APPENDIX H

DRAFT AGREEMENT BETWEEN THE INTERNATIONAL
FUND FOR AGRICULTURAL DEVELOPMENT AND THE FOOD AND
AGRICULTURE ORGANIZATION OF THE UNITED NATIONS

WHEREAS the International Fund for Agricultural Development (hereinafter called the "Fund") and the Food and Agriculture Organization of the United Nations, (hereinafter called "FAO") both have responsibilities relating to food and agriculture pursuant to their constituent instruments and desire to cooperate with each other in order to attain their common objectives; and

WHEREAS

1. Article 8.2 of the Agreement Establishing the International Fund for Agricultural Development requires the Fund to cooperate closely with FAO and other organizations of the United Nations system; and
2. Article XIII.1 of the FAO Constitution stipulates that, in order to provide for close cooperation between FAO and other international organizations with related responsibilities, FAO may enter into agreements with such organizations, defining the distribution of responsibilities and methods of cooperation;

NOW THEREFORE the Fund and FAO have agreed as follows:

ARTICLE I

Section 1. The Fund and FAO agree that, with a view to facilitating the attainment of their common objectives and to promoting a harmonious approach to agricultural development, rural development, food production and nutrition, they shall act in close cooperation and shall consult each other regularly on all matters of mutual interest.

Section 2. The Fund and FAO shall cooperate fully on terms and conditions satisfactory to each other. The Fund, in carrying out its functions, will make use, as it deems appropriate, of the services and expertise in FAO.

Section 3. Any activity carried out by the Fund or FAO pursuant to this Agreement shall be consistent with the policies, criteria and regulations laid down by the respective governing bodies of each organization.

ARTICLE II

Section 1. (a) At the request of the Fund and with the concurrence of the government concerned, FAO shall, in agreed cases, organize or participate in missions to developing countries in order to identify projects suitable for possible financing by the Fund. 
                 (b) In addition, FAO may bring to the notice of the Fund projects which it has identified in the normal course of its operations and which might be suitable for selection by the Fund.

Section 2. At the request of the Fund or the government concerned, FAO shall assist developing countries in preparing projects for submission to the Fund. In the case of a project to be prepared specifically for submission to the Fund, preparation shall be initiated by FAO with the agreement of the Fund. The Fund may actively participate in such preparation. Where specific studies are necessary to complete project preparation undertaken at the request of the Fund and these cannot be carried out by FAO, the Fund shall make suitable arrangements in consultation with FAO for the completion of such studies.

Section 3. At the request of the Fund and with the concurrence of the government concerned, FAO may undertake appraisal missions on behalf of the Fund, or participate in such missions organized by the Fund or by any other cooperating institution entrusted by the Fund with project appraisal. Such appraisal shall be in accordance with the lending policies and criteria of the Fund.

Section 4. The terms of reference, including standards, methods and procedures for appraisal where relevant, of any mission that FAO may organize pursuant to this Article shall be as agreed between the Fund and FAO. The Fund reserves the right to participate in such missions.

Section 5. FAO and the Fund shall agree on the type and form of the reports that FAO shall prepare on any activity it conducts pursuant to this Article. In the case of reports on project identification, preparation and appraisal, FAO shall make these reports available to the Fund in draft and shall take account of any comments thereon made by the Fund.

Section 6. FAO's staff may be invited to assist the Fund's staff in negotiations between the Fund and the recipient concerned regarding a loan or grant for a project appraised by FAO. If so requested by the Fund, FAO's staff, subject to their availability, shall assist the Fund's staff at meetings of the Executive Board of the Fund when such a loan or grant is being considered.

Section 7. FAO and the Fund may also cooperate in providing technical assistance to member countries in accordance with arrangements to be agreed upon from time to time.

Section 8. FAO may, on request by the Fund, in a manner consistent with the arrangements for loan administration, if any, accept responsibility for carrying out supervisory work on projects receiving the Fund's assistance,or participate in such supervisory work.

ARTICLE III

Section 1. Subject to such arrangements as may be necessary to safeguard the confidentiality of any information or document, the Fund and FAO shall provide each other with.all such data, documents and information as may be necessary and relevant to their work.

Section 2. To the extent determined from time to time by mutual agreement, the Fund and FAO shall provide maximum assistance to each other in the preparation of investment-related development studies, including country development papers.

ARTICLE IV

The Fund and FAO shall consult each other with a view to facilitating the exchange of their personnel. To the extent practicable, FAO, on request from the Fund and on terms and conditions agreed between them, shall:

1. make its administrative services and other facilities available to the Fund;
2. provide the Fund with staff on loan or secondment;
3. enable the Fund to utilize the services of FAO's staff in the field to the extent necessary.

ARTICLE V

Section 1. (a) Representatives of FAO shall be invited to attend sessions of the Governing Council of the Fund and may participate in its deliberations on agenda items of interest to FAO;  

                 (b) Representatives of the Fund shall be invited to attend sessions of the FAO Conference and Council and to participate in their deliberations on agenda items of interest to the Fund.

Section 2. After such preliminary consultations as may be necessary, the Fund shall give due consideration to including in the provisional agenda of its Governing Council items proposed by FAO. Similarly, FAO shall give due consideration to including in the provisional agenda of its Conference or Council, items proposed by the Fund.

ARTICLE VI

Section 1. Subject to such cost sharing arrangements as may be agreed upon, the Fund shall reimburse FAO for all direct and all additional indirect costs of the services performed by FAO on behalf of the Fund under this Agreement in accordance with appropriate arrangements to be agreed between the Parties.

Section 2. If so requested by the Fund, FAO shall, as soon as possible but not later than four months after the close of the financial year, submit to the Fund an audited statement of accounts showing the financial status of the amounts which may have been provided by the Fund for the purpose of making payments on behalf of the Fund for a cooperative activity covered by this Agreement.

ARTICLE VII

Section 1. This Agreement shall enter into force upon its approval by the Executive Board of the Fund and by the FAO Council, subject to confirmation by the FAO Conference.

Section 2. This Agreement shall be reviewed at the request of either the Fund or FAO and may be amended by mutual agreement., Any such amendment shall come into force after each Party has satisfied its necessary legal requirements.

Section 3. Any dispute between a Member of the Fund or the recipient of the Fund's financial assistance and FAO in respect of an activity carried out under this Agreement which cannot be settled by negotiation or other agreed mode of settlement in accordance with the loan document or other relevant document, shall be brought to the attention of the Fund for such action as may be feasible and acceptable to the parties to the dispute.

Section 4. This Agreement may be terminated by mutual agreement or by the Fund or FAO giving the other six months' written notice. Notwithstanding the expiry of a notice of termination, the Fund and FAO agree that the provisions of this Agreement shall remain in full force to the extent necessary to enable the orderly conclusion of any activity covered by this Agreement.

Section 5. The Fund and FAO may enter into such supplementary arrangements within the scope of this Agreement as may be desirable in the light of the operating experience of the two organizations to implement this Agreement.