Loan/Grant Administration

Types of Financing

• Highly concessional • Hardened terms • Intermediate terms • Ordinary terms

Description of lending terms

• Highly concessional – no interest, service charge of 0.75%, repayment in 40 years including 10 years grace period • Hardened terms – no interest, service charge 0.75%, repayment in 20 years including 10 years grace period • Intermediate terms – interest @ 0.5% of IFAD Reference rate, maturity period 20 years including 5 years grace period • Ordinary terms – interest on par with IFAD Reference rate, maturity period 15-18 years including 3 years grace period

Basic documents

• Financing Agreement • Letter to the Borrower • Loan Disbursement Handbook • AWPB • Procurement Plan

Standard Procedures

• Replenishment to Special Account/Designated Account • Reimbursement • Direct Payment • Special Commitment

Special Account/Designated Account

• Provides a mechanism, somewhat like an imprest account • Borrower should have sufficient control and financial systems • Should be in a currency and bank acceptable to IFAD

Special Account/Designated Account

• Initial deposit will be determined by the Borrower • Administered by CAA&A • Audit of Special Account done by the office of C&AG • Ceiling of Authorised Allocation

Replenishment

• Should be in USD • Atleast or equal to 20% of the advance

Reimbursement

• Outside Designated Account • For Government pre-financed expenditure • Could be in any currency requested by the borrower • Will not flow to Designated Account • Should not be later than 3 months

Direct Payment

• IFAD directly pays third party • Project instructs IFAD to pay directly • In-country banking regulations are stringent • For above USD 20,000 • Documentation should show evidence of amount due

Direct Payment

• For above USD 20,000 • Documentation should show evidence of amount due • Progress or due payments • Only to party in the contract • Payment instructions should be clear

Recovery of Initial Deposit

• Balance in the Loan Account minus committed expenditures equals to twice the authorised allocation • 6 months before Project Completion • Balance in SA/DA to be refunded

Basic formats for Withdrawal Applications

• Form 100 – to be filled by CAA&A • Application Summary Sheet (supported by documentation) • Statement of Expenditure • Special Account Reconciliation Statement

Statement of Expenditure (SoE)

• Normally used where it is impractical or unduly burdensome to provide documentation • No documentation required • Threshold in the LTB • Separate forms for each category • Breakdown of expenditure

Statement of Expenditure (SoE)

• IFAD to be satisfied about the Borrower’s/LPA’s accounting standards, internal control, auditing capabilities are sound and adequate • SoE method could be for threshold value of expenditure or for a particular category • Threshold could be revised either way, if situation warrants.

What a SoE should contain?

• Form 100 • Special Account statement • Abstract of summary sheets • SoE – signed by PD and Borrower – for each category • Breakdown of expenditure

Breakup of Expenditure

• Reasonable disclosure of expenditure within the category • PMU/District units-wise • Activities • Why the breakup is required?

Documentation required - Overall

• The signed contract or confirmed purchase order– showing the specified amount that is due to be paid; • The bank guarantee for advance payment, as specified in the contract documents; • The bank guarantee for performance, as specified in the contract documents; • Copies of communications sent by the IFAD country programme manager to the lead project agency providing the ‘no objection’ (whether post or prior) to the contract award; and • Evidence of payment.

Documentation required (contd)

In additional to overall requirements, for goods: • Supplier’s invoice, duly certified for payment specifying the goods, their quantities, and prices; • Bills of lading or similar documents; and • As appropriate, the certificate of delivery (to include condition of goods on delivery).

Documentation required

In addition to overall requirements, for Consultancy payments: • The supplier’s or consultant’s claim, duly certified for payment and showing sufficient detail; and • As appropriate, a certificate of delivery of satisfactory services.

Documentation required

For progress and retention payment of civil works: • The claim of the contractor, including a financial progress report, stating the work performed and the amount due; • A certificate – signed by the project consultants or owner’s representative, if any, or by • the borrower’s chief engineering officer to the effect that the work performed is satisfactory and the payment claimed is due in accordance with the terms of the contract; and • A copy of the contract payment monitoring form signed in original by the certifying officer.

Wtihdrawal of Loan resources

• Expenditure to cover reasonable cost of goods and services required for the project • Establishing the trail of the expenditure to the AWPB • Within the programme implementation period • Category ceilings are not exceeded • Establish the recommendations of the JRM are complied with • Status of audit reports • Compliance of reporting

Rejection of WAs

• IFAD may reject the WA either fully or partially • Requested information is not provided within the timeline (7 days) • Project to resubmit the WA in full or part

Why IFAD rejects the WA

• No trail available to AWPB • Procurement not as per the approved Procurement Plan • Wrong Categories • Incorrect eligible percentages • No breakup available for review

Measures that could be adopted

• Refer the Cost Tables or Costab files for correct category • Financing Agreement provisions • Expenditure as per the AWPB • Respond within the timeline • Use checklist

Reconciliation of Disbursement

• IFAD sends copy of Disbursement Advice • Historic transaction • Status of Funds by Category • PMU to reconcile

Register of Contracts

• List all contracts with relevant details • Form C10 from LDH • Contract Monitoring Form C11 from LDH • Certified copies of contracts (prior review procurement and above SoE threshold) to be sent to IFAD