Street 15, House 238 Wazir Akbar Khan Kabul, Afghanistan Afghanistan Country Office Tel: (0093) 701133414 December 16, 2020 H.E. Abdul Hadi Arghandiwal Minister of Finance Ministry of Finance Islamic Republic of Afghanistan Kabul, Afghanistan Excellency: RE: COVID-19 Relief Effort for Afghan Communities and Households (IDA Grant No. D7110 and ARTF Grant No TF0B3543) Disbursement and Financial Information Letter (DFIL) I refer to the Financing Agreements between the Islamic Republic of Afghanistan (the “Recipient”), and the International Development Association (the “Association”) and to the Grant Agreement between the Islamic Republic of Afghanistan (the “Recipient”) and the International Development Association (the “Association”) acting as administrator of grant funds provided by various donors to the Afghanistan Reconstruction trust Funds (“ARTF) . These legal agreements provide that the Association may issue additional instructions regarding the withdrawal of funds of these grants (IDA Grant and ARTF Grant collectively the “Financing”). This letter constitutes such Disbursement and Financial Information Letter (“DFIL”) and may be revised from time to time. This replaces the Disbursement and Financial Information Letter issued under IDA Grant D7110 and ARTF Grant no. TF0B3543 dated August 09,2020. This is the first restatement of the subject Disbursement and Financial Information Letter to change the ceiling of Designated Account A, B and C from fixed to variable under Schedule 1- Disbursement Provisions. I. Disbursement Arrangements, Withdrawal of Financing 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 guidelines apply to the Grant is specified below. (i) Disbursement Arrangements • General Provisions. The table in Schedule 1 sets out the disbursement methods which may be used by the Recipient, information on registration of authorized signatures, processing of withdrawal applications (including minimum value of applications, processing of Direct Payments, and advances), and instructions on supporting documentation. • Special Provision. Projects in situations of urgent need of assistance or capacity constraints: Disbursements under contracts for goods, works, non-consulting services and consulting services procured or selected through international open or limited competition or Direct Selection, as set out in the procurement plan, must be made only through Direct Payment and/or Special Commitment disbursement methods. (ii) Electronic Delivery. Reference: (A) for the ARTF, Section 7.01 of the Standard Conditions for Grants; and (B) for the IDA grant, Section 11.01 of the General Conditions for IDA Financing: Investment Project Financing. The Association may permit the Recipient to electronically deliver applications (with supporting documents) through the Association’s web-based portal (https://clientconnection.worldbank.org) “Client Connection”. This option may be effected if 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 may deliver Applications electronically by completing the Form 2380, which is accessible through “Client Connection”. By signing the Authorized Signatory Letter, the Recipient confi rms 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 continue to exercise the option of preparing and delivering Applications in paper form. The Association reserves the right and may, in its sole discretion, temporarily or permanently disallow the electronic delivery of Applications by the Recipient. 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://worldbank.org and “Client Connection”; and (b) to cause such official to abide by those terms and conditions. II. Financial Reports and Audits. Applicable to the IDA Grant, in line with Section 5.09 of the General Conditions for IDA Financing: Investment Project Financing.1 (i) Financial Reports. The Recipient must prepare and furnish to the Association not later than forty-five (45) days after the end of three (3) months period, interim unaudited financial reports (“IFR”) for the Project covering such period. Where a UN agency is contracted by the Borrower, the Borrower is responsible to ensure that the financial reporting requirements applicable to the UN Agency are stipulated in the agreement between the Borrower and the UN agency and met in a timely manner. (ii) Audits. Each audit of the Financial Statements must cover the period of one 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 Associations not later than nine (9) months after the end of such period. Where a UN agency is contracted by the Borrower, the Borrower is responsible to ensure that the documentation requirements applicable to the UN agency, for project audit purposes, are stipulated in the agreement between the Borrower and the UN agency. III. Other Information. For additional information on disbursement arrangements, please refer to the Loan Handbook available on the Association’s website and “Client Connection”. The Association recommends that you 1 Both provisions, i.e. Financial Reports and Audit, are applicable to the ARTF Grant. 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 Financing, 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. Sincerely, Henry Khali Henry G. R. Kerali Country Director for Afghanistan South Asia Region Attachments 1. Form of Statement of Expenditures (SOE) and Certificate from Monitoring Agent. 2. Form of authorized Signatories Schedule 1 : Disbursement Provisions Basic Information Numbers Country and Islamic Stated in (i) section III.B.2. of Schedule 2 to the IDA IDA Grant D7110 Recipient Republic of Closing Date Financing Agreements and Grant Agreement. Afghanistan ARTF Grant TF0B3543 Name of the COVID-19 Disbursement Four (4) months after the closing date. Project Relief effort Deadline Date for Afghan Subsection 3.7 * Communities and Households [REACH] Disbursement Methods and Supporting Documentation Disbursement Methods Methods Supporting Documentation Section 2 (*) Subsections 4.3 and 4.4 (*) Direct Payment Yes Copy of records Reimbursement Yes Statement of Expenditure (SOE) and Certificate from Monitoring Agent (Attachment 1) Advance Yes Statement of Expenditure (SOE) and Certificate from Monitoring Agent (Attachment 1) Special Commitments Yes Copy of Letter of Credit Designated Account (Sections 5 and 6 *) Financial Institution Da Afghanistan Bank Ceiling Variable Quarterly Forecast for two quarters of eligible Frequency of Reporting Amount expenditures Type of the Designated Accounts DA-A One pooled Designated Account for IDA grant and ARTF grant to be operated by Ministry of Rural Rehabilitation and Development (MRRD) through MRRD- Citizen Charter Afghanistan PIU. Related Category of the Withdrawal Table of the IDA Grant Financing are 1,4 and 5 and related category of the Withdrawal Table of the ARTF Grant Agreement are 1,4, and 5. Financial Institution Da Afghanistan Bank Ceiling Variable Quarterly Forecast for two quarters of eligible Frequency of Reporting Amount expenditures One pooled Designated Account for IDA grant and ARTF grant to be operated by Independent DA-B Directorate of Local Governance (IDLG) through IDLG- Citizen Charter Afghanistan EZ-Kar PIU. Related Categories of the Withdrawal Table of the IDA Grant Financing are 2,4 and 5 and related categories of the Withdrawal Table of the ARTF Grant Agreement are 2,4 and 5. Financial Institution Da Afghanistan Bank Ceiling Variable Quarterly Forecast for two quarters Frequency of Reporting Amount of eligible expenditures Type of the Designated Accounts DA-C One pooled Designated Account for IDA grant and ARTF grant to be operated by Kabul Municipality (KM) through Kabul Municipality Development Project (KMDP) PIU. Related Categories of the Withdrawal Table of the IDA Grant Financing are 3,4 and 5 and related categories of the Withdrawal Table of the ARTF Grant Agreement are 3,4 and 5. Minimum Value of Applications (subsection 3.5) The minimum value of applications for Reimbursement and Special Commitment is USD 12 million for MRRD and USD6 million for IDLG and KM. Authorized Signatures (Subsection 3.1 and 3.2 *) Applications for the Financing (both IDA Grants under the Project) will be signed by the official(s) authorized to sign Applications as indicated in your letter dated April 07,2020. Whenever changes are necessary, a letter in the Form attached (Attachment 2) should be furnished to the Association at the address indicated below, providing the name(s) and specimen signature(s) of the official(s) authorized to sign Applications : The World Bank Country Office Kabul, Afghanistan Attention: Country Director, Afghanistan Withdrawal and Documentation Applications (Subsection 3.3 and 3.4*) Please provide completed and signed (a) applications for withdrawal, together with supporting documents, and (b) applications for special commitments, together with a copy of the commercial bank letter of credit, to the address indicated below: The World Bank No11, Taramani Main Road, Taramani, Chennai- 600113. Tamil Nadu, India Attention: Senior Regional Team Leader, WFACS Other Disbursement Instructions (i) List of contracts selected through international open or limited competition or Direct Selection to be disbursed only using Direct Payment and/or Special Commitment disbursement methods are provided in the procurement plan. (ii) In case of category 1,2 and 3 of the table under Schedule 2 Section III (“Withdrawal Table”) of the Financing and Grant Agreement, payments to UN Agencies (if any) may be made through UN Advances (with or without a UN Commitment) disbursement mechanism. In case of a contract with a UN Agency requiring a UN Commitment, an application for issuance of UN Commitment is to be submitted by the Recipient/Borrower. Subsequent payments and documentation of expenditures under the contract must be made in accordance with the Commitment letter to be issued by the Association and the contract between the Borrower/Recipient and the UN agency. In case of a UN Advance (without UN Commitment), documentation of expenditure should be made once the final invoice is issued and based on the UN Financial Report. (iii) Further Advances would be provided to CDCs, FPs and Traders’ association based on approved list. Any undocumented balance of Further Advances should be refunded to the Designated accounts and then to the Bank by the end of project. * Sections and subsections relate to the “Disbursement Guidelines for Investment Project Financing”, dated February 2017. Attachment 1- Form of Statement of Expenditure and Certificate from Monitoring Agent (attached seperately) Attachment 2 – Form of Authorized Signatory Letter [Letterhead] Ministry of Finance [Street address] [City] [Country] [DATE] The World Bank Country Office Kabul, Afghanistan Attention: Country Director RE: IDA Grant No. ______ (COVID-19 Relief effort for Afghan Communities and Households [REACH]) I refer to the Financing Agreements between the Islamic Republic of Afghanistan (the “Recipient”), and the International Development Association (the “Association”) and to the Grant Agreement between the Islamic Republic of Afghanistan (the “Recipient”) and the International Development Association (the “Association”) acting as administrator of grant funds provided by various donors to the Afghanistan Reconstruction trust Funds (“ARTF), dated _____, providing the above Financing. For the purposes of Section 2.03 of the General Conditions as defined in the IDA Financing Agreements and Section 3.04 (b) of the Standard Conditions as defined in the ARTF Grant Agreement, any 2[one] of the persons whose authenticated specimen signatures appear below is authorized on behalf of the Recipient to sign applications for withdrawal and applications for a special commitment under the above Financing. For the purpose of delivering Applications to the Association, 3[each] of the persons whose authenticated specimen signatures appears below is authorized on behalf of the Recipient, acting 4 [individually] 5[jointly], to deliver Applications, and evidence in support thereof on the terms and conditions specified by the Association. 2 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. 3 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. 4 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. 5 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. 6 [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 / ______________ 6 Instruction to the Recipient: Add this paragraph if the Recipient wishes to authorize the listed persons to accept Secure Identification Credentials and to deliver Applications by electronic means; if this is not applicable, please delete the paragraph. Please delete this footnote in final letter that is sent to the Association.