Loan/Grant Administration. Types of Financing Highly concessional Hardened terms Intermediate terms Ordinary terms.

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

Adobe Acrobat Document

Reconciliation of Disbursement

• IFAD sends copy of Disbursement Advice

• Historic transaction

• Status of Funds by Category

• PMU to reconcile

Adobe Acrobat Document

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