The World Bank 1818 H Street N.W. (202) 473-1000 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 20433 Cable Address: INTBAFRAD INTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A. Cable Address: INDEVAS OFFICIAL ti t - ' DOCUMENTS IS NovEMQEP ,20l5 Hon. Aisake Value Eke Minister of Finance and National Planning Ministry of Finance and National Planning P.O. Box 67 Vuna Road Nuku' alofa Kingdom of Tonga Dear Honorable Minister: Re: IDA Credit No. 5730-TO and IDA Grant No. D091-TO Additional Financing for Tonga Transport Sector Consolidation Project Additional Instructions: Disbursement Letter I refer to the Financing Agreement between the Kingdom of Tonga (the "Recipient") and the International Development Association (the "World Bank") dated 18 NOVEM&EfP , 2015 for the above-referenced project. The Agreement provides that the Bank may issue additional instructions regarding the withdrawal of the proceeds of IDA Credit 5730-TO and IDA Grant D091-TO. This letter ("Disbursement Letter"), as revised from time to time, constitutes the additional instructions. The attached World Bank Disbursement Guidelines for Projects, dated May 1, 2006, ("Disbursement Guidelines") (Attachment 1), are an integral part of the Disbursement Letter. The manner in which the provisions in the Disbursement Guidelines apply to the Grant is specified below. Sections and subsections in parentheses below refer to the relevant sections and subsections in the Disbursement Guidelines and, unless otherwise defined in this letter, the capitalized terms used have the meanings ascribed to them in the Disbursement Guidelines. I. Disbursement Arrangements (i) Disbursement Methods (section 2). The following Disbursement Methods may be used under the IDA Credit and Grant: * Reimbursement * Advance * Direct Payment * Special Commitment (ii) Disbursement Deadline Date (subsection 3.7). The Disbursement Deadline Date is 4 months after the Closing Date as specified in the Financing Agreement. Any changes to this date will be notified by the Association. (iii) Disbursement Conditions (subsection 3.8). Please refer to the Disbursement Conditions in the Financing Agreement. II. Withdrawal of IDA Credit and Grant Proceeds (i) Authorized Signatures (subsection 3.1). 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 Level 19, 14 Martin Place CML Building Sydney NSW 2000, Australia Attention: Country Director The Authorized Signatures letter should be updated promptly whenever changes are necessary and should be sent to us before the first submission of a withdrawal application. (ii) Applications (subsections 3.2 - 3.3). 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 26/F, One Global Place 5th Avenue corner 25th Street Bonifacio Global, Taguig City Philippines Attention: Loan Department (iii) Electronic Delivery (subsection 3.4) The Bank may permit the Recipient to electronically deliver to the Association Applications (with supporting documents) through the Bank's Client Connection, web-based portal. The option to deliver Applications to the Bank by electronic means may be effected if: (a) the. Recipient has designated in writing, pursuant to the terms of subparagraph (i) of this Section, its officials who are authorized to sign and deliver Applications and to receive secure identification credentials ("SIDC") from the Bank 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. If the Bank agrees, the Bank will provide the Recipient with SIDC for the designated officials. Following which, the designated officials may deliver Applications electronically by completing Form 2380, which is accessible through Client Connection (https://clientconnection.worldbank.org). The Recipient may continue to exercise the option of preparing and delivering Applications in paper form. The Bank reserves the right and may, in its sole discretion, temporarily or permanently disallow the electronic delivery of Applications by the Recipient. 2 (iv) Terms and Conditions of Use of SIDC to Process Applications. 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 ("Terms and Conditions of Use of SIDC") provided in Attachment 3; and (b) to cause such official to abide by those terms and conditions. (v) Minimum Value of Applications (subsection 3.5). The Minimum Value of Applications for Direct Payment, Reimbursement and issuance of Special Commitment is US$80,000. (vi) Advances (sections 5 and 6) to Ministry of Infrastructure. * Type ofDesignated Account (subsection 5.3): One Segregated Account * Currency of Designated Account (subsection 5.4): USD * Financial Institution at which the Designated Account[s] Will Be Opened (subsection 5.5: Financial institution acceptable to the Bank * Ceiling (subsection 6.1): USD400,000 (USD200,000 for IDA Credit and USD200,000 for IDA Grant) III. Reporting on Use of Grant Proceeds (i) Supporting Documentation (section 4). Supporting documentation should be provided with each application for withdrawal as set out below: * For requests for Reimbursement: o Statement of Expenditure (SOE) in the form attached (Attachment 4), for all expenditures/contracts that are not subject to the Bank's prior review o List of payments against contracts that are subject to the Bank's prior review, in the form attached (Attachment 5) together with records evidencing eligible expenditures (e.g., copies of receipts, supplier invoices) * For reporting eligible expenditures paid from the Designated Account: o Statement of Expenditure (SOE) in the form attached (Attachment 4), for all expenditures/contracts that are not subject to the Bank's prior review o List of payments against contracts that are subject to the Bank's prior review, in the form attached (Attachment 5) together with records evidencing eligible expenditures (e.g., copies of receipts, supplier invoices) o Designated Account Reconciliation Statement in the form attached (Attachment 6) with a copy of the Designated Account Bank Statement. 3 * For requests for Direct Payment: o Records evidencing eligible expenditures, e.g., copies of receipts, supplier invoices (ii) Frequency of Reporting Eligible Expenditures Paid from the Designated Account (subsection 6.3): Quarterly or more often if needed. IV. Other Disbursement Instructions One new separate account will be opened for this Additional Financing project for both IDA Credit and IDA Grant. Sub-ledger accounts will be maintained to record receipt and usage of the funds under Credit and Grant respectively. V. Other Important Information For additional information on disbursement arrangements, please refer to the Disbursement Handbook available on the Bank's public website at https://www.worldbank.org and its secure website "Client Connection" at https://clientconnection.worldbank.org. Print copies are available upon request. If you have not already done so, the Bank recommends that you register as a user of the Client Connection website (https://clientconnection.worldbank.org). From this website you will be able to download Applications, monitor the near real-time status of the Grant, and retrieve related policy, financial, and procurement information. All Recipient officials authorized to sign and deliver Applications by electronic means are required to register with Client Connection before electronic delivery can be effected. For more information about the website and registration arrangements, please contact the Bank by email at . If you have any queries in relation to the above, please contact the World Bank Loan Department at loa-eap@,worldbank.org using the above reference. Yours sincerely, Franz Drees-Gross Country Director Papua New Guinea, Timor Leste and Pacific Islands East Asia and Pacific Region 4 Attachments 1. World Bank Disbursement Guidelines for Projects, dated May 1, 2006 2. Form for Authorized Signatures 3. Terms and Conditions of Use ofSecure Identification Credentials in connection with Use of Electronic Means to Process Applications and Supporting Documentation, dated March 1, 2013 4. Sample Form of Statement of Expenditure 5. Sample Form of Payments Against Contracts Subject to the Association's Prior Review 6. Sample Form of Designated Account Reconciliation Statement cc with copies: Project Director Ministry of Infrastructure Address: Email: Telephone no.: Fax no.: Email address: 5 Attachment 1 THE WORLD BANK DISBURSEMENT GUIDELINES FOR PROJECTS MAY 2006 6 WORLD BANK DISBURSEMENT GUIDELINES FOR PROJECTS LOAN DEPARTMENT May 1, 2006 7 в �а��(ы. �:�t��� ::,wiuur� ��л 1 1� �� � �S'S:hч�. �,)�(1 'a��tarзt`�`�Ъ1 11 'i •�•�,tz� �1 �.1�1 Чti1'�t (1lNt.ь'41 '���i t ���t.>tdldui�''t•`(1 F`i,ти �г�зз.�tцу:т�,�.и�2Э traf '��п"tЭ I��'lrrпт':ц.?tn� .�°i 1 'ИЙ(4. �_� i.��п"2�чl1'tl.� CONTENTS Flagt, .... . .. ... .. ... . .... . .. .. . .... ... . .. ... .. . . ... .. 2. Disbursernerit Methods--- ...................... -.. - - - ý ý ý - (3 3, W ith(Irawal of Loart Procce(Ls . ..... ............. .......... ..... 6 i . Supporting L-kxmmentation Requirements ........... .......... 9 ........... » ....... ........... - 10 C). T.rrns aiid Con(fitions Applicable to Advances - ........... 12 7, Ineligible Exýx,udit iirt-, ..................... - .......... - ......... . .. . . .. . . . . . . . . . . .. . . . . . . . . . . .. . . .. . . . . . .. . . .. .. . 31 9 World Bank Disbursement Guidelines for Projects May 1, 2006 1. Purpose 1.1 1te pirpose of these Guideines i, to set ont the Bank's procedures for disbursemenrt of loan proCedS for projects. Sp-eifically. the Guildelies explaii a t,he different mel hods used by the Bank to dIsburOSC oan proceeds. (b: the require- mrents for withdrawal from the Lan Account. ic the ypes of supporting dunieittation that the borrower may be re- quired to provide to dim-onstrat- the use of loan proceeds for eligibl, expendit ires. id the criteria for establishing des- ignlia ed accounts. w'ie terms and conditions applicable to advanlces. fl the typcs of actions that the Bank may take if it determines that loan procats are not refled or have been 1SIed for iniligible purposes. and i g: the ffc onequnce of refundjL Rank~~ ~ ~ ~ ~~I meZd.RRT n I\.ffltuserd a1n.1 i at- r, W,rT inIVlIDI-s fb, hkorow,r.fani IIMRD oa.ID.\ ernýdo . r ProIfes,Pr-p ratin l ailinxa a v.i;id t hf ei n f aVTrVII: Wind -1 -,;ut i. .\ `rreToInt 1 * elude thl. : -r i.ent wilh i.. Bank prosvidba? fr 6 a vrfdf grani, -r 'v 1 I DeI11AVe[Op n i U.. a i al ilrj .rvi éTo r 1,-i arLt v un ,th- r'T'1ir prttvnIte:r in 'prilal Ptylnv pt i, ( rA. In fin1 .;.?'. T. i-rh nH i >me iliah e 11,y applv t,, ..:therT , i y i ':t-l.lEd mTtTIws firarli..41 fTe n ri1su f:r s rI. t-Xr-pm .rdalles. s hi ivTTs oflI he :wr nee In il i ti,,e tn makr provisimn f,r tiffteren re-ui rtmn ts i h- v o r.r appl 10 ! i lr pnwnt P bry lni,, 10 2. Disbursement Methods 2.1 1 he Bank stablishe. dishiirsemeiit arrangemi,ents for an op- eration in consultation with the borrower and taking into corsideration. it, r alh. an assessient of the borrower* fåtancial mnaitagenent and prro)curenTt plai and cash flow ncetds of the operation. and it.s dibursement experience witi tht borrower. 2.2 lhe Bank disburýes proceeds fron the Loan Accotint estab- lished for each loan. to or on the order of the borrower. using One or More of the disbursement mietbods set forti below. as d-teTmiln-d by the Bank. (a) Relnibursement: Il he Bank may reiinburse the bor- rower for expenditures eligible for fimancing pirsuant to the Loanl Agreement i-eigible expenditures1 that the horrower has prefnanced from its owli resourees. (b) Advance: Ihe Bank may advaice loan proceeds into a ik-sigiated accouni of the borrower to financc eligible xpeniditures as they are ineurred and for which sup- portirg dournents will be provided at a later date Isee seetion 5. -Designated Acct:units; (e) Direct Payment I'b, Bank may make pa ments. at th, horrower's request. dirttv to a third partY :e.g.. suppli,r. vontravtor. ctn1suiltant ! for eligible expendi- tures. (d) Special Commitment: Ih le Bak may p ay aM0. ounts to a third party for elgilll expendIiTures under spvcial collnitilments iitere< ints. in writing. at the borrOwers requek1 and on termns and condili(lons agreedi betweenl the Bank and the borrIwI-r. 3. Withdrawal of Loan Proceeds 3.1 Authorized Signatures. Before loanI proeeds may bw witlhirawii r committed from the Loan AcConllt. the all- |6 11 thorizle represeritative of the borrow'er a deignated in th Loai Agr,iemenrt i must furnishi ro the Baik i a the iame>i ojf Ithe irations for a special cormnitment icolk-e- tivelv. 'Aplictions". and :b, the autheticated spevimen sigiiat'ris of the officiaPhz The borrower must inlicate clearly if more thai one signature is required on Applica- Ii-pns and miust notify the Baink promptly of ary changes in signafure aut hority. 3.2 Apphcations. Apipheation must be provided to the Bank in such form and inehide ich irfonnation as the Bank nay reastniably- request. Apphlation forms are availabk online from the Chent Connection W1eb site at hltp: -i: n'oi-onn - o a.rorldnumk.r e>'or from the Bank upon request. 3.3 F or withdrawal from the Loan Account for advaicc. rhe horrower sou1ld provide an original signed appheation for withdrawal. For withdrawal fron the Loai Acconråt for re- jimursenenis anl direct payrients and for reporting on the use of aivances. the borrower should provide an original ,ig nedI application for withdrawal together with onie copy é,f ZuIpporting documents s elion 1. Dopotig Doci- mientation Requireme'nts For a speal commitrnent from Ilie Loai Acesrunt. the borrower should provitde an original ,in-d application for a sptcial conuitment together with one Copy of the let ter of ereiit. Ute Bank reserve the righit not to accept or rexiew duplicate copies of Applications and .ipportinåg docmnent, and mnay at its scretion return or d-stry the duplicate 3.4 Electronic Dellvery. Ilhe Bank may aiuthorize the hr- rower to ise electironic miecars, in a iannier an1d on terms and btns spreif iv the Bank. to deliver Appitat ions and supporfing docelnittaiin to the Bank. Applicarionå,ré and supporting documen'ation delivered in accordancc with Illis slibsevtion will bje d1'ned t1 have 1beln proVirtiiig documentation to the Bank to show that loan proccds have beert or are being ':,ed to fiiiaic- ehgible expentditures. 4.2 For special comniiitients. the cornercial bank provides its confirimatiott diretly to the Bank that conditions for release tf paymntts ommitted for withdrawal have been rmet. 4.3 Tjpes of Supporting Documentation. Tlhe Bank re- quires either copics of the origiiial documnts evidening vligible expenditures i URcord ) or sumrmary reports of ex- xnditire f.-Sinary Reportts iii such form) and substance as tbe Bank may specify. Records inelitde such docuiits as invoies and reveiprs. A Summary Report may bie either a; the iiterim un-ailited fiiancial report required under the Loan Agrrment iInterim Financial Report) or ib: a staternent of expenditursiimmarizing eligible expendi- tures paid duriring a stated pe-riod : "Statement If Expendi- tur#' n all cases. the borrower is responsible for retaining ths originial documient'sevidenaing eligible expendit ures and IMaking them available for aidit or inspection. 4.4 l be Bank deteriiiines th- types of upporting docunntation that th, I,rrower should provide. taking into consideration the di-.bunrsemn,nt mtet hod use d 1 he "uppo. rming dos cumnrn t a- tmiln may be the following: (a) For applications for reimburse-ment: :i lintsrim- Financial Repo rt .. :ii St atuIements of Expenditlure. Iiii: Records. or iv) IReords required by tlie Bank for spe- cific expenditures and Si a!ement of E:xpenditur for atll other expe ndituires; (b) For reporting on the us of adrances: IJ Iriterim F inancial Re po rt s. iii St atemennt s of Expendituire. iiii Recorus. or liv Pccords requirdr, by the Bank for sp- cific expenditures and St atcmenit of Expenditure for all other expenditures: 9| 14 (c) For applicattons for direct paynents: Records: aMd (d) Aiv oither supporting documientation that the aink miaV TequeSt by toticc to the borrower. 4.5 Failure to Provide Audited Financial Statements. If the horrower fails to provide any of the audited Financial Statements required in accordance with. and within the px- riod of tine specified in. the Loan Agreerent. the Barik may at its discretion detide not to accept applications for with- drawal supported by Sumnmary Reports. even if such reports are accompanied by Records. 5. Designated Accounts 5.1 Ihe borroewer rnay open one tr more designated accoinIits into. which the Bank may. at the borrower's reqpuest. de- po,sir anounts withdrawn frorn the Loan Account for the p11rposeC of paving for eligible expenditures as thev are in- curred IDesignated Account~ i Before the Bank au thorizes est abliient of a Designated Account. the borrower must have adequate adminjnistrative capabity. internal controls. and accouiting ani d aiiting prtenlures to ensure effective lise of the Designaled Account. 5.2 Ihe Bank may decid. not ti perinit tli use of Des-ignaredtl ACCruITIfir ini new projects if the borrower has fail-d io re- fiid uocmented adlvanet- in the )esignated Accouit of any other loan to. or gbaranteel by. the horrower within Iw# mont hs aftt-r the I)isbiirsemeiit Dcadline Date for such loan. 5.3 ype of Designated Account. A Designated Account may be established in one oif the Iw( ways vet out below. as ap- pri>priat, for rhe opo-ration tu conernerrower or any freelv convertible curreney. The Bank may also agree to local currency- esignated Accoints when. mts r ata. the coiiiitry's clirrency teven if not freely convertibit is stabbe and the expenditures to be fmanced are primarily in o- cal curTencY. t he borrower bears all risks associated with forrign exchange flluctuations betsween ial the currency of denomination of the loan and that of the bosrrower's Desig- uated Account. and (b the curreincy of denomnination of the borrower's Desigiated Accoint and the cUrrency or t-irren- rivs of project expenditures. 5.5 Financial Institution. Designated Accoun-s mu-t be opeledl and naintained in a fmancial institution acep- al-t t e Bank on terns and comndition accept able to the Bank. lo be acceptable to the Bank. the financial inrtitution projosed by the borrower shul generally neit all the fol- lowing requireens: (a) b0 fnancially sound: (b) be athoried to mainali the Designate Acmirut in th- curreney agred bet weein the Bank and the bor- rower: (c) be auited reIentitatioii b,asedl on periodic forcausts of project cash flow need,ls 6.2 .4pplications for Advances. Ithe borrower may apply for an advance in an aliounlit up fo the Ceiliig less the aggre- gatc arninit of thosC advane previoly reeived by the borrower for which the bor bower has not yet proided -up- pmorting document ation.rrially. to supporr ordevly elosure of tl- Loai Acount. te Bank A n es not advance lian pr,>- vecIs into ti Designated Acouft after the CIOsing Date. 6.3 &cquency of Reporting Eligible Erpenditures Paid from the Designated Account. I he borrower repmrts oni the ise of b,an prceeds advaned t fthe Designated Accunt I 12 17 at intervals specified by the Bank by niotice to the orrower : Beport ing Period The 1 borrower should ellsure that all anolnts deposited in the [esignated Accouit are accouned for and their use reported prior to the 4isbursement Dead- line Date. After this date. the borrower rimst refind to the Bank anv advances still unaccounted for or rernainiing in the D)esigniated Accounzt. 6.4 Withholding Adrances. the Bank is not required to make any deposit into the iDesignared Account if- (a) The Bank detennines that payment of the deposit would result in exceeding the Ceiling ie subsection 6Q Ap- plications for Advanes: (b) the Bank is not satisfied that the horrower's pkared projevt expenditures justifv the deposit. The Bank may. by norice to the borrower. adjust the amount it deposits or withhold furither deposits into the Designated A(- count until it is satisfied that rhe financial lieds of the pri>jet warrant further deposits: (c) 1He borrwer fails to take the action required pursuant to iht determinations made by the Bank under s the evidence furni,zhlit to the Bank (,r waŽ iadet- for ani iiligible expøn- dirire. ti- Bank iay. at its discretiøn. requir tit, borrower to take on. iif th action, listedl belo. Vponl noification by th. Bank. the borrø,ower mlust proimtptlv takt- the action (a) [ri4vide the additional evidernre requesl by the Bank: (b) D).eposit an equtiivalenxt amoun1tt into the De.signiated Ar- l 14 19 (c) Refulid an etlivaleult amiout to the ark; or (d) Exceptionally. provi