National Road 13 Improvement and Maintenance Project (Under the Financing Agreement for Credit No. H6226-LA between the Government of Lao PDR (“GOL”) and the International Development Association (“IDA”); the Financing Agreement between GOL and Nordic Development Fund (“NDF”); and Loan Agreement No. L0066 between GOL and Asian Infrastructure Investment Bank (“AIIB”) ) Financial Statements For the year ended 31 December 2022 National Road 13 Improvement and Maintenance Project (Under the Financing Agreement for Credit No. H6226-LA between the Government of Lao PDR (“GOL”) and the International Development Association (“IDA”); the Financing Agreement between GOL and Nordic Development Fund (“NDF”); and Loan Agreement No. L0066 between GOL and Asian Infrastructure Investment Bank (“AIIB”)) CONTENTS Pages Report of the Project’s management 1-2 Independent auditors’ report 3-4 Statement of receipts and disbursements 5 Statement of fund balance 6 Notes to the financial statements 7 - 23 National Road 13 Improvement and Maintenance Project (Under the Financing Agreement for Credit No. H6226-LA between the Government of Lao PDR (“GOL”) and the International Development Association (“IDA”); the Financing Agreement between GOL and Nordic Development Fund (“NDF”); and Loan Agreement No. L0066 between GOL and Asian Infrastructure Investment Bank (“AIIB”)) REPORT OF THE PROJECT’S MANAGEMENT The management of National Road 13 Improvement and Maintenance Project (the “Project”) is pleased to present this report and the financial statements of the Project as at 31 December 2022 and for the year then ended. MANAGEMENT’S RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS The Project’s management is responsible for the preparation of the Project’s financial statements as at 31 December 2022 and for the year then ended in accordance with the accounting policies as described in Note 3 to the financial statements. In preparing these financial statements, the Project’s management is required to: ► adopt accounting policies as described in Note 3 to the financial statements and apply them consistently in accordance with the requirements of Donors for Government-executed projects’ financial statements; ► make judgements and estimates that are reasonable and prudent; ► maintain proper financial operations and controls; ► maintain adequacy of the management structure and general control environment; ► ensure that all non-expendable properties are used solely for and by the Project, and maintain proper control over those properties; and ► comply with the related Financing Agreements. The Project’s management is responsible for ensuring that proper accounting records are kept which disclose, with reasonable accuracy at any time, the funds requested, authorized for, received and disbursed by the Project and to ensure that the accounting records comply with the accounting policies described in Note 3 to the financial statements. The Project’s management is also responsible for safeguarding the assets of the Project, and for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Project’s management confirms that they have complied with the above requirements in preparing the financial statements. 1 Reference: 12836196/67340402 INDEPENDENT AUDITORS’ REPORT To: The Project’s Management The International Development Association (“IDA”) The Nordic Development Fund (“NDF”); and The Asian Infrastructure Investment Bank (“AIIB”) Opinion We have audited the accompanying financial statements of National Road 13 Improvement and Maintenance Project (“the Project”) funded by the Government of Lao PDR (“GOL”), the International Development Association (“IDA”), Nordic Development Fund (“NDF”), and Asian Infrastructure Investment Bank (“AIIB”), as set out on pages 5 to 23, which comprise the statement of fund balance as at 31 December 2022, the statement of receipts and disbursements for the year then ended, and the notes to financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements of the Project are prepared, in all material respects, in accordance with the accounting policies as described in Note 3 to the financial statements and the Project’s Financial Manual (“the Manual”). Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Project in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Lao PDR, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter – Basis of Accounting and Restriction on Distribution and Use We draw attention to Note 3 to the financial statements which describes the accounting policies adopted by the Project. These accounting policies are not intended to present the financial position, the results of operations of the Project in accordance with international generally accepted accounting principles. As also disclosed in Note 2 to the financial statements, the financial statements are prepared to assist the Project’s management in meeting the reporting requirements of its Donors. As a result, the financial statements may not be suitable for another purpose. Our report is intended solely for the information and use of the Project and its Donors, and should not be distributed to or used by other parties. Our opinion is not modified in respect of this matter. Responsibility of the Project’s management for the Financial Statements. The Project’s management is responsible for the preparation of the financial statements in accordance with the accounting policies as described in Note 3 to the financial statements, and for such internal control as management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. 3 Auditors’ responsibility for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Project’s internal control.  Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. We communicate with the Project’s management regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. ____________________________ Vientiane, Lao PDR 30 June 2023 4 National Road 13 Improvement and Maintenance Project (Under the Financing Agreement for Credit No. H6226-LA between the Government of Lao PDR (“GOL”) and the International Development Association (“IDA”); and Financing Agreement between GOL and Nordic Development Fund (“NDF”); and Loan Agreement No. L0066 between GOL and Asian Infrastructure Investment Bank (“AIIB”)) NOTES TO THE FINANCIAL STATEMENTS as at and for the year ended 31 December 2022 1. PROJECT BACKGROUND National Road 13 Improvement and Maintenance Project (“the Project”) is implemented by the Ministry of Public Works and Transport (“MPWT”) and is managed by the Department of Planning and Cooperation. The Project is funded by: ► International Development Association (“IDA”) in accordance with the Financing Agreement for Credit No. H6226-LA dated 23 July 2018 between IDA and the Government of Lao PDR (“GOL”) with a total fund being contributed by IDA of USD 40 million; ► Nordic Development Fund (“NDF”) in accordance with the Financing Agreement dated 7 December 2018 between NDF and the GOL with a total of EUR8 million being contributed by NDF as a credit (equivalent to a total of USD 9,5 million); ► Asian Infrastructure Investment Bank (“AIIB”) in accordance with the Loan Agreement No. L0066A dated 6 June 2019 between NDF and the GOL with a total of USD40 million being contributed by AIIB; and ► Counterpart fund from the GOL with a total contribution of USD 38,5 million via Road Fund (“RF”). The Project’s execution period is for the period from 22 January 2019 to 31 May 2023. The objectives of the Project are: (i) to improve road condition by yielding significant economic benefits; (ii) road safety by helping reduce traffic injury and fatality risks as well as enhancing safety of pedestrians; and (iii) climate resilience by building road infrastructure. The Project consists three components: ► Component 1: Road improvement and maintenance ► Component 2: Technical assistance and supervision ► Component 3: Project management 7 National Road 13 Improvement and Maintenance Project (Under the Financing Agreement for Credit No. H6226-LA between the Government of Lao PDR (“GOL”) and the International Development Association (“IDA”); the Financing Agreement between GOL and Nordic Development Fund (“NDF”); and Loan Agreement No. L0066 between GOL and Asian Infrastructure Investment Bank (“AIIB”)) NOTES TO THE FINANCIAL STATEMENTS (continued) as at and for the year ended 31 December 2022 2. BASIS OF PREPARATION The Project’s financial statements comprise the statement of receipts and disbursements , the statement of fund balance and the notes to financial statements which are expressed in United States dollars (“USD”). The financial statements are prepared by the Project’s management in accordance with the accounting policies as described in Note 3. These accounting policies are not intended to present the statement of fund balance, statement of receipts and disbursements of the Project in accordance with international generally accepted accounting principles. The financial statements are prepared solely to report: ► funds received from IDA, NDF, AIIB and GOL; ► funds disbursed by the Project; and ► the Project’s fund balance. The Project maintains its accounting records in Lao Kip (“LAK”). The financial statements, however, have been prepared in USD as required by IDA. The Project uses the comma (,) as the decimal separator and the dot (.) to separate thousands. The financial statements are prepared solely to assist the Project’s management in meeting the reporting requirements of the Donors. As a result, the financial statements may not be suitable for another purpose. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 3.1 Receipts Contribution from IDA, NDF – Special account replenishment Funds from IDA and NDF are recognized as receipts when cash is credited to the Project’s Special Accounts managed by the National Treasury of the Ministry of Finance (“MoF”), rather than when committed or budgeted. Direct payments from IDA, NDF and AIIB Direct payments from IDA, NDF and AIIB to the Project’s suppliers and consultants are accounted for as direct receipts when payments are made by and upon receipt of payment notices from IDA, NDF and AIIB. 8 National Road 13 Improvement and Maintenance Project (Under the Financing Agreement for Credit No. H6226-LA between the Government of Lao PDR (“GOL”) and the International Development Association (“IDA”); the Financing Agreement between GOL and Nordic Development Fund (“NDF”); and Loan Agreement No. L0066 between GOL and Asian Infrastructure Investment Bank (“AIIB”)) NOTES TO THE FINANCIAL STATEMENTS (continued) as at and for the year ended 31 December 2022 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 3.1 Receipts (continued) Counterpart fund from the Government of Laos Counterpart fund from the Government of Laos is recognized as receipts from Road Fund (“RF”) when cash is credited to the Project’s Account deposited at the National Treasury of Ministry of Finance (“MoF”), rather than when committed or budgeted. 3.2 Disbursements Except for advances made to Project staffs and other receivables, disbursements under each component are recognized when incurred and upon the approval of the Project’s management based on the accompanying documents. 3.3 Advances Advances to the Project’s contractors, partners and staffs to implement the Project’s activities are carried as part of the fund balance until subsequent liquidation or clearance at approval of the Project’s management. 3.4 Fixed assets Fixed assets are recognized as the Project’s disbursements in the statement of receipts and disbursements when received from suppliers upon finalization and approval of the Project management. Accordingly, fixed assets are not recognized in the statement of fund balance at the year end. List of assets are maintained for management and monitoring purpose, which includes vehicles, computers and office equipment. 3.5 Accounts payable Payables are recognized for expenditure incurred and related supporting documents are approved by the Project’s management, but payments have not been settled as at the reporting date and are recorded as payables in the statement of fund balance. 3.6 Foreign exchange differences The Project maintains its accounting records in LAK. For the purpose of preparing these financial statements, the receipts and disbursements denoted in LAK are converted into USD at the actual exchange rates ruling at the date of the transactions and the fund balances are converted into USD at the exchange rate prevailing at year end. Foreign exchange differences are presented separately and as net foreign exchange gains/(losses) in the statement of receipts and disbursements for the reporting period. 9 National Road 13 Improvement and Maintenance Project (Under the Financing Agreement for Credit No. H6226-LA between the Government of Lao PDR (“GOL”) and the International Development Association (“IDA”); the Financing Agreement between GOL and Nordic Development Fund (“NDF”); and Loan Agreement No. L0066 between GOL and Asian Infrastructure Investment Bank (“AIIB”)) NOTES TO THE FINANCIAL STATEMENTS (continued) as at and for the year ended 31 December 2022 4. FUNDS FROM IDA – SPECIAL ACCOUNT REPLENISHMENT Special account replenishment represents the cash received by the Project under the Financing Agreement for Credit No. H6226-LA as follows: For the year ended For the year ended Withdrawal Application 31 December 2022 31 December 2021 No. Date of application USD USD Application DOF-000007 23 June 2021 - 974.640 Application DOF-000016 28 April 2022 345.085 - Application DOF-000022 21 November 2022 510.564 - 855.649 974.640 5. FUNDS FROM IDA – DIRECT PAYMENTS Direct payments from IDA under the Financing Agreement for Credit No. H6226-LA represents payments made to Hubei Changjiang Road and Bridge Co., Ltd with details are as follows: For the year ended For the year ended Withdrawal Application 31 December 2022 31 December 2021 No. Date of application USD USD Application DOF-000010 6 October 2021 - 800.665 Application DOF-000009 8 October 2021 - 456.341 Application DOF-000011 1 February 2022 673.126 - Application DOF-000012 1 February 2022 338.383 - Application DOF-000013 1 February 2022 2.042.586 - Application DOF-000014 1 February 2022 1.026.817 - Application DOF-000017 8 June 2022 2.173.997 - Application DOF-000018 8 June 2022 843.421 - Application DOF-000020 7 September 2022 2.068.071 - Application DOF-000021 7 September 2022 748.651 - Application DOF-000023 9 December 2022 2.619.235 - Application DOF-000024 9 December 2022 862.039 - Application DOF-000025 9 December 2022 1.188.689 - Application DOF-000026 9 December 2022 391.220 - 14.976.235 1.257.006 10 National Road 13 Improvement and Maintenance Project (Under the Financing Agreement for Credit No. H6226-LA between the Government of Lao PDR (“GOL”) and the International Development Association (“IDA”); the Financing Agreement between GOL and Nordic Development Fund (“NDF”); and Loan Agreement No. L0066 between GOL and Asian Infrastructure Investment Bank (“AIIB”)) NOTES TO THE FINANCIAL STATEMENTS (continued) as at and for the year ended 31 December 2022 6. FUNDS FROM AIIB – DIRECT PAYMENTS Direct payments from AIIB under the Financing Agreement for Loan Agreement No. L0066 represents payments made to Hubei Changjiang Road and Bridge Co., Ltd. With details are as follows: For the year ended For the year ended Withdrawal Application 31 December 2022 31 December 2021 No. Date of application USD USD Application DOF-000002 18 October 2021 - 800.665 Application DOF-000003 20 October 2021 - 416.834 Application DOF-000004 1 February 2022 673.126 - Application DOF-000005 1 February 2022 342.002 - Application DOF-000007 1 February 2022 2.042.586 - Application DOF-000008 1 February 2022 1.037.798 - Application DOF-000009 8 June 2022 2.173.997 - Application DOF-000010 8 June 2022 708.185 - Application DOF-000011 7 September 2022 2.068.070 - Application DOF-000012 7 September 2022 697.294 - Application DOF-000013 9 December 2022 2.619.235 - Application DOF-000014 9 December 2022 878.059 - Application DOF-000015 9 December 2022 1.188.689 - Application DOF-000016 9 December 2022 398.490 - 14.827.531 1.217.499 11 National Road 13 Improvement and Maintenance Project (Under the Financing Agreement for Credit No. H6226-LA between the Government of Lao PDR (“GOL”) and the International Development Association (“IDA”); the Financing Agreement between GOL and Nordic Development Fund (“NDF”); and Loan Agreement No. L0066 between GOL and Asian Infrastructure Investment Bank (“AIIB”)) NOTES TO THE FINANCIAL STATEMENTS (continued) as at and for the year ended 31 December 2022 7. FUNDS FROM NDF – DIRECT PAYMENTS Direct payments from NDF under the Financing Agreement represent payments made to: - Dongsung Engineering Co., Ltd with details are as follows: For the year ended For the year ended 31 December 2022 31 December 2021 Withdrawal Application No. Date of application USD USD Application DOF-000012 18 February 2021 - 142.718 Application DOF-000013 31 March 2021 - 142.862 Application DOF-000016 19 August 2021 - 139.292 Application DOF-000017 19 August 2021 - 133.226 Application DOF-000018 5 November 2021 - 183.523 Application DOF-000019 2 December 2021 - 124.542 Application DOF-000011 9 February 2022 176.136 - Application DOF-000012 14 March 2022 241.999 - Application DOF-000013 30 May 2022 192.436 - Application DOF-000014 8 August 2022 154.128 - Application DOF-000015 14 September 22 137.282 - 901.981 866.163 - Lao Consulting Group with details are as follows: For the year ended For the year ended 31 December 2022 31 December 2021 Withdrawal Application No. Date of application USD USD Application DOF-000011 18 February 2021 - 41.706 Application DOF-000014 11 May 2021 - 20.853 Application DOF-000015 2 July 2021 - 41.706 Application DOF-000016 17 January 2022 10.426 - Application DOF-000017 4 April 2022 45.444 - Application DOF-000018 4 July 2022 106.036 - Application DOF-000019 25 October 2022 75.740 - 237.646 104.265 8. COUNTERPART FUND FROM THE GOVERNMENT OF LAOS For the year ended For the year ended 31 December 2022 31 December 2021 Withdrawal Application No. Date of application USD USD Application – 02 17 June 2021 - 1.300.945 - 1.300.945 12 National Road 13 Improvement and Maintenance Project (Under the Financing Agreement for Credit No. H6226-LA between the Government of Lao PDR (“GOL”) and the International Development Association (“IDA”); the Financing Agreement between GOL and Nordic Development Fund (“NDF”); and Loan Agreement No. L0066 between GOL and Asian Infrastructure Investment Bank (“AIIB”)) NOTES TO THE FINANCIAL STATEMENTS (continued) as at and for the year ended 31 December 2022 9. DISBURSEMENTS BY COMPONENT Disbursements by component for the year ended 31 December 2022 are as follows: For the year ended 31 December 2022 For the year ended 31 December 2021 Counterpart Counterpart IDA fund NDF AIIB Total IDA fund NDF AIIB Total Component USD USD USD USD USD USD USD USD USD USD 1. Road improvement and maintenance 16.473.366 - 84.040 16.324.663 32.882.069 1.471.464 1.212.905 709.417 1.471.464 4.865.250 - Road improvement and maintenance 16.473.366 - - 16.324.663 32.798.029 1.471.464 - - 1.471.464 2.942.928 - Land acquisition - - 84.040 - 84.040 - 1.212.905 709.417 - 1.922.322 2. Technical assistance and supervision 224.340 - 1.139.627 - 1.363.967 299.578 - 970.428 - 1.270.006 - Traffic safety, overloading control and safeguards monitoring 224.340 - - - 224.340 299.578 - - - 299.578 - Management and supervision of OPBRC - - 912.407 - 912.407 - - 970.428 - 970.428 - Preparation of future investments - - 227.220 - 227.220 - - - - - 3. Project management 394.676 - - - 394.676 340.837 - - - 340.837 - Project management consultant 57.460 - - - 57.460 107.490 - - - 107.490 - Financial audit 16.449 - - - 16.449 33.821 - - - 33.821 - Training and study tour 68.145 - - - 68.145 15.600 - - - 15.600 - Incremental operating costs 147.496 - - - 147.496 165.987 - - - 165.987 - Vehicles and equipment 105.126 - - - 105.126 17.939 - - - 17.939 17.092.382 - 1.223.667 16.324.663 34.640.712 2.111.879 1.212.905 1.679.845 1.471.464 6.476.093 13 National Road 13 Improvement and Maintenance Project (Under the Financing Agreement for Credit No. H6226-LA between the Government of Lao PDR (“GOL”) and the International Development Association (“IDA”); the Financing Agreement between GOL and Nordic Development Fund (“NDF”); and Loan Agreement No. L0066 between GOL and Asian Infrastructure Investment Bank (“AIIB”)) NOTES TO THE FINANCIAL STATEMENTS (continued) as at and for the year ended 31 December 2022 10. CASH ON HAND AND CASH AT BANKS 10.1 Cash on hand 31 December 31 December 2022 2021 USD USD Cash on hand 527 5.921 527 5.921 10.2 Cash at banks 31 December 31 December 2022 2021 Item Note USD USD Cash in special account – IDA 10.3.1 758.289 521.516 Cash in special account – NDF 10.3.2 232.920 232.918 Cash in operating accounts 609.725 737.803 In which: IDA’s cash in operating account at BCEL 10.3.1 43.009 39.016 NDF’s cash in operating account at BCEL 10.3.2 479.190 563.756 RF’s cash in operating account at Vientiane Capital 10.5 87.058 134.309 RF’s cash in operating account at Vientiane Province 10.5 468 722 1.600.934 1.492.237 10.3 Cash in special account In accordance with the financing agreements of the Project, the following Special Accounts are maintained in USD at Bank of the Lao PDR: 10.3.1 Cash in special account – IDA’s Credit No. H6226-LA Account No.: 0000010136440154 Depository: Bank of the Lao PDR Address: Yonnet Street, Vientiane, Lao PDR Related Credit: IDA Credit No. H6226-LA Currency: USD The purpose of the special account is to receive fund from IDA on Credit No. H6226-LA for transferring to operating accounts and for certain direct payments to suppliers, contractors and service providers. 14 National Road 13 Improvement and Maintenance Project (Under the Financing Agreement for Credit No. H6226-LA between the Government of Lao PDR (“GOL”) and the International Development Association (“IDA”); the Financing Agreement between GOL and Nordic Development Fund (“NDF”); and Loan Agreement No. L0066 between GOL and Asian Infrastructure Investment Bank (“AIIB”)) NOTES TO THE FINANCIAL STATEMENTS (continued) as at and for the year ended 31 December 2022 10. CASH AT BANKS (continued) 10.3 Cash in special account (continued) 10.3.1 Cash in special account – IDA’s Credit No. H6226-LA (continued) The special account is non-interest bearing. Movement of special account during the years is as follows: For the year For the year ended 31 ended 31 December 2022 December 2021 Item USD USD Opening balance 521.516 188.474 Add: IDA replenishment 855.649 974.640 IDA direct payment 14.976.235 1.257.006 Deduct: Total amount withdrawn (Note 9) (17.092.382) (2.111.879) Replenishment to operating account – BCEL (Note 10.2) (*) (43.009) (39.016) Advances (Note 11) (1.113.421) (2.618.147) Cash on hand (527) (5.921) Accounts payable (Note 12) 35.124 43.733 Foreign exchange gain (247) 77.406 Prior year’s cash in operating accounts 39.016 33.404 Prior year’s cash on hand 5.921 1.295 Prior year’s advances 2.618.147 2.742.593 Prior year’s accounts payable (43.733) (22.072) Closing balance 758.289 521.516 (*) Cash in operating account – IDA’s Credit No. H6226-LA Account No: 010110101666245001 Depository: Banque Pour Le Commerce Exterieur Lao Public. Head office Address: No 1, Pangkham Rd, Chanthabouly District, Vientiane Capital, Laos Related Credit: IDA Credit No. H6226-LA Currency: USD The purpose of the operating account is for certain payments to suppliers, contractors and service providers. 15 National Road 13 Improvement and Maintenance Project (Under the Financing Agreement for Credit No. H6226-LA between the Government of Lao PDR (“GOL”) and the International Development Association (“IDA”); the Financing Agreement between GOL and Nordic Development Fund (“NDF”); and Loan Agreement No. L0066 between GOL and Asian Infrastructure Investment Bank (“AIIB”)) NOTES TO THE FINANCIAL STATEMENTS (continued) as at and for the year ended 31 December 2022 10. CASH AT BANKS (continued) 10.3 Cash in special account (continued) 10.3.2 Cash in special account – NDF Financing Agreement dated 7 December 2018 Account No.: 0000010136450155 Depository: Bank of the Lao PDR Address: Yonnet Street, Vientiane, Lao PDR Related Credit: NDF Financing Agreement dated 7 December 2018 Currency: USD The purpose of the special account is to receive fund from NDF on Financing Agreement dated 7 December 2018 for transferring to operating accounts in order to pay for land acquisition for road improvement and maintenance. The special account is non-interest bearing. Movement of special account for the years is as follows: For the year For the year ended 31 ended 31 December 2022 December 2021 Item USD USD Opening balance 232.918 936.048 Add: NDF direct payment 1.139.627 970.428 Deduct: Total amount withdrawn (Note 9) (1.223.667) (1.679.845) Replenishment to operating account (Note 10.2) (479.190) (563.756) Prior year’s cash in operating accounts 563.756 570.506 Prior year’s accounts payable - (168) Foreign exchange loss (524) (295) Closing balance 232.920 232.918 10.4 Cash in operating account – NDF Cash in operating accounts – NDF’s financing agreement dated 7 December 2018 maintained in both LAK and USD at Banque Pour Le Commerce Exterieur Lao Public as at 31 December 2022 as follows: Account No: 010110101731538001 Depository: Banque Pour Le Commerce Exterieur Lao Public. Head office Address: No 1, Pangkham Rd, Chanthabouly District, Vientiane Capital, Laos Related Credit: NDF’s financing agreement dated 7 December 2018 Currency: USD Account No: 010110001797128001 Depository: Banque Pour Le Commerce Exterieur Lao Public. Head office Address: No 1, Pangkham Rd, Chanthabouly District, Vientiane Capital, Laos Related Credit: NDF’s financing agreement dated 7 December 2018 Currency: LAK 16 National Road 13 Improvement and Maintenance Project (Under the Financing Agreement for Credit No. H6226-LA between the Government of Lao PDR (“GOL”) and the International Development Association (“IDA”); the Financing Agreement between GOL and Nordic Development Fund (“NDF”); and Loan Agreement No. L0066 between GOL and Asian Infrastructure Investment Bank (“AIIB”)) NOTES TO THE FINANCIAL STATEMENTS (continued) as at and for the year ended 31 December 2022 10. CASH AT BANKS (continued) 10.4 Cash in operating account – NDF (continued) Account No: 019110001797706001 Depository: Banque Pour Le Commerce Exterieur Lao Public. Phonhong Branch Address: Phonehong Village, Phonehong District, Vientiane Province, Laos Related Credit: NDF’s financing agreement dated 7 December 2018 Currency: LAK The purpose of the operating account is for certain payments of land acquisition for road improvement and maintenance. 10.5 Cash in operating accounts – RF Cash in operating accounts – Road Fund are maintained in LAK at the National Treasury and with details are as follows: As 31 December 2022 As 31 December 2021 Original currency Original currency LAK USD equivalent LAK USD equivalent National treasury – Vientiane Capital 1.498.882.538 87.058 1.498.882.538 134.309 National treasury – Vientiane Province 8.056.000 468 8.056.000 722 1.506.938.538 87.526 1.506.938.538 135.031 17 National Road 13 Improvement and Maintenance Project (Under the Financing Agreement for Credit No. H6226-LA between the Government of Lao PDR (“GOL”) and the International Development Association (“IDA”); the Financing Agreement between GOL and Nordic Development Fund (“NDF”); and Loan Agreement No. L0066 between GOL and Asian Infrastructure Investment Bank (“AIIB”)) NOTES TO THE FINANCIAL STATEMENTS (continued) as at and for the year ended 31 December 2022 11. ADVANCES As at 31 December 2022 As at 31 December 2021 Counterpart Counterpart IDA fund NDF AIIB Total IDA fund NDF AIIB Total Item USD USD USD USD USD USD USD USD USD USD Advance of civil work services to contractors 1.108.311 - - 1.108.311 2.216.622 2.605.453 - - 2.605.453 5.210.906 Advances to Project’s staffs to implement Project’s activities 5.110 - - - 5.110 12.694 - - - 12.694 1.113.421 - - 1.108.311 2.221.732 2.618.147 - - 2.605.453 5.223.600 12. ACCOUNTS PAYABLE As at 31 December 2022 As at 31 December 2021 Counterpart Counterpart IDA fund NDF AIIB Total IDA fund NDF AIIB Total Item USD USD USD USD USD USD USD USD USD USD Professional fee 33.359 - - - 33.359 16.910 - - - 16.910 Salary payable to employee 1.743 - - - 1.743 26.821 - - - 26.821 Other payables 22 24 - - 46 2 24 - - 26 35.124 24 - - 35.148 43.733 24 - - 43.757 18 National Road 13 Improvement and Maintenance Project (Under the Financing Agreement for Credit No. H6226-LA between the Government of Lao PDR (“GOL”) and the International Development Association (“IDA”); the Financing Agreement between GOL and Nordic Development Fund (“NDF”); and Loan Agreement No. L0066 between GOL and Asian Infrastructure Investment Bank (“AIIB”)) NOTES TO THE FINANCIAL STATEMENTS (continued) as at and for the year ended 31 December 2022 13. COMPARISON OF ACTUAL DISBURSEMENTS AGAINST BUDGET For the year ended 31 December 2022 For the year ended 31 December 2021 Actual Budget Variance Actual Budget Variance Item USD USD USD USD USD USD 1. Road improvement and maintenance - Road improvement and maintenance 32.798.029 30.287.764 (2.510.265) 2.942.928 24.898.690 21.955.762 - Land acquisition 84.040 6.647.774 6.563.734 1.922.322 7.910.004 5.987.682 2. Technical Assistance and Supervision - Traffic safety, overloading control and safeguards monitoring 224.340 655.000 430.660 299.578 435.000 135.422 - Management and supervision of OPBRC 912.407 1.181.024 268.617 970.428 698.070 (272.358) - Preparation of future investments 227.220 300.000 72.780 - 500.000 500.000 3. Project management - Project management consultant 57.460 84.000 26.540 107.490 84.000 (23.490) - Financial audit 16.449 23.205 6.756 33.821 80.000 46.179 - Technical audit - - - - 50.000 50.000 - Training and study tour 68.145 160.000 91.855 15.600 160.000 144.400 - Incremental operating cost 147.496 249.600 102.104 165.987 244.800 78.813 - Vehicles and equipment 105.126 630.000 524.874 17.939 215.000 197.061 34.640.712 40.218.367 5.577.655 6.476.093 35.275.564 28.799.471 19 National Road 13 Improvement and Maintenance Project (Under the Financing Agreement for Credit No. H6226-LA between the Government of Lao PDR (“GOL”) and the International Development Association (“IDA”); the Financing Agreement between GOL and Nordic Development Fund (“NDF”); and Loan Agreement No. L0066 between GOL and Asian Infrastructure Investment Bank (“AIIB”)) NOTES TO THE FINANCIAL STATEMENTS (continued) as at and for the year ended 31 December 2022 13. COMPARISON OF ACTUAL DISBURSEMENTS AGAINST BUDGET (continued) Overall, disbursements during the year were under than the annual budget plan. Expenditures for road improvement and maintenance exceeded the approved budget and was mainly due to the delay in certain construction works since previous years and had been completed in the current year. There were some certain milestone of works planned in the year 2021, but not completion and to be paid in the year 2022. Land acquisition is far under the budget plan cause the budget of 6.647.774 USD was set aside to pay for land compensation in connection to the road construction from Sikhai to Sikerd villages. However, it’s very difficult to get the agreement with local people for land compensation. Since there were certain delay of activities on road improvement and maintenance line, those effected to the payment on this line. Expenditures for other budget lines were generally under the approved budget and were mainly due to the delay in the procurement processes and requirements of related activities. 14. STATEMENTS OF RECEIPTS AND DISBURSEMENTS AND FUND BALANCE BY SOURCES OF FUND For the year ended 31 December 2022 For the year ended 31 December 2021 Counterpart Counterpart IDA funds NDF AIIB Total IDA funds NDF AIIB Total USD USD USD USD USD USD USD USD USD USD Receipts Funds from IDA 15.831.884 - - - 15.831.884 2.231.646 - - - 2.231.646 Counterpart fund from the Government of Laos - - - - - - 1.300.945 - - 1.300.945 Funds from NDF - - 1.139.627 - 1.139.627 - - 970.428 - 970.428 Loan from AIIB - - - 14.827.531 14.827.531 - - - 1.217.499 1.217.499 Net foreign exchange gain/(loss) (247) (47.505) (524) (10) (48.286) 77.406 (57.274) (295) 116.943 136.780 Total receipts 15.831.637 (47.505) 1.139.103 14.827.521 31.750.756 2.309.052 1.243.671 970.133 1.334.442 5.857.298 20 National Road 13 Improvement and Maintenance Project (Under the Financing Agreement for Credit No. H6226-LA between the Government of Lao PDR (“GOL”) and the International Development Association (“IDA”); the Financing Agreement between GOL and Nordic Development Fund (“NDF”); and Loan Agreement No. L0066 between GOL and Asian Infrastructure Investment Bank (“AIIB”)) NOTES TO THE FINANCIAL STATEMENTS (continued) as at and for the year ended 31 December 2022 14. STATEMENTS OF RECEIPTS AND DISBURSEMENTS AND FUND BALANCE BY SOURCES OF FUND (continued) For the year ended 31 December 2022 For the year ended 31 December 2021 Counterpart Counterpart Disbursements by IDA funds NDF AIIB Total IDA funds NDF AIIB Total component USD USD USD USD USD USD USD USD USD USD 1. Road improvement and maintenance 16.473.366 - 84.040 16.324.663 32.882.069 1.471.464 1.212.905 709.417 1.471.464 4.865.250 - Road improvement and maintenance 16.473.366 - - 16.324.663 32.798.029 1.471.464 - - 1.471.464 2.942.928 - Land acquisition - - 84.040 - 84.040 - 1.212.905 709.417 - 1.922.322 2. Technical Assistance and Supervision 224.340 - 1.139.627 - 1.363.967 299.578 - 970.428 - 1.270.006 - Traffic safety, overloading control and safeguards monitoring 224.340 - - - 224.340 299.578 - - - 299.578 - Management and supervision of OPBRC - - 912.407 - 912.407 - - 970.428 - 970.428 - Preparation of future investments - - 227.220 - 227.220 - - - - - 3. Project management 394.676 - - - 394.676 340.837 - - - 340.837 - Project management consultant 57.460 - - - 57.460 107.490 - - - 107.490 - Financial audit 16.449 - - - 16.449 33.821 - - - 33.821 - Training and study tour 68.145 - - - 68.145 15.600 - - - 15.600 - Incremental operating cost 147.496 - - - 147.496 165.987 - - - 165.987 - Vehicles and equipment 105.126 - - - 105.126 17.939 - - - 17.939 Total disbursements (Note 9) 17.092.382 - 1.223.667 16.324.663 34.640.712 2.111.879 1.212.905 1.679.845 1.471.464 6.476.093 Net receipts/(disbursements) (1.260.745) (47.505) (84.564) (1.497.142) (2.889.956) 197.173 30.766 (709.712) (137.022) (618.795) 21 National Road 13 Improvement and Maintenance Project (Under the Financing Agreement for Credit No. H6226-LA between the Government of Lao PDR (“GOL”) and the International Development Association (“IDA”); the Financing Agreement between GOL and Nordic Development Fund (“NDF”); and Loan Agreement No. L0066 between GOL and Asian Infrastructure Investment Bank (“AIIB”)) NOTES TO THE FINANCIAL STATEMENTS (continued) as at and for the year ended 31 December 2022 14. STATEMENTS OF RECEIPTS AND DISBURSEMENTS AND FUND BALANCE BY SOURCES OF FUND (continued) For the year ended 31 December 2022 For the year ended 31 December 2021 Counter- Counter- IDA part funds NDF AIIB Total IDA part funds NDF AIIB Total USD USD USD USD USD USD USD USD USD USD Opening balance 3.140.867 135.007 796.674 2.605.453 6.678.001 2.943.694 104.241 1.506.386 2.742.475 7.296.796 Net receipts/(disbursements) (1.260.745) (47.505) (84.564) (1.497.142) (2.889.956) 197.173 30.766 (709.712) (137.022) (618.975) Closing balance 1.880.122 87.502 712.110 1.108.311 3.788.045 3.140.867 135.007 796.674 2.605.453 6.678.001 Represented by: Cash on hand and cash at banks 801.825 87.526 712.110 - 1.601.461 566.453 135.031 796.674 - 1.498.158 Advances 1.113.421 - - 1.108.311 2.221.732 2.618.147 - - 2.605.453 5.223.600 Accounts payable (35.124) (24) - - (35.148) (43.733) (24) - - (43.757) 1.880.122 87.502 712.110 1.108.311 3.788.045 3.140.867 135.007 796.674 2.605.453 6.678.001 22