 

in Georgia and significant legal and 

other barriers facing Georgian SMEs. 

Although IFC has previously sponsored 

investments in businesses in Georgia, 

the target internal rates of return and 

sizes of investments have exceeded the 

typical investment the GRDF is 

expected to pursue. The IFC business 

development efforts will complement 

and reinforce the Investment Fund 

Activity’s efforts to improve the 

business climate. 

(ii) EBRD. EBRD has established 

several debt and equity investment 

facilities that can invest in Georgia. 

EBRD has also established business 

consulting services using local 

consultants that offer their services to 

Georgian businesses at rates partly, and 

temporarily, subsidized by EBRD. The 

Investment Manager may (but is not 

required to) utilize these consulting 

services when applying technical 

assistance to one of the portfolio 

companies. The investment facilities 

may provide another source of capital 

for the GRDF’s portfolio companies. 

(iii) OPIC. There are several OPIC 

funds that are eligible to invest in 

Georgia, among other countries. 

However, the sizes and types of 

investments that these funds generally 

pursue differ from, and are larger than, 

those that the GRDF is expected to 

pursue. Moreover, OPIC guarantees debt 

issued by these funds, while MCC 

Funding would be used as the source of 

equity capital for the GRDF. 

(iv) USAID. The GRDF will 

complement USAID’s financial sector 

and agricultural activities. These have 

included AgVantage, the Georgia 

Enterprise Growth Initiative, the Georgia 

Microfinance Stabilization and 

Enhancement activity, the Land Market 

Development Project, and the banking 

infrastructure strengthening program to 

assist the National Bank of Georgia. 

(b) Agribusiness Development Activity 

(i) USAID. Of particular relevance to 

the objectives of the ADA is the USAIDfunded project called AgVantage. This 

activity focuses on developing 

agricultural export markets and strategic 

interventions to overcome barriers to 

increase export sales of agriculture and 

food products. Later this year, 

AgVantage will also begin work in 

policy analysis, legal drafting, training, 

and limited administrative support to 

the Ministry of Agriculture and will put 

in place policies which promote and 

support the development of private 

sector agribusiness. The ADA is 

interested in supporting these efforts 

and participating in constructive 

dialogue with the Ministry of 

Agriculture to create a more conducive 

environment for private business 

development. 

(ii) USDA. A transition program is 

underway by USDA/ICD in Georgia. 

Previous project activity provides 

opportunities for ADA to build upon 

progress made, especially in developing 

meat slaughterhouses and dairy 

processing in several regional locations. 

The new focus of USDA’s program will 

most likely include assistance to the 

Ministry of Agriculture in seed and 

plant material certification and 

multiplication, quality assurance 

capabilities and veterinary inspection 

services, which complements ADA. 

(c) Both Project Activities 

(i) World Bank/IFAD. A new Rural 

Development Loan has been approved, 

with a portion to be used to flow 

through commercial banks and 

multilateral financial institutions as 

credit for agribusiness investments. This 

loan will provide a source of debt 

finance for businesses that has terms 

and characteristics different from many 

of the risk capital investments the GRDF 

will pursue. Discussions with World 

Bank and IFAD representatives 

generated collaborative ideas for loan 

preparation training and technical 

assistance to prospective borrowers 

through the ADA grant program. Also, 

IFAD has established four regional 

‘‘Farm Houses’’ which support a variety 

of services to farmers including 

equipment leasing, extension, and input 

sales. Proposals from the leadership of 

a Farm House to expand to ADA clients 

will be encouraged. 

5. Sustainability 

(a) Financial and Institutional 

Sustainability. 

The impacts of each of the Project 

Activities are intended to be 

sustainable, although neither the GRDF 

nor the ADA is required to be a 

sustainable institution. Sustainability 

will result from the following activities: 

(i) Building, through the GRDF, 

profitable businesses that have an 

important demonstration effect on 

similar businesses, as well as 

investment funds or other financial 

institutions. To the extent these 

businesses are profitable, after the 

Compact Term they can be expected to 

survive and strengthen key links with 

other businesses in the value chain as 

well as pave the way for additional 

entrepreneurs and providers of finance 

considering developing the SME sector 

or Regional enterprises; 

(ii) Establishing profitable farms, rural 

service providers and viable 

agribusiness that compete in 

commercial markets and are responsive 

to market forces and trends; 

Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 58933 

1The role of civil society in the implementation 

of the Compact (including through participation on 

the Stakeholders’ Committee and as an observer on 

the Supervisory Board), the responsibilities of the 

Government and MCC in achieving the Compact 

Goal and Objectives, and the process for the 

identification of beneficiaries are addressed 

elsewhere in this Compact and therefore are not 

repeated here. 

(iii) Investing in human capacities 

(skills, access to information and mindset toward the market) to transform and 

make their enterprises profitable; 

(iv) Building, through each of the 

Project Activities, sustainable and 

transferable Georgian enterprise 

management capacity and 

entrepreneurial skills, particularly for: 

(1) Agribusinesses and other SME 

businesses that have received assistance 

from the GRDF or the ADA; 

(2) Georgian consulting and technical 

advisory businesses that have been 

engaged as part of the Portfolio 

Company Technical Assistance Facility 

or the ADA; and 

(3) Georgian investment professionals 

trained by the GRDF; and providing the 

enterprises and individuals that have 

acquired these skills with the ability to 

apply them to their businesses or 

transfer them to other businesses in 

Georgia; 

(v) Attracting, as part of the GRDF, 

additional long-term capital to the 

agribusiness and other SME sectors in 

Georgia. Because these providers may 

have been attracted, because of the 

GRDF, to sectors and businesses they 

would not have otherwise financed, the 

successful performance of these 

investments will encourage additional 

investments; and 

(vi) Complementing and encouraging 

reform to remove legal and regulatory 

impediments to investment and growth 

in the agribusiness and SME sectors in 

the Regions as well as nationally, 

including encouraging best practices for 

corporate governance. 

(b) Environmental and Social 

Sustainability. To help ensure that 

investments made through the GRDF are 

not likely to cause a significant 

environmental health or safety hazard, 

the GRDF will develop investment 

guidelines acceptable to MCC that will 

require compliance with MCC 

Environmental Guidelines, and the 

Investment Manager will develop an 

environmental review process and 

monitoring check-list. To help ensure 

that investments made through the ADA 

are not likely to cause a significant 

environmental health or safety hazard, 

technical assistance will be provided to 

include training and guidance on the 

proper selection, handling, use, storage, 

and disposal of pesticides and other 

agricultural chemicals. 

6. Policy and Legal Reform 

To improve its level of performance 

under the policy criteria identified in 

Section 607 of the Millennium 

Challenge Act and the MCA Eligibility 

Criteria and to support the Enterprise 

Development Project, the Government 

will pursue the following legislative and 

policy reforms: 

(i) Improve the investment climate, 

particularly for investments in the 

agribusiness and other sectors relevant 

to the Enterprise Development Project, 

including those reforms identified by 

working with the expert engaged under 

the Legal and Policy Environment 

component of the Investment Fund 

Activity. Broadly construe reform to 

include commercial laws, enforcement 

mechanisms and systematic issues, such 

as problems with payment systems; 

(ii) Provide for effective 

implementation of the law on additional 

privatization of agricultural land 

remaining in state ownership (providing 

for privatization of large plots of 

agricultural land); 

(iii) Pass effective laws on immovable 

and moveable property pledge 

registration and related secured 

transaction law reform, and provide for 

implementation; and 

(iv) Undertake policy reform and seek 

to improve legislation governing the 

agribusiness sector, including: 

(1) Refine the National Agricultural 

Strategy that outlines critical priorities 

to be undertaken that creates a proagribusiness growth environment; 

(1) Planning and implementing 

significant benchmarks for improved 

legislation for seed and plant material 

law; and 

(3) Planning and implementing 

significant benchmarks for improved 

legislation for food safety regulations. 

Annex II—Financial Plan Summary 

This Annex II to the Compact (the 

‘‘Financial Plan Annex’’) summarizes 

the Multi-Year Financial Plan for the 

Program. Each capitalized term in this 

Financial Plan Annex shall have the 

same meaning given such term 

elsewhere in this Compact. 

1. General. A multi-year financial 

plan summary (‘‘Multi-Year Financial 

Plan Summary’’) is attached hereto as 

Exhibit A. By such time as specified in 

the Disbursement Agreement, MCAGeorgia will adopt, subject to MCC 

approval, a Multi-Year Financial Plan 

that includes, in addition to the multiyear summary of anticipated estimated 

MCC Funding and the Government’s 

contribution of funds and resources, an 

estimated draw-down rate for the first 

year of the Compact based on the 

achievement of performance milestones, 

as appropriate, and the satisfaction or 

waiver of conditions precedent. Each 

year, at least 30 days prior to the 

anniversary of the entry into force of the 

Compact, the Parties shall mutually 

agree in writing to a Detailed Financial 

Plan for the upcoming year of the 

Program, which shall include a more 

detailed plan for such year, taking into 

account the status of the Program at 

such time and making any necessary 

adjustments to the Multi-Year Financial 

Plan. 

2. Implementation and Oversight. The 

Multi-Year Financial Plan and each 

Detailed Financial Plan shall be 

implemented by MCA-Georgia, 

consistent with the approval and 

oversight rights of MCC and the 

Government as provided in this 

Compact, the Governance Agreement 

and the Disbursement Agreement.1

3. Estimated Contributions of the 

Parties. The Multi-Year Financial Plan 

Summary identifies the estimated 

annual contribution of MCC Funding for 

Program administration, monitoring and 

evaluation, and each Project. The 

Government’s contribution of resources 

to Program administration, monitoring 

and evaluation, and each Project shall 

consist of (i) ‘‘in-kind’’ contributions in 

the form of Government Responsibilities 

and any other obligations and 

responsibilities of the Government 

identified in this Compact, including 

contributions identified in the notes to 

the Multi-Year Financial Plan Summary, 

(ii) such other contributions or amounts 

as identified in notes to the Multi-Year 

Financial Plan Summary, and (iii) such 

other contributions or amounts as may 

be identified in relevant Supplemental 

Agreements between the Parties or as 

may otherwise be agreed by the Parties; 

provided, in no event shall the 

Government’s contribution of resources 

be less than the amount, level, type and 

quality of resources required to 

effectively carry out the Government 

Responsibilities or any other 

responsibilities or obligations of the 

Government under or in furtherance of 

this Compact. 

4. Modifications. The Parties 

recognize that the anticipated 

distribution of MCC Funding between 

and among the various Program 

activities and Project and Project 

Activities will likely require adjustment 

from time to time during the Compact 

Term. In order to preserve flexibility in 

the administration of the Program, the 

Parties may, upon agreement of the 

Parties in writing and without amending 

the Compact, change the designations 

and allocations of funds between 

58934 Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 

Program administration and a Project, 

between one Project and another 

Project, between different activities 

within a Project, or between a Project 

identified as of the entry into force of 

this Compact and a new Project, without 

amending the Compact; provided, 

however, that such reallocation (i) is 

consistent with the Objectives, (ii) does 

not cause the amount of MCC Funding 

to exceed the aggregate amount 

specified in Section 2.1(a) of this 

Compact, and (iii) does not cause the 

Government’s obligations or 

responsibilities or overall contribution 

of resources to be less than specified in 

Section 2.2(a) of this Compact, this 

Annex II or elsewhere in the Compact. 

5. Conditions Precedent; Sequencing. 

MCC Funding will be disbursed in 

tranches. The obligation of MCC to 

approve MCC Disbursements and 

Material Re-Disbursements for the 

Program and each Project is subject to 

satisfactory progress in achieving the 

Objectives and on the fulfillment or 

waiver of any conditions precedent 

specified in the Disbursement 

Agreement for the relevant Program 

activity or Project or Project Activity. 

The sequencing of Project activities or 

Project Activities and other aspects of 

how the Parties intend the Projects to be 

implemented will be set forth in the 

Implementation Plan, including Work 

Plans for the applicable Project, and 

MCC Disbursements and ReDisbursements will be disbursed 

consistent with that sequencing. 

Exhibit A—Multi-Year Financial Plan 

Annex III—Description of the M&E Plan 

This Annex III to the Compact (the 

‘‘M&E Annex’’) generally describes the 

components of the M&E Plan for the 

Program. Each capitalized term in this 

Annex III shall have the same meaning 

given such term elsewhere in this 

Compact. 

1. Overview 

MCC and the Government (or a 

mutually acceptable Government 

Affiliate or Permitted Designee) shall 

formulate, agree to and the Government 

shall implement, or cause to be 

implemented, an M&E Plan that 

specifies (i) how progress toward the 

Objectives and Project Activity 

Outcomes will be monitored (the 

‘‘Monitoring Component’’), (ii) a 

methodology, process and timeline for 

the evaluation of planned, ongoing, or 

completed Project Activities to 

determine their efficiency, effectiveness, 

impact and sustainability (the 

‘‘Evaluation Component’’), and (iii) 

other components of the M&E Plan 

described below. Information regarding 

the Program’s performance, including 

the M&E Plan, and any amendments or 

modifications thereto, as well as 

periodically generated reports, will be 

made publicly available on the MCAGeorgia Website and elsewhere. 

2. Monitoring Component 

To monitor progress toward the 

achievement of the Objectives and 

Project Activity Outcomes, the 

Monitoring Component of the M&E Plan 

shall identify (i) Program levels, (ii) the 

Indicators, (iii) the party or parties 


EN07OC05.004</GPH>
Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 58935 

responsible, the timeline, and the 

instrument for collecting data and 

reporting on each Indicator to MCAGeorgia, and (iv) the method by which 

the reported data will be validated. 

(a) Program Levels. The M&E Plan in 

general, as well as the Monitoring 

Component in particular, shall describe 

the Program at multiple levels of 

aggregation and shall describe the 

expected Program results at each of 

those levels. 

(i) Compact Goal. The highest level of 

results to be achieved by the Program, 

the Compact Goal, is understood to be 

the aggregation of the estimated benefits 

of the two Projects and which are 

indicative of the overall impact 

expected from all of the Project 

Activities. While these benefits can be 

estimated, it is methodologically 

impossible to attribute with a high 

degree of precision changes in income at 

the end of the Compact Term 

specifically to interventions undertaken 

under or in furtherance of the Compact 

due to the existence of other factors, 

unrelated to the Program, that may 

affect income changes. However, these 

estimated benefits may be used to 

inform future impact evaluation. 

INCREASED ECONOMIC GROWTH AND POVERTY REDUCTION IN REGIONS OF GEORGIA

Goal indicators Indicator definition Baseline Year 5 

Reduction in poverty gap in the Samtskhe-Javakheti 

Region.

The mean distance separating the population from the 

poverty line.

23.4% (2002) 19.90% 

Reduction in poverty incidence in the SamtskheJavakheti Region.The fraction of population under the poverty line, defined by SDS as the ‘‘subsistence minimum.’’ 56.8% (2002) 50.00% 

Incremental increase in household incomes from Compact interventions*.Financial benefits derived from roads, infrastructure investment and pipeline rehabilitation, and GRDF and 

ADA enterprise development activities.

0 TBD 

*Setting of targets will be made at the end of Year One, once RID projects have been selected and vehicle operating costs on S–J roads have 

been determined. 

(ii) Project. At the second highest 

level of the Compact, or the Project 

level, the M&E Plan shall describe 

Program activities, results and measures 

of results’ attainment in two categories 

which relate to: (1) The Regional 

Infrastructure Rehabilitation Project and 

(2) the Enterprise Development Project. 

The Project Objectives to be achieved by 

the activities under each of these 

Projects shall be understood, as with the 

Compact level benefits, as being 

indicative of impact and not necessarily 

measurably attributable to the Program’s 

interventions within the timeframe of 

the Compact. 

(iii). Project Activity. At the third 

highest level of the Program, or the 

Project Activity level, the M&E Plan 

shall describe the results to be achieved 

within each Project Activity: (1) The 

Road Rehabilitation Activity; (2) the 

Energy Rehabilitation Activity; (3) the 

Regional Infrastructure Development 

Activity; (4) the Investment Fund 

Activity and (5) the Agribusiness 

Development Activity. The outcomes of 

each Project Activity (‘‘Project Activity 

Outcome’’) shall be understood to be 

directly attributable to the Compact 

interventions and measurable within an 

intermediate period during the Compact 

Term. 

(b) Indicators. The M&E Plan shall 

measure the results of the Program using 

quantitative, objective and reliable data 

(‘‘Indicators’’). Each Indicator will have 

one or more expected results that 

specify the expected value and the 

expected time by which that result will 

be achieved (‘‘Target’’). The M&E Plan 

will measure and report on Indicators at 

each of the two levels corresponding to 

those described above. First, the 

indicators for each Objective (each, an 

‘‘Objective Indicator’’) will measure the 

final results of the Projects in order to 

monitor their success in meeting each of 

the Objectives, including results for the 

intended beneficiaries identified in 

accordance with Annex I (collectively, 

the ‘‘Beneficiaries’’). Second, indicators 

for each Project Activity (each, a 

‘‘Project Activity Outcome Indicator’’) 

will measure the intermediate results 

achieved under each of the Project 

Activities in order to provide an early 

measure of the likely impact of the 

Project Activities. For each Indicator for 

a Project Activity Outcome, and 

Objective, the M&E Plan shall define a 

strategy for obtaining and validating the 

value of such Indicator prior to its being 

affected by the Program (‘‘Indicator 

Baseline’’). All Indicators will be 

disaggregated by gender, income level 

and age, to the extent practicable. 

(i) Project Objective Indicators. The 

M&E Plan shall contain the Objective 

Indicators listed in the table below, with 

their definitions. The corresponding 

Indicator Baselines and Targets to be 

achieved are in the following tables. 

MCA-Georgia may add Objective 

Indicators or refine the Targets of 

existing Objective Indicators prior to 

any MCC Disbursement or ReDisbursement for any Project or Project 

Activity that may influence that 

Indicator, or at such other times as may 

be agreed with MCC, in each case with 

prior written approval of MCC. 

PROJECT OBJECTIVE DEFINITIONS

[Key Regional Infrastructure Rehabilitated] 

Goal Indicators: Indicator Definition: 

Financial benefits stemming from Infrastructure 

Project investments (in 1,000 USD).

Aggregated data for reduction of vehicle operating costs on rehabilitated roads, increased collection rate of GGIC, and actual operations and maintenance funds from responsible maintaining agencies (local/central government or other agencies). 

Enterprises in Regions Developed: 

Goal Indicators: Indicator Definition: 

Aggregate jobs created by Program interventions.Portfolio company jobs will be aggregated with ADA jobs in each year. 

Aggregate incremental household incomes and 

business revenues (in 1,000 USD).

Absolute annual increase in household incomes and revenues to companies in both GRDF 

and ADA. 

58936 Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 

PROJECT OBJECTIVES

Unit Baseline Year 

one 

Year 

two 

Year 

three 

Year 

four 

Year 

five 

Key Regional Infrastructure Rehabilitated 

Financial benefits stemming from Infrastructure Rehabilitation 

Project investments (in 1,000 USD) *.

Number 0 .............. .............. .............. .............. TBDs 

Enterprises in Regions Developed 

Aggregate jobs created by Program interventions ** .......................... Number 0 .............. .............. .............. .............. 23,962 

Aggregate incremental household incomes and business revenues 

(in 1,000 USD) **.

Number 0 .............. .............. .............. .............. 59,434 

*Setting of targets will be made at the end of Year One, once RID projects have been selected and vehicle operating costs on S–J roads have 

been determined. **Portfolio company jobs and income will be aggregated with ADA jobs and income, shown here, in each year when GRDF investments are 

made. 

(ii) Project Activity Outcome 

Indicators. The M&E Plan shall contain 

the Project Activity Outcome Indicators 

listed in the table below with their 

definitions. The baseline and targets to 

be achieved are shown in the 

subsequent table. MCA-Georgia may add 

Project Activity Outcome Indicators or 

refine the Targets of existing Project 

Outcome Indicators prior to any MCC 

Disbursement or Re-Disbursement for 

any Project Activity that may influence 

that Indicator, or at such other times as 

may be agreed with MCC, in each case 

with prior written approval of MCC. 

ACTIVITY OUTCOME INDICATOR DEFINITIONS FOR REGIONAL INFRASTRUCTURE REHABILITATION PROJECT

Improved Transport for Regional Trade: Road Rehabilitation Activity 

Reduction in journey time: 

Akhalkalaki-NinotsmindaTeleti (hours) 

Reduction in vehicle 

operating costs.

These costs comprise the economic value of the running costs of the vehicle for the duration of the journey on the 

section of road or road network, the depreciation and maintenance costs of the vehicle and the associated costs 

related to the driver/goods transported for the journey. 

Increase in internal regional traffic volumes.It is expected that this internal traffic will increase when the Project roads are improved as journey times will be 

significantly shorter thereby making it more attractive/enticing to the local population to make journeys that they 

would have thought too time consuming to attempt before the roads were improved. 

Increased Reliability of Energy Supply and Reduced Losses: Energy Rehabilitation Activity 

Decreased technical 

losses.

Decrease of losses occurring between receiving point on Georgia-Russian border and delivery points to the customers, including Georgia-Armenia border. 

Reduction in the production 

of greenhouse gas emissions measured in tons of 

CO2 equivalent: 

Increased collection 

rate of GGIC.

Revenues from Gardabani, industries, gas distribution companies, and consumers of gas. 

Improved Regional and Municipal Service Delivery: Regional Infrastructure Development Activity 

Number of household 

beneficiaries served 

by RID projects (cumulative).

Number of households that benefited from improved water/sanitation, irrigation and/or gas provision. 

Actual operations and 

maintenance expenditures (in 1,000 

USD).

Allocated and actual operations and maintenance funds from responsible maintaining agencies (local/central government or other agencies) used as a proxy measure of revenues and fees from RID investments. 

SUB-ACTIVITY OUTPUT INDICATORS

Rehabilitation of Local Physical Infrastructure Sub-Activity 

Number of RID projects completed (cumulative).Number of rehabilitation projects completed. 

Value of RID projects (cumulative, mln. USD).The cumulative total capital invested, where fund size is US $58 million. 

Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 58937 

ACTIVITY OUTCOME INDICATORS FOR REGIONAL REHABILITATION PROJECT

Unit Baseline Year 1 Year 2 Year 3 Year 4 Year 5 

Improved Transport for Regional Trade: Road Rehabilitation Activity 

Reduction in journey time: AkhalkalakiNinotsminda-Teleti (hours).Number .... 6.5 0 0 1 2.5 2.8 

Reduction in vehicle operating costs (cumulative).% ............. 0% 0% 0.5% 2% 6% 15% 

Increase in internal regional traffic volumes (cumulative).% ............. 0% 0% 0.5% 2% 5% 8% 

Increased Reliability of Energy Supply and Reduced Losses: Energy Rehabilitation Activity 

Decreased technical losses ....................... % ............. 5% 5% 4% 3% 2% 2% 

Reduction in the production of greenhouse 

gas emissions measured in tons of CO2

equivalent.

Number .... 324,713 696,016 1,117,137 1,195,047 1,247,471 1,278,919 

Increased collection rate of GGIC ............. % ............. 50% 50% 95% 95% 95% 95% 

Improved Regional and Municipal Service Delivery: Regional Infrastructure Development Activity 

Number of household beneficiaries served 

by RID projects (cumulative).

Number .... 0 0 2,000 20,000 46,000 53,000 

Activity Outcome Indicators for Regional Rehabilitation Project 

Actual operations and maintenance expenditures (USD)*.Number .... 0 TBD TBD TBD TBD TBD 

* Setting of targets will be made at the end of Year One, once RID projects have been selected and vehicle operating costs on S–J roads have 

been determined. 

SUB-ACTIVITY OUTPUT INDICATORS FOR REGIONAL INFRASTRUCTURE DEVELOPMENT ACTIVITY

[Rehabilitation of Local Physical Infrastructure Sub-Activity] 

Unit Baseline Year 1 Year 2 Year 3 Year 4 Year 5 

Sub-Activity Output Indicators: 

Number of RID projects completed 

(cumulative).

Number .... 0 0 2 8 13 14 

Value of RID projects (cumulative, 

mln. USD).

Number .... 0 8 28 48 57 58 

ACTIVITY OUTCOME INDICATOR DEFINITIONS FOR ENTERPRISE DEVELOPMENT PROJECT

Increased Investment in and Performance of SMEs: Investment Fund Activity Georgia Regional Development Fund (GRDF) 

Increase in annual revenue in portfolio companies 

(in 1,000 USD).

Aggregate increase in revenues of companies in which GRDF invests. 

Increase in number of portfolio company employees and number of local suppliers.Includes additional number of employees of, as well as additional local suppliers of inputs 

or services to, companies in which GRDF invests. 

Increase in portfolio companies’ wages and payments to local suppliers (in 1,000 USD) 

Improved Economic Performance in Agribusiness: Agribusiness Development Activity 

Jobs created ............................................................. Includes jobs created in on farms, input supply services and agribusiness enterprises. 

Increase in aggregate incremental net revenue to 

project assisted firms (in 1,000 USD and cumulative over five years).

Aggregate annual increase in Net Revenue (NR) of project assisted agribusinesses, service providers and value added enterprises. 

Direct household net income (in 1,000 USD cumulative over five years).Includes direct beneficiaries of the access to modern technology, grants to rural entrepreneurs initiatives. 

Direct household net income for market information 

initiative beneficiaries (in 1,000 USD cumulative 

over five years) 

Number of beneficiaries ........................................... Includes population directly employed in and clients of agribusinesses, input supply services and enterprises. 

58938 Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 

ACTIVITY OUTCOME INDICATORS FOR ENTERPRISE DEVELOPMENT PROJECT

Unit Baseline Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 

Increased Investment in and Performance of SMEs: Investment Fund Activity Georgia Regional Development Fund (GRDF) 

Increase in annual revenue in portfolio companies (in 

1,000 USD and cumulative).

Number 0 .............. .............. .............. .............. 22,200 55,000 

Increase in number of portfolio company employees and 

number of local suppliers (cumulative).

Number 0 .............. .............. .............. .............. 4,400 6,650 

Increase in portfolio companies’ wages and payments to 

local suppliers (cumulative).

Number 0 .............. .............. .............. .............. 9,450 23,900 

Improved Economic Performance in Agribusiness: Agribusiness Development Activity 

Jobs created from project interventions (cumulative) ...... Number 0 597 1,481 2,375 3,174 3,606 NA 

Increase in aggregate incremental net revenue to 

project assisted firms (in 1,000 USD and cumulative 

over five years).

Number 0 45 287 951 2,277 4,448 NA 

Direct household net income (in 1,000 USD cumulative 

over five years).

Number 250 160 1,035 3,474 8,415 16,605 NA 

Direct household net income for market information initiative beneficiaries (in 1,000 USD cumulative over 

five years).

Number 250 133 713 1,941 3,929 6,731 NA 

Number of beneficiaries (cumulative) ............................... Number 0 8,584 20,070 36,625 49,423 57,626 NA 

(c) Data Collection and Reporting. The 

M&E Plan shall establish guidelines for 

data collection and a reporting 

framework, including a schedule of 

Program reporting and responsible 

parties. The Management Team shall 

conduct regular assessments of program 

performance to inform MCA-Georgia, 

Project Managers and the MCC of 

progress under the Program and to alert 

these parties to any problems. These 

assessments will report the actual 

results compared to the Targets on the 

Indicators referenced in the Monitoring 

Component, explain deviations between 

these actual results and Targets, and in 

general, serve as a management tool for 

implementation of the Program. With 

respect to any data or reports received 

by MCA-Georgia, MCA-Georgia shall 

promptly deliver such reports to MCC 

along with any other related documents, 

as specified in this Annex III or as may 

be requested from time to time by MCC. 

(d) Data Quality Reviews. From time 

to time, as determined in the M&E Plan 

or as otherwise requested by MCC, the 

quality of the data gathered through the 

M&E Plan shall be reviewed to ensure 

that data reported are as valid, reliable, 

and timely as resources will allow. The 

objective of any data quality review will 

be to verify the quality and the 

consistency of performance data, across 

different implementation units and 

reporting institutions. Such data quality 

reviews also will serve to identify where 

those levels of quality are not possible, 

given the realities of data collection. 

The data quality reviewer shall enter 

into an Auditor/Reviewer Agreement 

with MCA-Georgia in accordance with 

Annex I. 

3. Evaluation Component 

The Program shall be evaluated on the 

extent to which the interventions 

contribute to the Compact Goal. The 

Evaluation Component shall contain a 

methodology, process and timeline for 

analyzing data in order to assess 

planned, ongoing, or completed Project 

Activities to determine their efficiency, 

effectiveness, impact and sustainability. 

This component should use state-of-theart methods for addressing selection 

bias and should make provisions for 

collecting data from both treatment and 

control groups, where practicable. The 

Evaluation Component shall contain 

two types of reports: Final Evaluations 

and Ad Hoc Evaluations, and shall be 

finalized before any MCC Disbursement 

or Re-Disbursement for specific Program 

activities or Project Activities. 

(a) Final Evaluation. MCA-Georgia, 

with the prior written approval of MCC, 

may engage an independent evaluator to 

conduct an evaluation at the expiration 

or termination of the Compact Term 

(‘‘Final Evaluation’’) or at MCC’s 

election, MCC may engage such 

independent evaluator. The Final 

Evaluation must at a minimum (i) 

evaluate the efficiency and effectiveness 

of the Program Activities; (ii) estimate, 

quantitatively and in a statistically valid 

way, the causal relationship between 

the Compact Goal (to the extent 

possible), the Objectives and Project 

Activity Outcomes; (iii) determine if 

and analyze the reasons why the 

Compact Goal, Objectives and Project 

Activity Outcomes were or were not 

achieved; (iv) identify positive and 

negative unintended results of the 

Program; (v) provide lessons learned 

that may be applied to similar projects; 

(vi) assess the likelihood that results 

will be sustained over time; and (vii) 

any other guidance and direction that 

will be provided in the M&E Plan. To 

the extent engaged by MCA-Georgia, 

such independent evaluator shall enter 

into an Auditor/Reviewer Agreement 

with MCA-Georgia in accordance with 

Annex I. 

(b) Ad Hoc Evaluations. Either MCC 

or MCA-Georgia may request ad hoc or 

interim evaluations or special studies of 

Projects, Project Activities, or the 

Program as a whole prior to the 

expiration of the Compact Term. If 

MCA-Georgia engages an evaluator, the 

evaluator will be an externally 

contracted independent source selected 

by MCA-Georgia, subject to the prior 

written approval of MCC, following a 

tender in accordance with the 

Procurement Guidelines, and otherwise 

in accordance with any relevant 

Implementation Letter or Supplemental 

Agreement. The cost of an independent 

evaluation or special study may be paid 

from MCC Funding. If MCA-Georgia 

requires an ad hoc independent 

evaluation or special study at the 

request of the Government for any 

reason, including for the purpose of 

contesting an MCC determination with 

respect to a Project or Project Activity or 

to seek funding from other donors, no 

MCC Funding or MCA-Georgia 

resources may be applied to such 

evaluation or special study without 

MCC’s prior written approval. 

4. Other Components of the M&E Plan 

In addition to the Monitoring and 

Evaluation Components, the M&E Plan 

shall include the following components 

Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Notices 58939 

for the Program, Projects and Project 

Activities, including, where 

appropriate, roles and responsibilities of 

the relevant parties and Providers: 

(a) Costs. A detailed cost estimate for 

all components of the M&E Plan. 

(b) Assumptions and Risks. Any 

assumptions and risks external to the 

Program that underlie the 

accomplishment of the Objectives and 

Project Activity Outcomes; provided, 

however, such assumptions and risks 

shall not excuse performance of the 

Parties, unless otherwise expressly 

agreed to in writing by the Parties. 

5. Implementation of the M&E Plan 

(a) Approval and Implementation. 

The approval and implementation of the 

M&E Plan, as amended from time to 

time, shall be in accordance with the 

Program Annex, this M&E Annex, the 

Governance Agreement, and any other 

relevant Supplemental Agreement. 

(b) Stakeholders’ Committee. The 

completed portions of the M&E Plan 

will be presented to the Stakeholders’

Committee at the Stakeholders’

Committee’s initial meetings, and any 

amendments or modifications thereto or 

any additional components of the M&E 

Plan will be presented to the 

Stakeholders’ Committee at appropriate 

subsequent meetings of the 

Stakeholders’ Committee. The 

Stakeholders’ Committee will have 

opportunity to present its suggestions 

on the M&E Plan, which the 

Supervisory Board will take into 

consideration, as a factor, in its review 

of any amendments to the M&E Plan 

during the Compact Term. The 

Stakeholders’ Committee shall deliver 

an acknowledgement following its 

review of the M&E Plan and any 

amendments thereto. 

(c) MCC Disbursement and ReDisbursement for a Project Activity. 

Unless the Parties otherwise agree in 

writing, prior to, and as a condition 

precedent to, the initial MCC 

Disbursement or Re-Disbursement with 

respect to certain Project Activities, the 

baseline data or report, as applicable 

and as specified in the Disbursement 

Agreement, with respect to such Project 

or Project Activity must be completed in 

form and substance satisfactory to MCC. 

As a condition to each MCC 

Disbursement or Re-Disbursement there 

shall be satisfactory progress on the 

M&E Plan for the relevant Project or 

Project Activity, and substantial 

compliance with the M&E Plan, 

including any reporting requirements. 

(d) Modifications. Notwithstanding 

anything to the contrary in the Compact, 

including the requirements of this M&E 

Annex, MCC and the Government (or a 

mutually acceptable Government 

Affiliate or Permitted Designee) may 

modify or amend the M&E Plan or any 

component thereof, including those 

elements described herein, without 

amending the Compact; provided, any 

such modification or amendment of the 

M&E Plan has been approved by MCC 

in writing and is otherwise consistent 

with the requirements of this Compact 

and any relevant Supplemental 

Agreement between the Parties. 

[FR Doc. 05–20008 Filed 10–6–05; 8:45 am] 

BILLING CODE 9210–01–P