"Sustainable Rural Water Supply and Sanitation Development Project'' Grant No. D138-KG, Credit No. 5907-KG Grant No. D204-KG, Gredit No. 6088-KG Financial statements fоr the уеаr ended DесеmЬеr 31,2О23 and independent auditor's report G Ь"kегtittу "SUSTAINABLE RURAL WATER SUPPLY AND SANITATION DEVELOPMENT PROJECT,, GRANT No. Dl38-KG, cREDlT No.5907-KG GRANT No. D204.KG, cREDlT Nо.6088-кG TABLE 0F сONTENTS Page STATEMENT оF MANAGEMENT,S RESPoNSlBlLlTlES FOR ТНЕ PREPARAT|ON AND APPROVAL ОF ТНЕ PROJECT FlNANC|AL ýTATEMENTS FoR тнЕ YEAR ENDED DEсEMBER 31, 2023 2 lNDEPENDENT AUDlToR,S REPoRT 3_5 PROJECT FlNANC|AL STATEMENTS FоR тНЕ YЕАR ENDED DECEMBER 3.1, 2023: Summary of funds rесеiчеd and expenditures paid 6 Summary of ехрепditчrеs paid Ьу project components 7 Notes to the pýect financial statements в-21 "SUSTAINABLE RURAL WATER SUPPLY AND ýANlTATloN DEVELoPMENT PRoJEсT,, GRANT No. Dl38_KG, cREDlT Nо.5907_кG GRANT No. D204-KG, cREDlT No.6088-KG SтАтЕмЕNт 0F MANAGEMENT,S RESPoNS|BlLlTlES FoR тнЕ PREPARATIoN AND APPRovAL тнЕ PRoJEcT FlNANclAL STATEMENTqjoR тнЕ YEAR ENDED DEGEMBER 31, оF 2023 The.following statement, which should Ье rеаd iп conjunction with the independent auditor's responsibilities is made with а view to distinguish the respective rеsропЪiьпitЁs bf ,.n.g"rent and those of the independent аuditог in rеlаtiоп to the project financial statemenis of the "sustаiпаьlб Rчrаl watei supply and sanitation Developme.nt Project"_(the "'Pгoj_ect"), financed iп ассоrdапсе with Fiпапсiпg Пgr;еЙепt Grапt No. Dlз8-кG and Credit No, 5908-KG dated October 26,2О16 and Fiпапсiпt Agr."..nt Grапt No, D204-KG, Credit No, 60B8_KG dated NочеmЬеr 13, 2о17 , Management of the Project is rеsропsiЬlе for_the рrераrаtiоп of the project financial statements that рrеsепt fаirlу, in all mаtеriаl respects, the summary of funds ieceived and expenditures paid and the summary of expenditureipaid Ьу components of the irоjесt fоr the Е!есеmьеr зl, zоzз iп ассоrdапсе with у"аr lпtегпаtiопаl Public Sесtоr Accounting Stапdа,rd ''гiпiпdiiiПЬроПiпg "nded Uпdеr trre iaiБBasis of Дссочпtiпg'' (the "lpsAs") issued Ьу the lпtеrпаtiоъаl pub]ic Accounting si5псаrоs Воагd of the lпtеrпаtiопаl Federation of Accountants and the World Bank's Financial МапаgеЙJпtЪ.tЬ, Board's "Guidelines: -- дппuаl Financial Reporting апd Auditing for World Bank Fiпапсео Абtiчitiеs" (th; "WB CuiOelines;), lп рrераriпg the ргоjесt financial statements, management is rеsропsiьlе fоr: , selecting suitable accounting policies and applying them consistently; , making judgments and estimates that аrе геаsЬпjьlе and prudent; '' , stating whether lPSAS and WB Guidelines have Ьееп followed, subject to any mаtеriаl dерагtчrеs disclosed and explained in the project fiпапсiаl statements; апО , рrераriпg the project financial statements оп the assumption that the Рrоjесt will Ье implemented in accordance with the established реriоd. Management of the Project is also rеsропsiЬlе fоr: , designing, implementing and maintaining effective and sound system of iпtегпаI сопtrоl and fоr revealing risks iп system of iпtеrпаl сопtrоl; , maintaining рrореr accounting rесоrds that disclose, with reasonable ассчrасу at апу time, the Project financial position, and which епаЬlе them to епSUrе irrat the financial stаtеmейts of the Project comply with lPSAS and WB Guidelines; ' comPliance with laws and regulations of the Kyrgyz Republic, and the rеquirеmепts of the ореrаtiопаl mапчаl of the project and the геqчirеmепts оitrrъ wоrld Bank. , taking such steps as аrе rеаsопаЫу available to them to saiejuarO , detecting and preventing fraud, еrrоr and other irгеgчtапtйi.-' the assets of the Project; and The project financial statements fоr the уеаr ended Dесеmьеr з1,2о2зwеrе аррrоvеd and authorized fоr issue оп Арril 15, 2О24 Ьу the mапаgейепt of the Project, Naspekov Маrs Executive Director of AR|S Арril 15,2024 Bishkek, the Kyrgyz Republic Bishkek, the Куrgуz Republic G Ь.kегtittу 1 0З, IЬrаiгпоч str. ВС"Victory", 7th floor "l";+906 (З12) 90 05 05 F:+996 (З12) 9'] 05 05 Bishkek, 7200'l'I contact@bakertilIy,kg Куrgуz Republic www,Ьаkегtiilу-са.соm lNDEPENDENT AUDlToR,S REPoRT То the Management of the Рrоjесt "Sustainable Rurаl.Wаtеr Sup,ply and Sanitation Development Pýect'' at Community Development and investment Аgепсу of the Куrgуz'ЁерчЬliс (the "дirФi Report оп the рrфесt financialstatements Орiпiоп We have audited the ассоmРаl.уilЭ ргоjесt financial statements of the "Sustainable Rural Wаtег Supply and Sanitation Development Projecti 1tБе'Ti,o;ect") which .ЬЙрrirБ trre summary bt iчпо.'гесеiчеd апd expenditures paid and the.summary of expend'itures paid Ьу components foi the уеаг ended Dесеmьеr з.l, 2023, and а Summary of significaniaccounting роliсiёs anO оiйеr explanatory information (the ''pюject financial statements"). lп оur opinion, the accompanying рюjесt financial.statements рrеsепt fаirlу, in all material respects, the Summаry of funds rесеivеd and expenditures paid and the sчйmаry ot ехiЬпОitчгеJ faiO Ьу dоmjбпепts or ![te nloje9JJ9r the уе_аr ended DесёmЬеr 3,1, io23 in ассоrdjпсе wltr, lnteinational рчыiс SЪсtоr iЦ.сочп]iпg Standard "Fiпапсiаl Rероrtiпg Uпdеr the Cash Basis of Accounting" ;lЁsАЪ;1 public sесtог Accounting standards 1trre issile6 Ьу the lпtеrпаtiопаl Воаrd of the lnternational Ёеdеrаtiоп of дссочпtапts, and the wоrld Bank's Financial Management Sесtоr Воагd's "Guidelines: Аппчаl гiпапсiаi R;Йrti;g and Дuditing for Wоrld Вапk Financed Activities" (the ''WB Guidelines'') Basis for opinion we conducted оur audit in ассоrdапсе with lпtеrпаtiопаl standards оп Auditing (lsдs). our responsibilities uпdеr those standaгds аrе fuгthеr described in the audito/s reilonsibilities fойhе or the project financial statements section of оur rероrt, we аrе independent of the Рфесt in ассоrdапсе "uoit with the lnternational Ethics Standards Воагd fоr Accountants' Codb of Ethics fог РrйssiопаL дссочпl.пi. 1rBSBn Code) together y,,ч.tt,p ethical requirements that аrе геlечапt to очr audiiof thъ рюjесt financial statements, and we have fulfi|led оur other ethical responsibilities in ассоrdапсе with these rеqчirеmепts and the lЕsвд code, we believe that the audit evidence we have obtained is sufficient апО tорЙ;iJе а basis for оur opinion. "р]эrорri;tе Emphasis of matter without qualifying оur opinion, we drаw attention to Note 2 to the рrоjесt financial statements, which dеsсriье the basis of accounting. ThPlp project financial statements й"r. pr.p.red fоr complying with the аррrорriаtе wогld Bank Guidelines..and Гiпiпiiпg аgrееmепts геqчirеmепts, These сirсчmstапсеs do not lead to modification of the auditor's opinion. other matter The project financial statements.are рrераrеd to_assist the pюject to comply with the геqчirеmепts of the World Bank, As а result, the pюject finahcial statbmenis й"у,iБiь sчitаЫЬ rоr апоirrJr рUrроSе, J Responsibilities of management and those charged with governance for the project financial statements Management is responsiple foi the рrераrаtiоп and fаir рrеsепtаtiоп of these рюjесt financial statements in ассоrdапсе with lnternational public sector Accounting standard "Fiпапсiаl i.pbrting uпdеr the cash Basis of Accounting" (the "IPSAS,) issued Ьу the lпtеrпаtiоп5l Public Дссочпtiпg Stапсайs-воагd of the lпtеrпаtiопаl Fеdеrаtiоп of Accountants, and the wоrld Bank's Financial йапаgеmепt sесtоr Board's "Guidelines: Аппuаl Fiпапсiаl Rерогtiпg and Auditing fоr World Bank FiпапсеdЪсtiчitiеs'' (the ''WB Guidelines"), a.nd for such iпtеrпаl contiol as mапаgЬmепt determines is песеssаф to enable the рrераrаtiоп of the рrоjесt financial statements that аrе free frой mаtеriаl misstatement, whether due to fraud оr еrrоr. Auditor's responsibilities for the audit of the project financial statements ourobjectives аrе to obtain rеаsопаьlе аsýuгапсе about whether theýe рго.lесt financial statements as а whole аrе frее frоm mаtегiаl misstatement, whеthеr due to fraud оr еrrоr, апО to issue an ачditоr's rерогt that includes оur орiпiоп, Rеаsопаьlе аssчrапсе is а high level of аssurапсе, but is not а guarantee that ап audit conducted in ассоrdапсе with lsAs will always deteh а mаtеriаl misstatement when iйхists, Misstatements сап аrisе frоm fraud оr еrrоr апd аrе considered material if, individually оr in the aggregate, they could rеаsопаЬlУ Ье expected to influence the economic decisions of users iaken оп thjБаs|s of'these рЦесt financial statements, As РаГt of аП audit iП аССОrdаПсе with lSАs, we ехеrсisе professionaljudgment and maintain professional skepticism throughout the audit. We also: , ldentify and assess the risks of mаtеriаl misstatement of the project financial statements, whether due to fгаud оr еrrоr, design and регfоrm audit рrосеdurеs responsive io those risks, and obtain audit evidence that is sufficient and аррrоргl9tе to provide а basjs fоr очr opinion, The risk of not detecting а mаtеriаl misstatement resulting from fraud is highег than fоr опе rеsчltiпg frоm еrrоr, as trgud mayinvolve collusion, fоrgеry, inte.ntionaI omissioni, misrерrеsепtаtiопs, ог The очеrridе of iпtегпаl , Obtain ап understanding of iпtеrпаl сопtrоl rеlёчапt to the audit iп оrdеr to besignЪudit сопtrоl; аrе. аррrорriаtе iп the сiгсumstапсеs, but not fоr the рrосеduгеs that рurроsе of ехрrеssiпg ап Jрiпiоп on the etfectiveness of the Project's internal сопtrоl; Evaluate the аррrорriаtепеss of accounting policies used and the rеаsопаЬlепеss of accounting estimates and related disclosures made Ьу mапаgеЙепt; of mЙаgеmепt's use of the going сопсеrп basis of accounting and, :::1Ч::1Ч.:.?Р!iОРriаtепеss Daseo оп the audit еvidепсе obtained, whether а mаtеriаl uпсепаiпiу exists rеlаtеd to events оr conditions that may cast significant.doubt on the project's ability to continuJas Ъ going сопсеrп. lf we conclude that а mаtеriаl uпсегtаiпtу exists_, we аrе rеqчirеd to dгаw ittention in очr ачйtоrЁ rероrt to the геlаtеd disсlоsuгеs iп the project financial staiements оr, if such disclosures аrе inadequate, to modify оur opinion. оur conclusions аrе based оп the audit ечidепсе obtained up to tt,," date of oui auditor's rероrt. Ноwечеr, future events оr conditions mау cause the Ргоjесt to cease tb continue as а goin| con."rn; Erraluate the оvеrаll presentation, structure апЪ content ortrre piolect fiпапсйl .йt"й"пts, including the disclosures, апd whether the project financial statements rерrе.ейt the underlying trапъасtiопs and events in а mаппеr that achieves fаir presentation. 4 We communicate with those,charged with governance rеgаrdiпg, among оthеr mаttегs, the planned scope and timing of the audit and significant audiifindings, incluiing айу signiйant deficiencibs in internal сопtrоl that we identify during очr aud certified accountant, certificate of auditor of the No, А 0069 dated осtоЬег 19, 2 Audit Раrtпеr, Diгесtог of Ваkеr Tilly Bishkek LLC Ваkеr Tilly Bishkek LLC is геgistегеd in the "Register of audit оrgапizаtiопs admitted fоr audit of public lпtеrеst entities and lаrgе епtrерrепеurshiр entiiies" of the uпifiеъ state rеgistег of ачditоrs, audit organizations, ргоfеssiопаl audit associations, lndividual rеgistгаtiоп пumЬЪr 21о1510 dated Дugчst g,2о2з Арril 1 5,2024 "SUSTAINABLE RURAL WATER ýUPPLY AND SANlTATloN DEVELoPMENT PRoJEcT,, GRANT No. D138-KG, cREDlT No.5907-KG GRANT No. D204_KG, GREDIT No. 6088-KG SUMMARY ОF FUNDS RECEIVED AND EXPENDITURES PAID FoR тнЕ YEAR ENDED DECEMBER 31,2023 (iп US dollars) Notes year Fоr the Fоr the year Cumulative ended ended December 31, DесеmЬеr 31, 2023 2022 Opening balance 4 з,931,849 4,з25,576 Funds received Grапt No. DlЗ8-КG 5 39в,737 697,693 9,983,115 Grапt No, D204-KG 5 2,920,362 1,999,995 12,118,07в Credit No.5907-KG 5 294,723 203,801 9,796,371 Credit No,6088-КG Со-fiпапсiпg Ьу the Gочеrпmепt of the Kyrgyz 5 6,076,9вз 2,498,402 12,20в,297 Republic 5_ з,187,754 Total funds received 9,688,805 5,399,891 47,291,613 other income 96,239 90,1 зб 474,429 Total receipts 9,7в5,044 5,490,027 47,766,о42 Expenses l Wоrks fоr the Project 7 6,4,11,325 4,070,053 32,1зв,414 ll Goods, non-consulting services, consultation sеrчiсеs training and operating costs fоr the Project 7 1,838,129 1,631,242 9,902,062 lll Sub-grants uпdеr Component 2(g) of the Project 7 44,200 26,200 93,982 Total expenses 8,293,654 5,727,495 42,134,458 Other expenses ,l56,207 89,877 298,114 Fоrех loss cz 108 Glosing balance 4 _5,3з3,362 з,931,849 5,з33.362 Executive Director of ARIS Financial Manager of Арril 15,2024 Арril 1 5,2024 Bishkek, the Куrgуz Republic Bishkek, the Kyrgyz Republic The notes on pages 8-21 form ап iпtеgrаl раrt of the projectfinancial statements. The independent auditor's rерогt is оп pages З-5, "SUSTAINABLE RURAL WATER SUPPLY AND SANITAT|ON DEVELOPMENT PROJECT,, GRANT No. D138-KG, cREDlT Nо.5907.кG GRANT No. D204.KG, cREDlT Nо.6088.кG SUMMARY ОF EXPENDITURES PAID ВY PROJECT COMPONENTS FoR тнЕ YEAR ENDED DECEMBER 31,2023 (iп US dollars) уеаr Fоr the ended Fоr the уеаr Cumulative ended December31, DесеmЬеr31, 2023 2022 l, Water Supply Jnvestments Works 6,109,693 4,026,476 31,301,565 Goods consultation services 57з,7s; 609,19; ж?s,|ЗЗ 6,683,473 4,635,672 34,680,395 2. Sanltation Development Works 301,633 43,577 836,849 Goods 179,291 403,475 consultation sеrчiсеs 2,15,906 145,939 1,124,991 Trainings 34,998 48,228 172,064 Sub gгапts 44,200 26,200 93,982 776,028 26з,944 2,631,361 3. ]nstitutlonal ýtrengthening 3,а, At the national level 41 ,1 96 87,642 994,602 3.Ь, At the local level ,1,663,665 397,353 354,439 3.с. Sectoral Тrаiпiпg Development Рrоgrаm 96,576 182,6s8 438,549 538,657 2,840,955 4. Project Management Ореrаtiпg costs 373,972 275,345 1,728,в07 Goods (Equipment for ARlS) 18,866 4,1 33 104,762 consultation sеrчiсеs 2,7вб 84,912 Audit 9,744 63.266 395.604 28g,222 1,9в1,747 8,293,654 5,727,495 42,134,458 on behalf of bek ччlч Baktybek Executive Director of ARIS Арril 1 5,2024 Аргil 15, 2024 Bishkek, the Куrgуz Republic Bishkek, the Kyrgyz Republic The notes оп pages 8-21 fоrm ап integral раrt of the project flnancial statements, The independent auditor's rерогt is оп pages З-5, 7 "SUSTAINABLE RURAL WATER SUPPLY AND SANITATION DEVELOPMENT PROJECT,, GRANT No, D138-KG, cREDlT No.5907-KG GRANT No. D204-KG, cREDlT No.6088.KG NOTES ТО ТНЕ PROJECT FINANC|AL STATEMENTS FoR тнЕ YEAR ENDED DEGEMBER 31, 2023 Lin US dollars) 1. GENERAL lNFoRMATloN ТhелF.iпапсiпg Аgrееmепt Grапt No. D138-KG and Сгеdit No. 59O7-KG was concluded оп October 26, 2016 between the Kyrgyz Republic and the lnternational DочеlорmепtдssосБtiоп 1rОЛ1, accJiJing to' - which рrоvidеd financing to the Куrgуz. RфчЬliс in the amount ot Z,OO0,oO0 ЪЁЬ;iri Оrаwiпg кigЙtЪ (SDR) and g,300,000 SDR, resPectMely. The Fiпапсiпg Аgrееmепt became eifective оп геБгчjrу-i, 2017. The additional Financing Аgгееmепt Grant No, D2o4_KG and Сrеdit No, бО88-КG was concluded оп November 13,2017 Ьеtwеёп the Kyrgyz Republic апd tйеiпtеrпаtiопаl ОечеlорЙепt дssосiаtiоп (the - ]DА,),.ассоrdiпglо which рrоvidеdfЙЪпсiп! to Ие Кугgуz Republic iп the amount of .1 ,1,9оо,ооо Special Drawing Rights (the - "SDR"1 and ,li,50o,ooo sЪп, respectively. The additional Fin;;;;g Аgrееmепt became effective оп SерtеmЬег 7, 20i8 The financing wa: рrоvidеd tt.,. implementation of "sustainable Rural water supply and sanitation Development Project'' (the - Ig ''Pýect''), The pýect реriоd of the mаiп Fiпапсiпg Аgrееmепt of Grant No. Dlз8-КG, Сгеdit No, 5907-KG is frоm осtоЬеr 26,201а to June 30, 2025. тrrj сйсе Period rоr Jubmitting fог expenditures iпсurrеd Ьеfоrе the Closing date is fоur months fоllоwЙg"itr,Cr"Й.iapptication tББ Clbsi,lt'oate, осtоЬеr 31,2025, The project реriоd of the additional Fiпапсiпg Аgrееmепt of Grапt No. D204-KG, Сгеdit No. 6088-KG is fгоm NоvеmЬеr 'l3, 2О17 June fhйгасJ _to expenditures iпсurrеd before 30, 2о25, ЁеiiоО rоr submitшng ,iihoir*.| application for the Closing date is fоuг months following tЙе ёЬrlпg'оrt", осtоЬеr 31,2025. Рrфесt purpose The objectives of th,is proJect аге: (i) to imрrоче access and quality of water supply and sanitation sегviсеs in the Paгticipating Rurаl Communities; and (ii) tb siiengtnen capacity of the Recipient's institutionз iп the water supply and sanitation sесtог. ' ' The Pýect соmрrisеs the following components: Component ,1: Wаtеr supply investments: This component wi|l аddrеss the needs fог rehabilitation of existing апd/оr construction of пеw wаtеr supply systems iп the tаrgеt аrеаs, benefiting аррrохiйаiеtу zoB,ooo people. The соmропепt will finance goods, wоrks and services and will iйсtudе .Mil ]n7"l.ctrical/mechanical installations fоr wаtеr supply рrоduсtiоп (Ьоrеhоlеs, well-fields,.intakes, etc,, as йJlч. dbinfectio;, апО pumping аs геqчirеd), and transmlssion and distribution (networks,.stoвge, ,i"r., etc.) to bouserrbЙs-iri trre рrо;есt аrеаs. This component will also finance tЁrе consuliing ."iribb, io pi"p"r" detailed епgiпее1пg designs and bidding documentatio.n, including the tесhпiсагrчреrчЁiоп бчеr сопstrчсtiоп activities in оrdеr to епsчrе the quality of wоrks. Additional iйstitutional suppoi:t соЙропЪпt, аrе identifie6 чпоеr Component З. These activities, together with investments iп irirrаstiчсtчЙ, witt suрроП the water supply ореrаtiоп system to епsчrе sustainable service delivery. Pюjecbfunded wаtеr s.upply systems will rеflесt саrеfчl consideration of а пчmЬеr of lmрогtапt design and implementation рriпсiрlеs, including the goal of equitable access and quality of service within pioject аГеаS; lndividual metering fоr each connectioh (and the introduction of сопiчmЁtiоп_ьаsеd billing), consideration of all life cycle coýtý, inclUding assessment of Wаtеr ýочгсе optiohs, сопsidеrаtiопЪi climate factors and sustainability, and requiiements to sчррогt ореrаtоr capacity. lп addition, it is important to note that the population and local authorities'will Ье involveO in identitying рriоriiу investments in their respective агеаs through public consultations and mееtiпgз. Fъm'аlе beneficiaries and women's groups_will Ье invite_d to рагtiсiраtе to reflect women's voices in бetermining the investments that mаttег to them. Communities will also Ье involved iп mопitоriпg the quality of сопstгuсtiоп wоrk througt com.munity mопitогiпg рrосеssеs and the establishmbnt of villaýe water Committees. Uпdеr the Resettlement Policy Frайеwоrk ("the RРF") рrосеdurеs, costs associated with the implementation of resettlement activities will Ье financed under Соmропепt i through the Gочеrпmепt's contribution to the Project. Соmропепt 2: Sanitation Development: This component will finance goods, wоrks and services to provide strategic sчррогt for improved sanitation within the target rurаlсоmmчпitiеs and to епhапсе the Gочеrimепt;s strаtеgу fЫ improved sanitation iп rurаl аrеаs. lп addition, the component iпсlчdеs technical advisory activities to maintain improved sanitary conditions at the household level. The соmропепt will also silррогt the dечеlорЙепt and implementation of а соmmчпiсаtiоп strategy and Wаtеr, ýanitation and Нуg'iёпе шдSн) educationa|campaignsto рrоmоtе_imрrочеd hььшп and hygiene practices, iпсiйоiпg ipecific'information, education and communication (lEc) materials related to wаiег quъtity and Ъаfеtу dii#ection. The Sanitation and Hygiene Training Рrоgrаms will Ье introduced thiougЙ the schooi education system and in communities iп оrdег to suрроrt improvement of knowledge, attitides and practices iп this field within the Project аrеа. (а) Rehabilitation of ехistiпg.iпdооr sanitary facilities and construction of пеw sanitary facilities iп schools, рrе-sсhооls, апd оthег social instiiutions; (Ь) Development of stапdагd designs; (с) Ргоvisiоп of strategic technical, policy and capacity sчрроrt fоr improved sanitation. (d) Сагryiпg out needs assessment fоr selected Sanitary Epidemiological Surveillance (the - "SES") units; (е) Development and implementation of communication stгаtеgу and wаtег, sanitation and hygiene educational campaigns; (f) Рrераrаtiоп of паtiопаl strategy fоr rчrаl sanitation; (g) РrоvisiоП of Results-based incentives to eligible beneficiaries as Sub-grants to upgrade their household sanitation facilities to а hygienic lечБl. Component 3: lnstitutional Strengthening: The Соmропепt wi|l finance goods and services to strengthen sесtог institutional capacity at the national and local levels. The specific activities wil| Ье саrriеd out-in оrdеr to assist the Goveinmebt of trrе Кугgуz Republic in. making informed gоvеrпmепt decisions aimed at developing, modernizinj апО геtоrmiпi [ЁJ wаtеr supply and sanitation sector, including implementation of the Куфуz Republic ёочеrпmепt Strаtеgу in the wаtеr supply and sanitation БесtЫ. ТЛе Componbnt abJiocusbs оп building capacity of local authorities and sеrviсе operators, such as cDwuu iп sustainable wаtегiuрjiу jnc sanitation system management. Component 4: Рюjесt management: This component wilI finance the project management costs of дRls геlаtеd to salaries of administгative реrsоппеl and staff, including the сhаrg_еs to ýocial fund of the Куrgуz Republic, consuitancies, and equipment costs, the М&Е рrоgrа.m, safeguards specialists, апО iiйcial iпiпjiейепi, inctu6ing internal and external financial audits. Project financing The total cost of the mаlп Pюject is 28 million US dоllаrs, to Ье financed thrочgh ап lDд lоап of 12,92 million US dollars, an lDA grапt of ,l0.58 million US dollais and а GочеrпmепtЪf the Куrgуi ПБрuБrБ contribution of 4.50 million US dоllаrs, The total cost of аddiЦопаI financing fоr the Pýect is 43 million US dollars and will Ье funded Ьу an lDД lоап of 19,8 million us dollars, ап lDд grапt of to,z miltion us dollars and а contribution of z.z iniltion US dollars frоm the Gочеrпmепt of the Kyrgyz Republic, ln а letter dated Мау 15, 2020, The lDA amended the Fiпапсiаlапd Grапt Дgrееmепts iп terms of SоurсеS of financing. Thus, accoTding to the amendments, the Gочеrпmепt jt tbe Kyrgyz Ke|ublic suspends financing of the mаiп Ргоjесt and the Project of additional financing. Project implementation The Project is implemented ьу Community Development and lnvestment Agency of the Кугgуz Republic (the "ARlS"). The_Community Development and lnvestment Agency of the Куrgуz Republic (ARlS) was established Ьу the Dесrее of the Pre_sident of the Куrgуz RepubTic ой octobeil6, zooi iп оrdЬг to deepen the mеаSuгеs taken to аttrасt investment to очеrсоmе poverty, develop and support private епtrерrепеurshiр within the frаmеwогk of the National Strbiegy fог'Рочеrtу HeJuёtion, strengthening- the activities of local governments and strengthening local comm-unities and iommunity organizБtions, Co-founders of ARlS аге Administration of the President of the Куrgуz Republic, association of Legal of the Куrgуz " entities "Аssосiаtiоп of Local self-government bodies of villages jпi'соmйчпitiеs Republic" and "Counterpart-Sherilitesh" public association, fhe wоrk of дRlS is sчреrчisеО Бу tr,е suрегчisоry Воаrd, which is the suреriоi steering body of the ARls, The AR|S address is: ,102 ВоkопЬаеча Street, Bishkek city, the Kyrgyz Republic, 72оо4о, 2. PREýENTATIoN оF тнЕ PRoJEcT FlNANcaAL STATEMENTS Basis of рrераrаtiоп These project financial statements have Ьееп рrерагеd in ассоrdапсе with the lпtеrпаtiопаl public Sесtоr Accounting Standard (the "lPSAS"1 "Finanbial RероПiпg чпdеr the Cash Basis or accounting'' issued Ьу the Public Sector Committee of the lпtеrпаtiопЪl Fеjегаtiоп of Accountants, and iпсоrроrаtе the following рriпсiраl acc9lntiry policies, which have Ьееп consistently followeJln ail mаtеriаl iеJрБсts and comply with the World Bankis Financial Management Sector Board's ''Guidelines: дппчаl Fiпапсiаl Rерогtiпg and Auditing fоr Wоr|d Вапk Fiпапсеd Дctivities;ltt,e "йЫОчiО.Пп.Ъ;i. Uпdеr the cash basis system iпсоmе (ог ехрепditчrе) is rесоgпizеd when cash is received (оr paid) irrеsресtiче of when goods or services аrе ieceived бr providbd. The Рrоjесt's _а.оргоvеd budget disclosed Ьу categories of ехрепsеs is not publicly available and аs such соmрагisоп of budget and actual amounts Ь not [resented. These project financial statements consist of: . Summary of funds received and expenditures paid; . Summary of expenditures paid Ьу ýroject components; , Notes to the project financial statements, inclubing shоп description of mаiп statements of accounting policy and оthег descriptivenotes. -" С The герогtiпg сurrепсу of these project financial statements is US dollars (the - ''USD''). 10 3. SUMMARY оF SlGNlFlcANT AccouNT|NG PoLlclES Gash basis of accounting Project financial statements аrе рrераrеd on а cash basis of accounting. The cash basis of accounting гecognizes transactions and events опtу when cash (including cash eqiivalents) - is гесеiчеd ог paid. project financial statements ргераrеd uпdеr the cash basis рrочidе rеаdеrs with information about the sоurсеs of cash raised during the реriоd, the рurроsеs forwhich cash was used and the cash balances at the rерогtiпg date. The measurement focus in the project fiпапсiаl statements is balances of cash and changes therein. Fоrеigп счrrепсу Operations iп fоrеigп сurrепсу initially аrе counted in functional сuггепсу using the сUггепсу exchange rаtе settled Ьу commercial bank оп а date of ореrаtiоп, Funds rесеivеd аrе trans|ated into US dоllагs at official exchange гаtе of Special Drаwiпg Rights (the "SDR") at the date of funds receipt. Al| payments made in.local сurrепсу аrе translated into us dоllаrs at the official exchange rаtе defined ьу serving соmmеrсiа| bank at the date of trапsасtiоп. All exchange diffeгences аrisiпg frоm the rеdеmрtiоп оr revaluation of mопеtаrу items аrе included in the summагу of funds гесеiчеd and ехрепditчгеi paid. Cash and cash equivalents cash and cash equivalents include cash оп hand and cash due frоm banks, which can Ье converted to the соrrеsропdiпg amount of cash in the shоrt tеrm, Taxes The calculation and payment of income tax оп iпсоmе of local employees and consultants, as well as iпsurапсе contributions to the social fund of the Кугgуz Пejublic, is made iп ассоrdапсе with the rеquiгеmепts and rаtеs set fогth in the Тах соое ott-Ёe Куфуz Republic and геlечапt Куrgуz Republic legislation. Project ехрепsеs The expenses аrе rесоrdеd in the регiоd when they wеrе actually paid. sочrсеs of funds The funds wеrе provided Ьу the lDA to the Project Ьу initial deposit and replenishment of designated account. other iпсоmе оthеr iпсоmе rерrеsепts interest income ассruеd Ьу the servicing соmmегсiаl bank on cash balances of the designated account, and also the amounts of guarantees rесБiчеd against поп-регtоrmапсе of suppliers and sale of tender documents. Other expenseý Оthеr expenses герrеSепt the payments of iпtегеst income to the Ministry of finance of the Куrgуz Republic as well as iпtеrеst and tепdег ассочпt bank charges. 11 4. GASH AND GASH EQU|VALENTS Cash and cash equivalents as at DесеmЬеr 31, 2023 апd 2Q22аrе presented as fol|ows: Source of Currency December 31, December 31, financing 2023 2022 Designated account Grant No. D138-KG US dollar 548,272 838,360 Designated account Grant No. D204-KG US dollar 1,92,1,891 1,853,з07 Designated account Credit No,5907-KG US dоllаr 954,740 990,з48 Designated account Credit No.6088-KG US dоllаr 1,812,798 160,535 lnterest ассочпt Other 95,660 89,295 lnterest account Other 1 ____lJlэ,3qа *_____19э]дq 5. FUNDS REcElvED The funds received wеrе provided Ьу the following methods and sоurсеs of financrng: Fоr the уеаr ended DесеmЬеr 31,2О2З No. Grant No. Credit No. Credit No. Grant D138.KG D204-KG 5907-KG 608S-КGCo.financing Ьу the Gочеrпmепt of the Kyrgyz Republlc lnitial deposit 1,000,000 1,000,000 Replenishment of designated account 396,737 2,92о,362 294,72з 5,076,983 8,688,805 ____а9ýJц ___?p?9,3q1 ___ц!;7ц_ 6,076,983 --_-----_------ 9,68в,805 Fоr the уеаr ended DесеmЬег 31,2О22 No. Grant No. Credit No. Grant Credit No. Go-financing Total D138-KG D204-KG 59o7.KG бо88-кG Ьу the Government of the Kyrgyz Republic lnitial deposit Replenishment of designated account 697,693 1,999,995 20з,В01 2'4g8,4O2 - 5,399,В91 ___]_,999'99ý_ - __-299да]- __з49эlо2 __-___-___-__:- _l J99д1 --_-ý9Z,q99- cumulative: No. Grапt No. Credit No. Grant Credit No. Co-financing D138-KG D204-KG 5907-KG 6088-KG Ьу the Total Government of the Kyrgyz Republic lnitialdeposit 1,000,000 2,000,000 1,000,000 2,000,000 6,000,000 Replenishment of designated account 8,983,1,15 10"1 18,076 8,796,371 10,206,297 3,187,754 4,1 ,29,1 ,613 9,983,,l15 12,118,076 ___9,]99JZ]_ 12,206,297 3,187,754 47,291,61з 12 6. oTHER lNcoME Оthег income of the Project comprises the following; Fоr the year Fоr the year Cumulatlve ended ended December 31, DесеmЬеr 31, 2023 2022 lnterest iпсоmе 96,239 90,136 392,,198 lmplementation guarantee received 64,605 тепdеr fees - 17,626 96,239 90,136 474,429 lп 2023 апd 2022, the Рrоjесt has счrrепt accounts with RSK Вапk JSC in national and fоrеigп сurrепсiеs. lnterest income ассrчеs оп these bank accounts of the Project. 7. PRoJEcT EXPENSES вгеаkdоwп of Рrоjесt expenses Ьу саtеgогiеs and sources of ftnancing is presented as fol|ows: Fоr the year Fоr the year Cumulative ended ended December 31, December 31, 2023 2022 l Works of theProject 6,411,325 4,07о,053 з2,1з8,414 ll Goods, non-consulting sеrчiсеs, consultation services trаiпiпg and operating costs fоr theProject 1,838,129 1,631,242 9,902,062 Project |ll Sub-grants uпdеr Component 2(g) of the 44,2оо 26,20о 93,982 ______q,299ýý1 _____эJд,49ý_ ____заlщJý!_ ,tз to о) ol ,+ll со N ol юlI ý N o.rl юll NNOl юll tг) v оl е (о фl с.) r со c{l (oll о_ ýl_ ýtl o)ll t_ о_ toll с.) чl ýll Ф_l чll - е tl c.rll О Г- r (f) Фl г..ll 0о ф N о соl +ll Б Nl ýrll Ф_ Фi ФIl ý Ф ý 00 lNIl Ё| эhN ll >Ё| lI >Ёtll ,l sll лhN 9Ё В,r Ё Е.;Ё -ч > :'ts о) о .= Е != 'чЁ S" ý l Sll _. Ё.ьgЁ 3 l Pll ýЕЁЁЁ ýё6*g ЕýЁЕ fЕ#ъ ь ll s8ЁБ ь sЁъ lll 1,1l ЕN ýll Ёý coll о) ,l ooll Ф\t Ё*ч ý -t Д:ч Б с", н -il E=Y ) orn *i н l l l зll вll oll ЕЕЕ Ф ЕЕЕ э,tБ оч Ф б б Ф Ф 1-1l 9Б Бll еý lt ,1-1l ь*9 ell ф l lЕll .(o coll я _ЁяЕ оо l (o_ll lдgТ со ýll -il d ёY - ý lД9| Ех 9|а Е Еý (5 Еý 9Б со 'о б,о 6,о lll 1,1l ý з Bl coool ;Y ЕF ell .rl -ll c,ll г г,- Ol Ell г* ф vсо NN ь. )I гlI Е RýI г.- о cio Esl пll cio г,*ll } З ýJl $ Ёсо )l Nll оо о) :ч го) ,l dll Еý o)col all )l o)ll _gfi lell 1-1l бБ 3 0о_ Ill il ЕЁ l 9ll l с) l оО l ] lii в8 l -tll lц)l ..о ll IC\l N Nll а l ýll Ell .0о г.- ci(9 3 0o-1| оо zY rci й :9 (o * но -ll zY з l Ф l Bll Ф Ф ll о" ЕЁ г.- .о Ер 3 ý_ll ll = оО Ер l бll оО ъ il 9 о Е ill о о о зЕ! ,оФ-h цi-а Фс N ci.o Фс б- Y Е Ё рЦЁ 91ьЕ Ь = .о Z olP х Ё Ф,F о о Е'.Ф Б Ф с.чо Ф,F о а Ф,; о о- зЕ*_Е рЕ*_Е ОЁ ос" О: ис- ре*_Е .чйя:ь .qdR:ь (J: ис- ,чd я: ь ý 8,ЁеЕ цОпиз F Б Ё€Е цОпо5 .р Б;€Е ё й-о цО;iи] 9, а 9,LбБа 9,ёйБо ,Е Е Ь б tr о а;я Е*< о -'Е ьЁ Y ьСо(J;я о -,;: ьЁ Y ь _9{дЕ ?ь g{д,Е ?ь о ^',= g{еЕ пЁ Y ?Ё" Е Ё;t ýs с| ЬБй ýЕо- Б 8.'' Ь Б;gЕо- _= о=Ё 9 аО я 9Uj cr =О OTHER EXPENSES Other expenses of the Project соmрrisе the following: Fоr the уеаr Fоr the уеаr cumulative ended ended DесеmЬеr 31 , December 31, 2023 2022 тrапsfеr of interest iпсоmе to Ministry of Fiпапсе of the Kyrgyz Republic ,l55,з68 89,300 294,798 Bank services 577 839 3,316 ________ýgдZL 156,207 298,114 FlNANclAL PoSlTloN Fiпапсiаl position as at DесеmЬег 31 ,2о2З апd 2О22 is as follows: DесеmЬеr 31, December 3'l , 2023 2022 ASSETS AND EXPEND]TURES Cash and cash equivalents 5,333,362 3,931,849 Cumulative expenses 42,134,45в 33,840,804 Other expenses 298,114 208,2з7 Fоrех loss 108 108 TOTAL ASSETS AND EXPEND|TURES 47,766,042 _' з7,980.998 FlNANclNG Funds received 47,291,613 з7,602,808 other income 474,429 378,1 90 ToTAL FlNANclNG 47,766,042 37,980,998 10. WITHDRAWALAPPLlcATloNs Withdrawal applications for the уеаr ended DесеmЬег 3,1, 2023 соmрrisе: Grant No. D138-KG Application Replenishment lnitial deposit Total of designated account 22 January 23,2023 161 ,640 161 ,640 23 Мау '1, 2023 203,654 203,654 24 July 27,2023 31,443 31,443 + 396.737 396.7з7 ,15 Grant No. D204-KG Application Date Replenishment lnitial deposit Total of designated ассочпt 21 FеЬruаry 22,2023 217,О22 217,022 22 Арril26,202З 277,157 277,157 23 Мау 18, 2023 247,О82 247,082 24 July 27,2023 29О,007 290,007 25 August 14,202З 214,З18 214,з18 26 September 8,2023 470,589 470,589 27 November 28,2о23 836,22З 836,223 28 DесеmЬеr 18,2023 193,997 193,997 29 DесеmЬеr 20,202З 104,897 104,897 30 DесеmЬеr 26,2023 69,070 69,070 2,920,362 2,920,362 Credit No. 5907-KG Application Date Replenishment lnitial deposit TotaI of designated account 20 January 30, 2023 10,453 - 10,453 21 July 27,2023 46,554 - 46,554 22 NочеmЬеr 21,2023 72,262 - 72,262 23 24 DесеmЬеr 18,2023 129,620 - 12s,620 DесеmЬеr 20,2023 35,8з4 з5,834 294,72з 294,72з Credit No. 6088-KG Application Date -. Rерlепishmепt lnitialdeposit Total of designated ассочпt ,lб January 13,2023 839,465 839,465 17 January 13,2023 1,000,000 1,000,000 18 Маrсh 8,2023 24о,47; 240,475 19 April 17,2023 280,1 0з 280,1 03 20 June 5, 2023 366,9,12 366,912 21 July 11,2023 463,658 46з,658 22 July 27,2023 928,497 928,497 2з SерtеmЬеr S,2023 з50,31.1 350,311 24 NочеmЬеr 28,202З з62,607 362,607 25 NочеmЬеr 30, 2023 50в,725 508,725 26 DесеmЬеr 18,2023 296,705 296,705 27 DесеmЬеr 21,2023 439,525 4з9,525 5,076,983 1,000,000 6,076,983 16 Б 9 о l-_ _со8 dо aY, N ь Ё+ =о о з с.] c'l = я (л оо3ФЁ =э Р сч <) о) ýы t -л Ф Ф 9N сл ц c;oN Рь о- Е 8 gъ о =Y c\l о ЕЕý8еа о* 9?JJ N о ыU!] с! Е - Е? сt] lz Ё L Ф БсOm г.- (f) 99 ýй>д ýl о :-3-:я Ер ц й; с{ ,j (f) оо3 ýэ Ф Еа Nx .о Е Ф о 8ё Ф о ýо ý ё ь т, q) iY8 =ъ Ех ю о Е с Еб н З о.л Ф Еь $ зч оФ ,i -с оь (!ýý Nфс.l о (!J оF lл= JфБ ьо zй эдэ JtsЕ о; сФФ 6ý lлб б9о ; ЕЕ Ед ,-t с сr) цФ об .Е рё \Н э вЕ Е ЕЕ ЕЕ .Р Ё Е Ё =Е Ё = Ё .Е Еfi lлfl 'ъ РЭ б8 € 5 "8 Ё* i; Ё Ё Е *Ё Ё Ё цJЁ gЁ бЕЦ; 9 ъ .Е i Е Ё ФL 9р :, - ? 3Ь "Э Ед Fý 9, v, U) ;ЁЁЁý ý Ё Ё ЕЁ э Ё Е яЁ ý j 12. UNDRAWN FUNDS Undrawn funds as at DесеmЬеr 31, 2023 аrе presented as follows: Grапt No. Grant No, Credit No. Credit No. D.t38-KG D204-KG 5907-KG 6088-KG iл SDR iп ýDR и SDR и SDR Approved fi nancing amount 7,600,000 ,1,1,900,000 Disbursed during the уеаr ended 9,300,000 14,500,000 DесеmЬеr 31,2022 6,864,152 6,620,581 6,823,520 4,4в3,896 Disbursed during the уеаr ended December з1, 2023 7,158,297 8,807,836 7,04з.740 9,016,545 Undrawn amount as at DесеmЬеr 31, 2023 441 703 3,092,164 2,256,?6о 5,483,455 18 з*F,F,flFё{qвнgýчБ tr С.) 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LEGAL cAýEs ,! Pl.tt{arch , 20,19, а сопtrасt fоr rehabilitation of the wаtеr supply system in the Dаrkап village of Jeti-Oguz district of lssyk-Kul геgiо_п (the - "Client") and Меgа'ТrЙst, lr_C 1trre - "сопtriсtоr'')'wаs signed between the Dаrkап ауr|9kцо_tlоf..lё]i-Оgчz distгict of lssfK-Kut rеgiоп. The deadline fоr completion of the work was FеЬruаry 29,202О, ARIS administered the сЬпtйсt аЙd paid fоr the ййk чпсеr the Сопtгасt using lDA-funded Pýect funds, The Сопtrасt conditions wеге not fully fulfilled Ьу the Сопtrасtоr, thus there was а mаtеriаl Ьrеасh of the сопtrасt conditions. According to theAgreement, Кеrеmеt ВапЁ oJsc асtеоъs Ь juaiantor fоr the Contractor, which fulfilled its_obligation ind оп Маrсh 12,2о2о trапsfеrrеd а guapn-tbb in favor of дRlS in the amount of 64,605 USD (4,700,000 soms) (Note 6). On FеЬruаrу 9,2021, the Client апd ARIS fi|ed а lawsuit against the Сопtгасtоr iп the Jeti-Oguz District Court lssyk-Kul Region to rесоvеr the amount of соmрепsйtiоп fоr damages iп the amou пt of 4,674,784 99as.ý.ubsequently this claim, was increased Ьу а рёtitiоп to the Jeti-Og-uz District сочгt dated Маrсh 17,2021, and the amount of the final claim was a,9i5,o88 SomS- оп Маrсh 17,2023, а decision in absentia was made Ьу the Dесisiоп of the district сочrt, the claim against the defendant in the case was satisfied. Ассоrdьg to the case, the specified айочпt was rесочеrеd frоm the defendant to the state rечепче. 15. EVENTS АFТЕR ТНЕ REPORTING DATE Duгiпg 2024 until the date of issue of these project financial statements, lDд has provided financing to the Project as follows: Fiпапсiпg source Application Date Replenishment of designated account in SDR in us dollars Credit No.6088-KG 28 FеЬrчаry 22,2024 19з,594 256,594 Credit No. D138-KG 2в Арril3, 2024 З02,4О5 400,000 495,999 656,594 As at the date of issue of the project financial statements по оthеr significant events оr transactions оссurrеd which should Ье disclosed in the project financial statements, expect for the events described above. 21