* CIAR GROUP               TSIAR-FINANS, LLC
2 Uzbekistan, Tashkent, 100077, 2a, Chust street
9 Tel/Fax: (998-71) 262-50-70; 262-08-47; 262-08-41
2 E-mail: reception0ciar.uz; www.ciar.uz
((MODERNIZING UZBEKISTAN NATIONAL INNOVATION SYSTEM))
PROJECT
IDA CREDIT No.6784-UZ
INDEPENDENT AUDITOR'S REPORT
ON THE SPECIAL PURPOSE FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2023 AND FOR THE YEAR THEN ENDED
ntr ol  W>   GENEVA GROUP INTERNATIONAL


yModernizing Uzbekistan National Innovation System)) Project, IDA Credit No. 6784-UZ
2
CONTENT
C O N TEN T  .......................................................................................................................................................... 2
INDEPENDENT      AUDITOR'S     REPORT     ........................................................................................................... 3
STATEMENT OF SOURCES AND USES OF FUNDS ..................................................................................... 4
STATEMENT OF USES OF FUNDS ON EXPENDITURE CATEGORIES.......................................................6
B A LA N C E  SH EET  ...........................................................................................................................................  7
STATEMENT OF USD DESIGNATED ACCOUNT OF PIU ............................................................................. 8
STA  TE M ENT  O F  SO E  ...................................................................................................................................... 9
NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS.............................................................10
1.      P ROJECT  BACKGRO   UND ............................ ....... . ..........  ..................................... 10
2.       PROJECT  A CCOUNTING   POLICY OI....   ..................................   . . .... .....................  .... .. 12
3.       PRESENTED   FINANCIAL  STATEMENTS........ .......................  ..................................  ........ .......   ... 13
4.       F IX E D  ASSETSSS  .......1 ........   ....................   ................................... . ...... .  ......... .   14
5.       CASH  AND  CASH  EQUIVALENTS 4......4......          .....................................        14
6.      A DVANCE   PRO CEDUREOE............         ...........  ............................................. ..................   15
7.       D IRECT  PAYMENTS  PROCEDURE   ....OC        ......   ........................... .......... ..................... -. 15
8.       G RA N TS AN.......................TS1 ..................... ..   ......  - ....  .... ..... . ............ . ...............  15
9.       W EBSITE  SUBSCRIPTIONBSCRN...... .........  ....IPTIO6............ .......... ............ ..... .......  16
10.     RECONCILIATION   OF FINANCING   OF THE  PROJECT    ....     ........................................................ 16
11.     CUMULATIVE    EXPENDITURES   OF  THE  PROJECT........ ........  ........  ........... I.......  .................... 1
12.     EVENTS   AFTER  THE  REPORTING  PERIOD.......................  -........ ... .......  ...... ...................... 16
13.     STATEMENT OF UZS OPERATING ACCOUNT OF PIU ......... ........ ......... .................. .......... 17
14.     STATEMENT OF EUR OPERATING AccoUNT OF PU .......... ..................    ......................... ...... 17


eModemizing Uzbekistan National Innovation System>> Project, IDA Credit No. 6784-UZ
3
INDEPENDENT AUDITOR'S REPORT
Addressee:  Project Implementation Unit under the Agency of Innovative Development under the
Ministry of Higher Education, Science and Innovation of the Republic of Uzbekistan
We have audited the accompanying Special Purpose Financial Statements of "Modernizing Uzbekistan
National Innovation System" Project (hereinafter - Project) financed from proceeds of the International Bank
for Reconstruction and Development (hereinafter - IBRD) according to the Project Preparation Advance
Agreement No. IBRD P5020 dated 25 June 2020 (hereinafter - Advance Agreement) and from credit proceeds
of the International Development Association (hereinafter - Association, IDA) according to the Financing
Agreement No.6784-UZ dated 17 May 2021 (hereinafter - Financing Agreement) as at 31 December 2023 and
for the year then ended.
Special Purpose Financial Statements include Statement of Sources and Uses of Funds, Statement of Uses of
Funds on Expenditure Categories, Balance Sheet, Statement of Designated Account of PIU, Statement of
SOE and Notes to Special Purpose Financial Statements.
Special Purpose Financial Statements prepared by the management of the Project Implementation Unit under
the Agency of Innovative Development under the Ministry of Higher Education, Science and Innovation of the
Republic of Uzbekistan (hereinafter - PIU) based on the cash flow basis in accordance with International
Public Sector Accounting Standards (hereinafter - IPSAS) issued by the International Public Sector Accounting
Standards Board of the International Federation of Accountants.
Opinion
In our opinion,
(i)  The above-stated Special Purpose Financial Statements of the "Modernizing Uzbekistan National
Innovation System" fairly present in all material respects the financial position of the Project as of
December 31, 2023 and for the year then ended, in conformity with conditions of the IPSAS - cash
flow method;
(ii)  All disbursed IDA Credit proceeds have been used solely for the Project objectives as agreed in the
Financing agreement; and no Credit proceeds have been used for other purposes;
(iii)  With respect to SOEs, adequate supporting documentation has been maintained to support claims to
IDA for recovered of expenditures incurred under the Credit and the expenditures comply with
objectives stipulated in the Financing Agreement; and
(iv) The Project's Designated Account Statement for the year ended December 31, 2023 gives a true and
fair view of the financial position of the Project Designated Account as of 31 December 2023 and of
the cash flow for the year then ended, and complies with the World Bank's guidelines.
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 "Auditor's Responsibilities for the Audit of the Financial
Statements" Section of our report. We are independent of PIU in accordance with the International Ethics
Standards Board of Accountants' Code of Ethics for Professional Accountants (IESBA Code), and we have
fulfilled our other ethical responsibilities in accordance with this code. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
Important circumstances - accounting principles and distribution restrictions
We draw attention to Note 2 to the Special Purpose Financial Statements, which describes the basis of
accounting. The Special Purpose Financial Statements are prepared to assist PIU to comply with the financial
reporting provisions on the requirements conditions of the IPSAS-cash basis. As a result, the Special Purpose
Financial Statements may not be suitable for another purpose.
Other Matter
Financial Audit reports and opinions, as ruled by the requirements set by the World Bank, shall be uploaded,
published and publicly accessible on the World Bank's website.


<Modernizing Uzbekistan National Innovation System)) Project, IDA Credit No. 6784-UZ
4
Management's Responsibility
The management of PIU is responsible for preparation and fair presentation of these special purpose financial
statements based on the cash flow basis in accordance with IPSAS-cash basis. This responsibility includes
designing, implementing and maintaining internal control relevant to the preparation and fair presentation of
the special purpose financial statements that are free from material misstatement, whether due to fraud or
error; selecting and applying appropriate accounting policies; and making accounting estimates that are
reasonable in the circumstances.
Auditor's responsibilities 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 scepticism
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 PI U's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
- Conclude on the appropriateness of management's use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the PIU's ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the
related disclosures in the financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report.
However, future events or conditions may cause the PIU to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the financial statement, including the
disclosures, and whether the financial statements present the underlying transactions and in a manner
that achieves fair presentation.
We communicate with the PIU'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.
We also provide the PIU management with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and where applicable, related safeguards.
Auditor aTSIAR-FINANSn LLC         -                 Sobir Safaev
(included in the Register of audit organiza  miis*   Director of Auditor
of Finance of the Republic of Uzbekistan  2 June     KTSIAR-FINANS) LLC
Tashkent, Uzbekistan              TSAR-FNA           Auditor qualification certificate, #05434
March 19, 2024                                       dated 29 October 2016


«Modemizing Uzbekistan National Innovation System» Project, IDA Credit No. 6784-UZ
5
STATEMENT OF SOURCES AND USES OF FUNDS
for 2023
(USD)
Indicator                Note    -ct-al
2023            2022        Cumulative to Date
Opening Cash Balance
Designated Account of the PIU in USD                3 230 335        223 321
Operating Account of the_PIU in UZS                      78                1
Operating Account of the PIU in EUR                        -               - 1
Total                                    5          3230413           223322
Add.
Sources of Funds
IBRD Credit PPF:
Advances to Project USD Designated Account                          -      -             250 000
Refund to IBRD-                                                           -            (101 474)
Total                                                         -            -             148526
IDA Credit:
Designated Account replenishment         5          8000000         5445012           13 945012
Direct payments                                                            -1 809
Total                                               8000000         5445012           13946821
Less
IBRD Credit PPF:
Goods                                                                                     41 356
Consultants' services                                                                     90 501
Operating costs            --16669
Total Uses of Funds                                                                      148526
IDA Credit:
Goods                                                  1 752          102915             142346
Consulting services                                 2633 982        1014641            3836041
Project and Subprojects audit                        100 738          24961              125699
Operating costs                                      232 953         250 725             535 259
Grants                                   8          3774498          587545            4362043
Website subscription                     9          2 823 948        457 134           3281 082
PPF charge costs                                           -1 809
Total Uses of Funds                                 9567872         2437921           12284280
Closing Cash Balance
Designated Account of the PIU in USD                1 660 125       3 230 335          1 660 125
Operating Account of the PIU in UZS                    2416               78               2416
Operating Account of the PIU in EUR
Total                                    5          1662541         3230413            1662541
Signed by Project management on 20 February 2024
Director of PlU                                  Financial specialist of PiU
DA Azgarov                                       N.U. Rakhmanova
"Statement of Sources and Uses of Funds" to be read in conjunction with Notes (pages from 10 to 17) there to
forming an integral part of the Project special purpose financial statements


«Modernizing Uzbekistan National Innovation System» Project, IDA Credit No. 6784-UZ
6
STATEMENT OF USES OF FUNDS ON EXPENDITURE CATEGORIES
for 2023
(USD)
Actual                 Planned    Variance
Category of expenditure   ------- ---              - -     -    --        --------
2023        2022     Cumulative  Cumulative  Cumulative
to Date    to Date     to Date
Goods                                1 752     102915      142346     142347            1
Consulting services               2 633 982  1 014 641   3 836 041   3 854 849     18 808
Project and Subprojects audit      100738       24961      125699     125710           11
Operating costs                    232 953     250725      535259     535281           23
Grants                            3774498      587545    4362043     4370866        8823
Website subscription              2 823 948    457 134   3 281 082   3 281 082
IBRD PPF charge reinstatement                        -       i 809      1 809           -
Total                             9567872    2437921    12284280    12311 945      27665
Signed by Project management on 20 February 2024
birector of PilU                              Financial specialist of PIU
D.A. Azgarov                                 N.U. Rakhmanova
"Statement of Uses of Funds on Expenditure Categories" to be read in conjunction with Notes (pages from 10
to 17) thereto forming an integral part of the Project special purpose financial statements


«Modemizing Uzbekistan National Innovation System» Project, IDA Credit No. 6784-UZ
7
BALANCE SHEET
as of December 31, 2023
(USD)
Indicator                      as of 31.12.2023   as of 01.01.2023
Assets
Cash and cash equivalents, including
USD Designated Account of PIU                            1 660 125           3 230 335
UZS Operating Account of PIU                                 2416                  78
Total Uses of Funds - IBRD PPF                             148526              148526
Total Uses of Funds - IDA Credit                        12284280             2716408
Total assets                                           14095347             6095347
Funding
IBRD PPF Funds                                             250 000             250 000
Refund of IBRD PPF Funds                                  (101 474)           (101 474)
IDA Credit Funds                                        13946821             5946821
Total funding                                          14095347             6095347
Signed by Project management on 20 February 2024
Director of PIU                             Financial specialist of PIU
D.A. Azgarov                                N.U. Rakhmanova
"Balance Sheef" to e read in conjunction with Notes (pages from 10 to 17) thereto forming an integral part of
the Project special purpose financial statements


Modernizing Uzbekistan National Innovation System>> Project, IDA Credit No. 6784-UZ
8
STATEMENT OF USD DESIGNATED ACCOUNT OF PIU
for 2023
Account No.       2021 0840 6053 9118 7001
Depository Bank   JSCB "Kapitalbank"
Address           32, Matbuotchilar street, Tashkent, Republic of Uzbekistan, 100000
Credit            IDA No.6784-UZ
Currency          USD
USD
Balance as of 01 January 2023                                                3 230 335
Cash inflow:
IDA financing                                                                8 000 000
Total cash inflow:                                                        8 000 000
Cash outflow:
Currency conversion to UZS                                                   6271 065
Currency conversion to EUR                                                     19907
Eligible expenditures of the Project                                         3 279 238
Total cash outflow:                                                      9570210
Balance as of 31 December 2023                                               1660125
Signed by Project management on 20 February 2024
Director of PIU                            Financial specialist of PIU
D.A. Azgarov                               N.U. Rakhmanova
"Statement of USD Designated Account of PiU to be read in conjunction with Notes (pages from 10 to 17)
thereto forming an integral part of the Project special purpose financial statements


«Modernizing Uzbekistan National Innovation System» Project, IDA Credit No. 6784-UZ
9
STATEMENT OF SOE
for 2023
(USD)
The amount of
Funding organization  Withdrawa application    Category          expenses on the
No.
app-catio
IDA                  21                    2                        923 880
IDA                  23                  Multiple                  1 556 832
IDA                   26                 Multiple                  1 306 105
IDA                   27                 Multiple                   368 470
IDA                  28                  Multiple                   620 240
IDA                   35                 Multiple                  1 549 623
IDA                  37                  Multiple                  1 328 555
IDA                  38                  Multiple                   959 661
Total                                                               8613366
Signed by Signed by Project management on 20 February 2024
Director of Piu                           Financial specialist of PIU
DA. Azgarov                               N.U. Rakhmanova
"Statement of SOE" to be read in conjunction with Notes (pages from 10 to 17) thereto forming an integral part
of the Project special purpose financial statements


<<Modernizing Uzbekistan National Innovation System) Project, IDA Credit No. 6784-UZ
10
NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS
for 2023
1.    Project background
On June 25, 2020 the International Bank for Reconstruction and Development (hereinafter - IBRD) and the
Government of the Republic of Uzbekistan (hereinafter - Government) have signed the Project Preparation
Advance Agreement No. P5020 (hereinafter - Advance Agreement) for USD 1,924,000 to the implementation
of the Project "Modernizing Uzbekistan National Innovation System" (hereinafter - Project).
On May 17, 2021 the International Development Association (hereinafter - Association, IDA) and the
Government have signed the Financial Agreement on the provision of a Credit to the Republic of Uzbekistan
No.6784-UZ (hereinafter - Financing Agreement) for USD 50,000,000 for the implementation of the Project
with a maturity of 25 years, including a 5-year grace period.
The Order of the Cabinet of Ministers of the Republic of Uzbekistan (COM) No.239-f dated 11 May 2020 on
preparation of project implementation and establishing PIU under the Ministry of Innovative Development of
the Republic of Uzbekistan was signed with the objective to apply in practice local innovative projects and
inventions, increasing effectiveness of the development of national science and innovations and enabling
effective integration in the science and production, developing innovative structures taking into account up-to-
date requirements of the comprehensive development.
COM Resolution No.172 dated 03 April 2021 (hereinafter - COM Resolution) on arrangements facilitating the
IDA-financed Modernization of the national innovative system of Uzbekistan Project (hereinafter - COM
Resolution) designates responsibility to the Ministry of Innovative Development of the Republic of Uzbekistan
as to the executive agency in charge for steering/coordination of timely project implementation and targeted
and effective use of the IDA financing.
-        To ensure the effective project implementation the Ministry of Innovative Development of the Republic of
Uzbekistan has established Project Implementation Unit (hereinafter - PIU), that according to the IDM Circular
No.85 dated 26 April 2021 maintains its bank account, legal entity and 16 staff members with costs covered by
the IDA financing. This Circular also winded up PIU established by the COM Order No.239-4o dated 11 May
2020, and assets procured under Advance Financing Agreement are transferred to the balance of newly
established PIU.
-        According to the COM Resolution the repayment of IDA loan financing, interest and commissions, including
agent fee (on commitments) is financed by the Uzbekistan budget.
By Uzbekistan Presidential Decree No.Yn-14/01.23.2023 <<On highly prioritized organizational arrangements
facilitating efficient operations of the republican executive authoritiesD established that in line with the
Uzbekistan Presidential Decree No.Yrl-269/12.21.2022 <On measures ensuring implementation of the
administrative reforms of new Uzbekistan) and also with the objective to define highly prioritized arrangements
focused on the effective organization of activity by ministries and agencies, was approved Single list/register of
republican executive authorities: agencies, ministries, committees and inspections.
Uzbekistan Presidential Decree No.Yn-269/12.21.2022 approves renewed executive structure of the Cabinet
of Ministers where on the base of re-organized Uzbekistan Ministry of Innovative development was established
Uzbekistan Agency of Innovative Development under Ministry of Higher Education, Science and Innovations,
where latter in its turn was established on the base of re-organized Uzbekistan Ministry of Higher and
Secondary Vocational education.
The objective of the Project is to enable the development of a market-oriented national innovation system in
Uzbekistan.
The project consists of the following parts:
1. Improving research excellence and commercialization
Promotion improvement of the capacity of publicly funded research through:
Current notes are an integral part of the Project Special Purpose Financial Statements


<Modernizing Uzbekistan National Innovation System) Project IDA Credit No. 6784-UZ
11
1.1. Research Excellence Program (REP)
Provision of the REP Grants to selected REP Beneficiaries to finance research REP Sub-projects based on
the following, inter alia, core criteria: (i) scientific merit and (ii) social and/or economic relevance, in particular in
the field of, but not limited to, renewable energy, energy efficiency, low-carbon technologies, and COVID-19-
related research.
1.2 Research Commercialization Program (RCP)
(a) Provision of RCP Grants to selected RCP Beneficiaries to finance RCP Sub-Projects on the
development of proof of concept and small-scale prototyping.
(b) Providing technical assistance for (i) establishment and building capacity of the technology transfer unit
under the Ministry of Higher Education, Science and Innovation (MHESI), and (ii) mentorship to RCP
Sub-projects under Part 1.2 above, including but not limited to drafting the RCP Manual, selecting the
RCP Beneficiaries and oversee the RCP implementation.
1.3 Public Research Institutes Modernization
Providing support for modernization of research infrastructure of selected research institutes.
2. Promoting Innovation in the private sector
Promoting private sector innovation by enabling technology adoption, diffusion and supporting the initial growth
of R&D-driven innovation, as well as supporting expansion of a knowledge-based start-up sector, through:
2.1 Innovation Capacity Program (ICP)
(a) Provision of Supplier Development (SD) Matching Grants to selected ICP Beneficiaries to finance SD
Sub-projects on adoption of quality standards.
(b) Provision of support for the modernization of the quality infrastructure for the selected SD Subprojects
under Part 2.1 (a) immediately above, through, but not limited to, the development of necessary
regulatory reforms and investment into selected equipment.
2.2 Business Investment in R&D Program (BIRD)
(a) Provision BIRD Match Grants to selected BIRD Beneficiaries to finance the BIRD Sub-projects to
support (i) later stages of research commercialization (ii) R&D for small and medium enterprises, and (iii)
early stages of knowledge-based start-ups.
(b) Provision of the mentorship assistance to selected BIRD Beneficiaries, including, inter alia,
individualized Training, mentoring and coaching, facilitating matching between potential candidates and
prospective investors.
3. Supporting STI policymaking and reforms
Technical support for integration of the new STI police instruments into the national policy and institutional
framework with the purpose of achieving the results of activities under Parts 1 and 2 of the Project, through:
(a) Preparation of studies andlor draft regulations and policies for the STI.
(b) Provision of Trainings, study tours, consensus-building workshops and other activities for the MID,
selected research institutions, other selected public institutions and the local scientific community to
enhance coordination of key stakeholders, as well as the development and implementation of a
communication strategy.
(c) Technical assistance for, inter alia: (i) the design of the institutional modernization plans under Part 1.3
of the Project and (ii) carrying out a gap assessment to determine the necessary reforms and possible
investments in metrology related equipment/tools to determine the scope of interventions under Part
2.1(b) of the Project.
4. Project Management, Monitoring and Evaluation
Provide support for Project implementation, including the Project's monitoring and evaluation, application of
Environmental and Social Standards, Project related audits, Training and financing of Incremental Operating
Costs.
Current notes are an integral part of the Project Special Purpose Financial Statements


<<Modernizing Uzbekistan National Innovation Systems Project, IDA Credit No. 6784-UZ
12
According to the Financing Agreement, the IDA funds available for the Project implementation are intended for
financing the following categories:
Amount of the Percentage of Expenditures to
No.                     Category                      financing  be financed (exclusive of taxes
allocated (USD) other then withheld taxes)
REP Grants under Part 1.1 of the Project;
RCP Grants under Part 1.2(a) of the Project;
26000000                                                                 100%
SD Matching-Grants under Part 2.1 (a) of the Project;
BIRD Matching Grants under Part 2.2 (a) of the Project
2   Goods, Works, Consulting services and non-consulting services  22 076 000  100%
Training and Incremental Operation Costs of the Project
3   Refund of Preparation Advance                      1 924 000  Amount payable pursuant
Total                           50000000
According to the COM Resolution, the funds of the Government of the Republic of Uzbekistan allocated for the
implementation of the Project are intended to finance the following items of expenditure:
Financing of the Government
No.                    Indicators                   --      ------------ -
USD      As a percentage of expenses
1   Taxes and customs duties                           3600000           100%
Total                            3600000
The expected closing date of the loan in accordance with the Financing Agreement is March 30, 2026.
2.    Project Accounting Policy
These Special Purpose Financial Statements have been prepared, in accordance with requirements of
International Public Sector Accounting Standards (hereinafter - IPSAS) issued by the International Public
Sector Accounting Standards Board of the International Federation of Accountants, following the cash flow
basis and compliant with the World Bank recommendations.
2.1.  Basis for the preparation of the Special Purpose Financial Statements
Statement of Sources and Uses of Funds, Statement of Uses of Funds on Expenditure Categories, Balance
Sheet, Statement of Designated Account of PIU, Statement of SOE and Notes to the Financial Statements are
developed to reflect operations conducted in the Project's framework.
Statement of Sources and Uses of Funds, Statement of Uses of Funds on Expenditure Categories, Balance
Sheet, Statement of Designated Account of PIU and Statement of SOE are developed based on cash flow
basis in accordance with below-stated principles.
2.2.  Financing
Financing of the Project is considered as actual in the following cases when:
*    suppliers of material resources or services are paid by the IDA from the Credit Account (hereinafter -
Credit Account) under Direct payments procedure;
*    the funds from IBRD and IDA's Credit Accounts were transmitted to PlU's USD Designated Account.
2.3.  Expenditures
The Project expenditures are recognized as such and stated in the financial statements when the payment is
made to suppliers of goods, works and/or services. The payments are made either directly from Credit Account
administered by the IDA or from Project's accounts.
Current notes are an integral part of the Project Special Purpose Financial Statements


<<Modernizing Uzbekistan National Innovation System.s Project, IDA Credit No. 6784-UZ
13
2.4.  Reporting currency and exchange rate methodology
Uzbekistan's national currency is Uzbek Soum (UZS). IBRD and IDA Funds Project financing are budgeted in
United States Dollars (USD). Hence, USD is functional and reporting currency in which the Project Special
Purpose Financial Statements are presented (presentation currency). Itemization in the Financial Statements
is exercised in the functional currency.
The Project has Designated Account in USD, Operating Account in UZS and Operating Account in Euro (EUR)
for financing eligible expenditures within IBRD's and IDA's share.
For preparing Project's financial statements and statements of expenditures (SOE), the following principles of
foreign exchange rate conversion were used:
*    On the IBRD and IDA Funds, expenses in UZS and EUR are exchanged into USD at the acquiring
commercial bank exchange rate, effective on the date of conversion;
*    In order to generate the Statement of Expenditure (SOE) the UZS and EUR expenditures are
converted into USD at the respective commercial bank exchange rate;
*    Cash balances on the IBRD and IDA Funds in UZS and EUR on the Project bank accounts are
revalued at the latest commercial bank exchange rate effective on the reporting date.
3.    Presented Financial Statements
The Project Special Purpose Financial Statements are prepared by the management of the PIU under the
Agency of Innovative Development under the Ministry of Higher Education, Science and Innovation of the
Republic of Uzbekistan, which is the executive agency of the Project.
The Project Special Purpose Financial Statements have been signed by the PIU management, namely by the
PIU Director A.D. Azgarov and PIU Financial specialist N.U. Rakhmanova on 20 February 2024.
Project Special Purpose Financial Statements for the reporting period are prepared in accordance with IPSAS
based on the cash method.
The Project Special Purpose Financial Statements comprise the following statements:
3.1.  Statement of Sources and Uses of Funds
The Statement of Sources and Uses of Funds includes information on financing from IDA. During the reporting
period, the Project was financed by IDA Credit funds in the amount of USD 8,000,000 under the Advance
Procedure (pls. see Note 6).
The total Project expenditure for the reporting period from IDA Credit funds amounted USD 9,567,872. This
report also includes information on cash balances at the beginning and at the end of the reporting period. Cash
balances at the end of the reporting period are IDA cash balances in the amount of USD 1,662,541.
3.2.  Statement of Uses of Funds on Expenditure Categories
Statement of Uses of Funds on Expenditure Categories includes breakdown by Project expenditures for each
category of expenditures, as well as Project budget and difference between actual expenditures and budgeted.
3.3.  Balance Sheet
This Statement provides information on the accumulated funds of the Project, financing, as well as the total
costs of the Project as of the reporting date.
3.4.  Statement of SOE
This Statement details the information Statement of Expenditures of the Project withdrawn to IDA in the
reporting period.
Current notes are an integral part of the Project Special Purpose Financial Statements


yModemizing Uzbekistan National Innovation System) Project, IDA Credit No.6784-UZ
14
4.    Fixed assets
Property, Plant and Equipment procured by the Project with the purposes effective achievement of Project
objectives are entered to the Cost Records right after being received. For the purposes of this financial
reporting all the PPE recorded at the initial cost and are not being depreciated.
PPE include assets purchased for the operational needs of PIU. Below is the list of Property, Plant and
Equipment administered by the PIU:
Opening balance                           Closing balance as
Group of PPE                         Purchases    Disposals
as of 01.01.2023                            of 31.12.2023
Vehicle                            34 360                       -             34 360
Computer equipment                 24 770                       -             24 770
Furniture and office equipment     16992                        -             16992
Total                              76122                         -            76122
5.    Cash and cash equivalents
The PIU opened accounts in JSCB "Kapitalbank". The Project's accounts and their purposes are listed below:
5.1.  Designated Account of PIU in USD
Financing from the IDA to the Designated Account in 2023 amounted to USD 8,000,000. During 2023, this
account was used to pay the eligible expenditures of the Project in the amount of USD 3,279,238. To cover
eligible expenditures USD 6,271,065 from this PIU account was converted and transferred to the UZS
Operating Account of PIU and USD 19,907 to the EUR Operating Account of PIU.
5.2.  Operating Account of PlU in UZS
The Project also has the UZS Operating Account of PIU. During 2023, this account was used to pay the
eligible expenditures of the Project in the amount of USD 6,268,727. In addition, value added tax (hereinafter -
VAT) in the amount of USD 9,780 was reimbursed to this account, which was paid in the reporting period from
the IDA funds (pls. see Note 13).
5.3.  Operating Account of PIU in EUR
In order to pay suppliers of goods and services in EUR, the PIU has the Operating Account in this currency.
During 2023, this account was used to pay the eligible expenditures of the Project in the amount of USD
19,907 (pis. see Note 14).
Balances of the Project's bank accounts are summarized in the following table:
Balance as of January 1, 2023                                               USD
USD Designated Account of PIU                                               3230335
UZS_Operating Account of PIU                                                     78
EUR Operating Account of PIU                                                       -
Total Project Funds as of January 1, 2023                                   3 230 413
Balance as of December 31, 2023
USD Designated Account of PIU                                               1 660 125
UZS Operating Account of PIU 2416
EUR Operating Account of PIU
Total Project Funds as of December 31, 2023                                 1 662 541
Current notes are an integral part of the Project Special Purpose Financial Statements


(Modernizing Uzbekistan National Innovation System)) Project, IDA Credit No.6784-UZ
15
6.    Advance procedure
Reconciliation of replenishment to the PIU Designated Account and documents supporting the use of IDA
Credit funds for 2023 is presented in the following table:
Balance of the IDA Funds as of January 01, 2023                             3230413
Replenishment of the USD Designated Account of PIU for the reporting period  8000000
Total IDA funds for the reporting period                                   11230413
The total expenditures claimed to IDA under the SOE in 2023                 8613366
2022 expenditures claimed to IDA in 2023                                    (923880)
2023 expenditures not yet claimed to IDA as of December 31, 2023            1 878 386
Total Project expenses for the reporting period                             9 567 872
Unspent amount of IDA Funds                                                 1 662 541
Balance of IDA Funds as of December 31, 2023                                1662 541
Variance                                                                           0
7.    Direct payments procedure
Within the framework of the Project, no financing was made under the Direct payment procedure in 2023.
8.    Grants
The List of Grants funded in the Project's framework for the reporting period is summarized below:
USD
Grant Agreement      Region                     Scope                   Amount
REP-1/1 dd 10 08 2022  Tashkent city  Water management                       262 609
REP-1/2 dd 10.08 2022  Tashkent city  Water and energy-saving technologies   148859
REP-1/3 dd 10.08 2022  Tashkent city  Renewable energy                        59 135
REP-1/4 dd 10.08.2022  Tashkent city  Biology                                494388
REP-1/5 dd 10.08 2022  Tashkent city  Renewable energy                       195 770
Advanced new material science & engineering,
REP-1 /6 dd. 10.08.2022  Tashkent city  nanotechnology, polymer science and  191 094
engineering, packaging engineering
REP-1 /7 dd. 10 08.2022  Tashkent region Agriculture and environmental protection  60689
REP-1/8 dd. 10.08.2022  Tashkent city  Agriculture and water management      129 340
REP-1 /9 dd. 10.08.2022  Tashkent city  Development of low-carbon technologies  93 192
Artificial intelligence, natural language
REP-1 /10 dd. 10.08.2022  Tashkent city  .132 700
processing
REP-1/11 dd 10.08.2022  Tashkent city  Economics, development                 69261
REP-1/12 dd. 10.08.2022  Tashkent city  Food science, analytical chemistry   466 536
REP-2/1 dd. 15.11.2022  Tashkent city  Development of eco-friendly biofertilizers  35 522
REP-2/2 dd. 15 11.2022  Tashkent city  Biotechnology, medicine, drug delivery  144 486
REP-2/3 dd 15.11.2022  Tashkent city  Medicine                               154 925
REP-2/4 dd. 15 11.2022  Tashkent region Agriculture and food, biotechnology   28 390
REP-2/5 dd 15 11 2022  Tashkent city  Public health (health policy, epidemiology)  49 434
REP-2/6 dd 15 11 2022  Tashkent city  Natural Language Processing             47 756
Current notes are an integral part of the Project Special Purpose Financial Statements


<<Modernizing Uzbekistan National Innovation System)) Project, IDA Credit No. 6784-UZ
16
Grant Agreement       Region                    Scope                    Amount
REP-2/7 dd. 15.11.2022  Tashkent city  Renewable energy                       114 034
Biotechnology, Human genomics, Reproductive
REP-2/8 dd. 15.11.2022  Tashkent city                                          25 026
biology, Bioinformatics, Data science
Technological solutions to environmental
REP-2/9 dd. 15,11 2022  Andijan region  problems, in particular resource and waste  25182
recycling technologies
REP-2/10 dd. 15.11.2022 Tashkent region Optics, laser physics                 195 779
REP-2/11 dd. 15 11.2022  Tashkent city  Earth sciences                        276 166
i REP-2112 dd. 15.11.2022 Tashkent region Condensed matter physics              41 224
REP-2113 dd. 15.11.2022  Tashkent city  Medicine                              333001
Total                                                                        3 774 498
9.    Website subscription
These expenditures include annual online subscription "Web of Science" with the Clarivate Analytics Ltd,
Springer nature customer service center, Proquest LLS companies, for total price of USD 2,823,948 in 2023.
10.   Reconciliation of financing of the Project
Reconciliation financing IBRD and IDA funds between Client Connection data and Project data as of December
31, 2023 is stated below:
USD
Source            Client Connection        Project            Difference
Credit IDA No.6784-UZ              13946821            13946821                    0
Advance IBRD No. P5020-UZ             148526              148526                   0
Total financing                    14 095 347          14095347                    0
11.   Cumulative expenditures of the Project
As of December 31, 2023, the total costs of the Project include the expenditure of IBRD advance funds and
IDA credit funds under the Direct payments procedure, as well as the expenditure of funds from the USD
Designated Account and Operating Accounts of the Project to pay grants, suppliers of goods (works, services),
operating expenses and consulting services using Statements of Expenditures (SOE).
USD
Total costs of the Project as
Indicator
at December 31, 2023
Direct payments                                                                 1 809
Expenditures using SOE                                                      12 430 997
Total Cumulative Expenditures                                               12432 806
12.   Events after the reporting period
The Management of the Project has not noted events that occurred after the date of preparation of the Special
Purpose Financial Statements, which could indicate the need for adjustments to funds received, expenditures
and cash balances of the Project.
Neither there were events indicating the need for their disclosure.
Current notes are an integral part of the Project Special Purpose Financial Statements


<<Modernizing Uzbekistan National Innovation System) Project, IDA Credit No. 6784-UZ
17
13.   Statement of UZS Operating Account of PIU
Account No.              2021 0000 5053 9118 7001
Depository Bank          JSCB "Kapitalbank"
Address                  32, Matbuotchilar street, Tashkent, Republic of Uzbekistan, 100000
Credit                   IDA No.6784-UZ
Currency                 UZS
000'UZS         USD
Balance as of 01 January 2023                                      867            78
Cash inflow:
Transfer from USD Designated Account of PIU                   74520391      6271065
Reimbursement of VAT                                            113593         9780
Total Cash inflow:                                            74633984      6280845
Cash outflow:
Eligible expenditures of the Project                          74491 515     6268727
Reimbursed VAT expenditures                                     113593         9780
Total cash outflow:                                           74605108      6278507
Balance as of 31 December 2023                                   29743         2416
14.   Statement of EUR Operating Account of PIU
Account No.              2021 0978 7053 9118 7001
Depository Bank          JSCB "Kapitalbank"
Address                  32, Matbuotchilar street, Tashkent, Republic of Uzbekistan, 100000
Credit                   IDA No.6784-UZ
Currency                 EUR
EUR          USD
Balance as of 01 January 2023                                        0            0
Cash inflow:
Transfer from USD Designated Account of PIU                      18287        19907
Total Cash inflow:                                               18287        19907
Cash outflow:
Eligible expenditures of the Project                             18287        19907
Total cash outflow:                                              18287        19907
Balance as of 31 December 2023                                       0            0
Current notes are an integral part of the Project Special Purpose Financial Statements