September 14, 2020 H.E. Hykmete Bajrami Minister of Finance Ministry of Finance New Government Building Mother Teresa Street 10000 Pristina Republic of Kosovo Re: IDA Credit 6416-XK (Financial Sector Strengthening Project) Additional Instructions: Disbursement and Financial Information Letter (DFIL) First Restatement Dear Madam Minister, I refer to the Financing Agreement between the Republic of Kosovo (the “Recipient”) and the International Development Association (the “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 Credit amounts from the Credit 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 . Accordingly, this letter is the First Restatement of the DFIL to increase the Ceiling of the Designated Account as set out in Schedule 1 of the letter. All other provisions of the DFIL dated September 23, 2019, except as amended, shall remain in force and effect I. Disbursement Arrangements, Withdrawal of Credit Funds, and Reporting on Uses of Credit 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 Credit 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 signatures, 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. 1 (ii) Electronic Delivery. Section 11.01 (c) of the General Conditions: The Recipient will electronically deliver applications (with supporting documents) through the Association’s web-based portal (https://clientconnection.worldbank.org) “Client Connection”. This facility will become available once: (a) the Recipient has designated in writing, its officials who are authorized to sign and deliver Applications and to receive Secure Identification Credentials (“SIDC”) from the Association for the purpose of delivering such Applications by electronic means; and (b) all such officials designated by the Recipient 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 an exceptional basis (including when encountering legislative limitations), and when pre-agreed with the Association. 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 (i) Financial Reports. The Recipient, through the Ministry of Finance, shall cause the Project Implementing Entity (KCGF) to prepare and furnish to the Association not later than forty-five (45) days after the end of each calendar semester, interim unaudited financial reports (IFR) for the Project, covering the semester, in form and substance satisfactory to the Association. (ii) Entity Audits. The Recipient, through the Ministry of Finance, shall cause the Project Implementing Entity (KCGF) to have its financial statements periodically audited by independent auditors acceptable to the Association, in accordance with consistently applied auditing standards acceptable to the Association. Each audit of the Entity Financial Statements shall cover the period of one fiscal year of the Entity. The audited Entity Financial Statements for each such period shall be (a) furnished to the Association not later than six (6) months after the end of such period, and (b) made publicly available in a timely fashion and in a manner acceptable to the Association. III. Other Information For additional information on disbursement arrangements, please refer to the Loan Handbook available on the Association’s website (http://www.worldbank.org/) 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 Credit, and retrieve related policy, financial, and procurement information. 2 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. Yours sincerely, ______________________________ Aissatou Diallo Senior Finance Officer World Bank Group Finance and Accounting Attachments 1. Form of Authorized Signatory Letter 2. Forms of Statement of Expenditure (SOE) 3. Form of Designated Account Reconciliation Statement CC: Mr. Besnik Berisha, CEO, Kosovo Credit Guarantee Fund Mr. Fehmi Mehmeti, Governor, Central Bank of Kosovo Mr. Ahmet Ismaili, Director of Treasury, Ministry of Finance Mr. Ermal Lubishtani, Chief of Cabinet, Ministry of Finance Mr. Guenther Schoenleitner, Executive Director, World Bank 3 Schedule 1: Disbursement Provisions Basic Information Country Republic of Kosovo Closing Date Section III.B.2. of Schedule 2 to the Recipient Republic of Kosovo Financing Agreement IDA 6416- Credit Number Name of the Project Financial Sector Strengthening Project Disbursement Four (4) months after the Closing XK Deadline Date Date (Subsection 3.7 **) Disbursement Methods and Supporting Documentation Disbursement Methods Methods Supporting Documentation (Section 2 **) (Subsections 4.3 and 4.4 **) Direct Payment Yes (for Part 2 only) Copy of records (e.g. suppliers’ invoices, guarantees for advance and retention payments, etc.) Reimbursement Yes (for Part 2 only) Statement of Expenditure (SOE) in the format provided in Attachment 2A of the DFIL Designated Account Reconciliation Statement in the format provided in Attachment 3 of the DFIL; and For Part 1of the Project - capitalization of KCGF: Customized Statement of Expenditure in the format Yes provided in Attachment 2B of the DFIL; bank statements showing the transfer of funds from the Designated Designated Account Account to KCGF capital account; KCGF Board decision for capital increase; (for Part 1 and Part 2) or For Part 2 of the Project - goods, works, services, training, IOC: Statement of Expenditure (SOE) in the format provided in Attachment 2A of the DFIL Special Commitments No N/A Designated Account (Sections 5 and 6 **) Segregated – two separate Designated Accounts (DA) to be opened and Type maintained by KCGF – one DA for Part 1 and one DA for Part 2 of the Ceiling Fixed Project To be established as follows: DA for Part 1 – at the Central Bank of the Republic of Kosovo (CBK); Financial Institution - Name Currency EUR and DA for Part 2 – at the financial institution acceptable to the Association Part 1 DA – 21,410,000 Frequency of Reporting Quarterly, or more frequently if needed Amount (Subsection 6.3 **) Part 2 DA - 100,000 Minimum Value of Applications (Subsection 3.5) The minimum value of applications for Reimbursement and Direct Payment (for Part 2 of the Project) is EUR 30,000 equivalent. Authorized Signatures (Subsection 3.1 and 3.2 **) The form for Authorized Signatories Letter is provided in Attachment 1 of this letter Withdrawal and Documentation Applications (Subsection 3.3 and 3.4 **) The World Bank Radnicka cesta 80, 9th floor, Zagreb, HR-10000, Croatia Attention: Loan Department (WFACS) Note: All Withdrawal and Documentation Applications will be electronically delivered to the Association, via the Association’s webs ite Client Connection. Additional Information/Instructions ** Sections and subsections relate to the “Disbursement Guidelines for Investment Project Financing”, dated February 2017. Attachment 1 – Form of Authorized Signatory Letter [Letterhead] [Recipient] [Street address] [City] [Country] [DATE] The World Bank 1818 H Street, N.W. Washington, D.C. 20433 United States of America Attention: Country Director Re: Credit No. 6416-XK (Financial Sector Strengthening Project) I refer to the Financing Agreement (“Agreement”) between the International Development Association (the “Association”) and the Republic of Kosovo (the “Recipient”), dated _______, providing the above Credit. For the purposes of Section 2.03 of the General Conditions as defined in the Agreement, any 1[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 this Credit. For the purpose of delivering Applications to the Association, 2[each] of the persons whose authenticated specimen signatures appears below is authorized on behalf of the Recipient, acting 3[individually] 4[jointly], to deliver Applications, and evidence in support thereof on the terms and conditions specified by 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 1 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. 2 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. 3 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. 4 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. 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 / ______________ [Position] Attachment 2A – Form of Statement of Expenditure Statement of Expenditure (SOE) For Goods, Works, Services, Training, IOC Payments made during the period from ________________ to ______________ Credit No.: Application No.: Category No.: SOE No.: 1 2 3 4 5 6 7 8 9 10 11 Supplier’s WB Type of Good or Currency and Total Currency and % Financed Amount Currency and Exchange Date of Remarks Name Contract Service Amount, and Date of Total Amount by Eligible Amount Paid Rate Payment Number in (CW/GO/CS/OP/TR) Contract of Invoice IBRD/IDA/TF for from Client / Brief Description Covered by Financing Designated Connection Application (5 x 6) Account (if (for Prior Applicable) Review Contracts) TOTALS Supporting documents for this SOE retained at ___________________________________________ (location) Attachment 3 – Form of Designated Account Reconciliation Statement DESIGNATED ACCOUNT RECONCILIATION STATEMENT LOAN/CREDIT/PPF/COFINANCIER NUMBER ______________ ACCOUNT NUMBER ______________ WITH (BANK) __________________________ 1. TOTAL ADVANCED BY WORLD BANK (OR COFINANCIER) US$/EUR _______________________ 2 LESS: TOTAL AMOUNT RECOVERED BY WORLD BANK - US$/EUR _______________________ 3. EQUALS PRESENT OUTSTANDING AMOUNT ADVANCED TO THE DESIGNATED ACCOUNT (NUMBER 1 LESS NUMBER 2) = US$/EUR _______________________ =========================================================== 4. BALANCE OF DESIGNATED ACCOUNT PER ATTACHED BANK STATEMENT AS OF DATE ______________________ US$/EUR _______________________ 5. PLUS: TOTAL AMOUNT CLAIMED IN THIS APPLICATION NO. _______________ + US$/EUR _______________________ 6. PLUS: TOTAL AMOUNT WITHDRAWN AND NOT YET CLAIMED REASON: ___________________________________ + US$/EUR _______________________ 7. PLUS: AMOUNTS CLAIMED IN PREVIOUS APPLICATIONS NOT YET CREDITED AT DATE OF BANK STATEMENTS APPLICATION NO. AMOUNT _________________ _________________ _________________ _________________ SUBTOTAL OF PREVIOUS APPLICATIONS NOT YET CREDITED + US$/EUR _______________________ 8. MINUS: INTEREST EARNED - US$/EUR _______________________ 9. TOTAL ADVANCE ACCOUNTED FOR (NO. 4 THROUGH NO. 9) = US$/EUR _______________________ 10. EXPLANATION OF ANY DIFFERENCE BETWEEN THE TOTALS APPEARING ON LINES 3 AND 9: ____________________________________________________________________________________________________ ________________________________________________________________________________________________ 11. DATE: __________________________ SIGNATURE: _________________________ TITLE: ______________________________