BOUTHEINA GUERMAZI Director, Regional Integration Africa and Middle East and North Africa 31-Mar-2024 Date: _____________ Honourable Simplex Chithyola Banda, MP Minister Ministry of Finance and Economic Affairs P.O. Box 30049 Capital City Lilongwe 3 Malawi Re: IDA Grant E280-MW (Regional Climate Resilience Program for Eastern & Southern Africa 2 Project) Additional Instructions: Disbursement and Financial Information Letter Honorable Minister: I refer to the Financing Agreement between Republic of Malawi (“Recipient”) and the International Development Association (“Association”) for the above-referenced Project. The General Conditions, as defined in the Financing Agreement, provide that the Recipient may from time-to-time request withdrawals of Grant amounts from the Grant Account in accordance with the Disbursement and Financial Information Letter, and such additional instructions as the Association may specify from time to time by notice to the Recipient. The General Conditions also provide that the Disbursement and Financial Information Letter may set out Project specific financial reporting requirements. This letter constitutes such Disbursement and Financial Information Letter (“DFIL”) and may be revised from time to time. I. Disbursement Arrangements, Withdrawal of Grant Funds, and Reporting of Uses of Grant Funds The Disbursement Guidelines for Investment Project Financing, dated February 2017 (“Disbursement Guidelines”), are available in the Association’s public website at https://www.worldbank.org and its secure website “Client Connection” at https://clientconnection.worldbank.org. The Disbursement Guidelines are an integral part of the DFIL, and the manner in which the provisions in the Disbursement Guidelines apply to the Grant is specified below. (i) Disbursement Arrangements  General Provisions (Schedule 1). The table in Schedule 1 sets out the disbursement methods which may be used by the Recipient, information on registration of authorized signatories, processing of Withdrawal Applications (including minimum value of applications and processing of advances), instructions on supporting documentation, and frequency of reporting on the Designated Account(s). (ii) Withdrawal Applications (Electronic Delivery) 1 The Recipient will deliver Withdrawal Applications (with supporting documents, “Applications”) electronically through the Association’s web-based portal “Client Connection” at https://clientconnection.worldbank.org. This option will be effected after the officials designated in writing by the Recipient who are authorized to sign and deliver Applications have registered as users of “Client Connection”. The designated officials will deliver Applications electronically by completing the Form 2380, which is accessible through “Client Connection”. By signing the Authorized Signatory Letter, the Recipient confirms that it is authorizing such persons to accept Secure Identification Credentials (SIDC) and to deliver the Applications and supporting documents to the Association by electronic means. The Recipient may exercise the option of preparing and delivering Applications in paper form on exceptional cases (including those where the Recipient encounters legal limitations), and which were previously agreed with the Association. By designating officials to use SIDC and by choosing to deliver the Applications electronically, the Recipient confirms through the Authorized Signatory Letter its agreement to: (a) abide by the Terms and Conditions of Use of Secure Identification Credentials in connection with Use of Electronic Means to Process Applications and Supporting Documentation, available in the Association's public website at https://www.worldbank.org and “Client Connection”; and (b) to cause such officials to abide by those terms and conditions. II. Financial Reports and Audits 2 (i) Financial Reports The Recipient must prepare and furnish to the Association not later than forty-five (45) days after the end of each calendar quarter, interim unaudited financial reports (“IFRs”) for the Project covering the quarter. (ii) Audits Each audit of the Financial Statements must cover the period of one (1) fiscal year of the Recipient, commencing with the fiscal year in which the first withdrawal was made. The audited Financial Statements for each such period must be furnished to the Association not later than six (6) months after the end of such period. 1 Section 11.01 (c) of the General Conditions. 2 Section 5.09 of the General Conditions. III. Other Important Information For additional information on disbursement arrangements, please refer to the Loan Handbook available on the Association’s public website and “Client Connection”. The Association recommends that you register as a user of “Client Connection”. From this website you will be able to prepare and deliver Applications, monitor the near real-time status of the Grant, and retrieve related policy, financial, and procurement information. For more information about the website and registration arrangements, or if you have any queries in relation to the above, please contact the Association by email at AskLoans@WorldBank.org using the above reference. Yours sincerely, ______________________________ Boutheina Guermazi Director, Regional Integration Africa and Middle East and North Africa Attachments 1. Form of Authorized Signatory Letter With copies: Ministry of Finance and Economic Affairs P.O. Box 30049 Capital City Lilongwe 3 Malawi Schedule 1 : Disbursement Provisions A. Basic Information Country Malawi Closing Date Section III.B.2 of Schedule 2 to IDA Grant Recipient Ministry of Finance and Economic Affairs the Financing Agreement. E280-MW Number Name of the Project Regional Climate Resilience Program forDisbursement Four (4) months after the Closing Eastern & Southern Africa 2 Project Deadline Date 3 Date. B. Disbursement Methods and Supporting Documentation Disbursement Methods 4 Methods Supporting Documentation 5 Direct Payment Yes Copy of records (e.g., invoices and receipts) Reimbursement Yes Interim unaudited Financial Report (IFR) Advance (into a Designated Interim unaudited Financial Report (IFR) Yes Account) Special Commitments Yes Copy of Letter of Credit (including pro forma invoice(s), if cited in the Letter of Credit) C. Designated Account(s) 6 Segregated Variable  DA 1: Managed by EPD Type and Management Unit Ceiling  DA 2: Managed by RFA  DA 3: Managed by NLGFC Financial Institution – To be established at a Reserve Bank of Malawi (RBM) USD Currency Name Same as IFR: Quarterly Based on a six-month cash forecast Frequency of Reporting 7 Amount approved by the TTL and included in the AWPB. D. Minimum Value of Applications 8 The minimum value of applications for Reimbursement, Direct Payment and Special Commitment is 20% of the Designated Account Ceiling. E. Authorized Signatories 9 Withdrawal and Documentation Applications 10 The form for Authorized Signatory Letter is provided in Attachment 1 of this letter. Authorized signatories can be submitted through Client Connections. For notes in Schedule 1: Sections and subsections relate to the “Disbursement Guidelines for Investment Project Financing”, dated February 2017. 3 Subsection 3.7 4 Section 2 5 Subsections 4.3 and 4.4 6 Sections 5 and 6 7 Subsection 6.3 8 subsection 3.5 9 Subsection 3.1 and 3.2 10 Subsection 3.3 and 3.4 All Applications and its supporting documentation, and Authorized Signatory Letter will be submitted electronically sent via the Bank’s system “Client Connection”. F. Additional Instructions For each Designated Account, one corresponding Project bank account to be opened at the RBM in Kwacha for payment of eligible expenditure. The funds will flow from the DA to the Kwacha holding account using ruling exchange rate on day of transfer. The project will also open operations bank accounts in Malawi Kwacha (MWK) at a commercial bank in Malawi, acceptable to the IDA. The operations accounts shall be applied for the payment of the day-to-day transactions of the project and the commercial bank will claim amounts paid against the holding account at the RBM. The operations bank accounts will not hold positive balances as no funds will be transferred to the account other than claims of cheques processed by the commercial bank . A detailed procedure for receiving and release of funds from the bank accounts for project activities shall be included in the PIM. The IFRs shall include the following components: • Statement of Sources and Uses of Funds by category • Statement of Uses of Funds by Project Activity/Component. • Designated Account (DA) Activity Statement. • Bank Statements for both the Designated and Project Account. • Summary Statement of DA Expenditures for Contracts subject to Prior Review; and • Summary Statement of DA Expenditures not subject to Prior Review. Attachment 1 – Form of Authorized Signatory Letter [Letterhead] Ministry of Finance [Street address] [City] [Country] [DATE] International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Attention: [Country Director] 11 Dear [Country Director]: Re: IDA Grant E280-MW (Regional Climate Resilience Program for Eastern & Southern Africa 2 Project I refer to the [Credit] [Grant] Agreement (“Agreement”) between the International Development Association (“Association”)[, acting as implementing of the ] 12 and [name of recipient] (“Recipient”), providing the above [Credit] [Grant]. For the purposes of Section 2.03 of the General Conditions as defined in the Agreement, any 13[one] of the persons whose authenticated specimen signatures appear below is authorized on behalf of the Recipient to sign Withdrawal Applications (“Application”) [and applications for a special commitment] under this [Credit] [Grant]. For the purpose of delivering Applications to the Association, including by electronic means, 14 [each] of the persons whose authenticated specimen signatures appears below is authorized on behalf of the Recipient, acting 15[individually] 16[jointly], to deliver Applications, and evidence in support thereof on the terms and conditions specified by the Association. 11 Instruction to Bank staff: please forward this letter to Country Lawyer for further processing (Recipient: please do not delete this note). 12 Instruction to the Recipient: add text in line with the Grant Agreement if applicable; if not applicable delete it. Please delete this footnote in final letter that is sent to the Associations 13 Instruction to the Recipient: stipulate if more than one person needs to sign Applications, and how many or which positions, and if any thresholds apply. Please delete this footnote in final letter that is sent to the Association. 14 Instruction to the Recipient: stipulate if more than one person needs to jointly sign Applications, if so, please indicate the actual number. Please delete this footnote in final letter that is sent to the Association. 15 Instruction to the Recipient: use this bracket if any one of the authorized persons may sign; if this is not applicable, please delete. Please delete this footnote in final letter that is sent to the Association. 16 Instruction to the Recipient: use this bracket only if several individuals must jointly sign each Application; if this is not applicable, please delete. Please delete this footnote in final letter that is sent to the Association. This confirms that the Recipient is authorizing such persons to accept Secure Identification Credentials (SIDC) and to deliver the Applications and supporting documents to the Association by electronic means. In full recognition that the Association shall rely upon such representations and warranties, including without limitation, the representations and warranties contained in the Terms and Conditions of Use of Secure Identification Credentials in connection with Use of Electronic Means to Process Applications and Supporting Documentation (“Terms and Conditions of Use of SIDC”), the Recipient represents and warrants to the Association that it will cause such persons to abide by those terms and conditions. This Authorization replaces and supersedes any Authorization currently in the Association records with respect to this Agreement. [Name], [position] Specimen Signature: ____________________ [Name], [position] Specimen Signature: ____________________ [Name], [position] Specimen Signature: ____________________ Yours truly, / signed / ___________