E 2a, Chust street, Tashkent, 100077, Uzbekistan W Tel/Fax: (998-71) 262-50-70, 262-50-90, 262-08-47 EE-mail: reception@ciar.uz; reception(&ciargroup.net www.ciar.uz IDA CREDIT No.5679-UZ "REGIONAL ROADS DEVELOPMENT PROJECT" INDEPENDENT AUDITOR'S REPORT ON SPECIAL PURPOSE FINANCIAL STATEMENTS FOR THE PERIOD FROM JANUARY 01, 2018 TO DECEMBER 31, 2018 I)UF 2 CONTENTS C O N T E N T S .......................... ......... .................... ..................... . . ................... ................. .................... ....... 2 INDEPENDENT AUDITO R' REPO RT ......................................................................... ............... ....... ... 3 STATEMENT OF SOURCES AND USES OF FUND ................................ ............................................ 5 STATEMENT OF USES OF FUNDS BY PROJECT CATEGORIES ................................... ............. -....... 6 S TA T E M E N T O F S O E ...................... . ..................... ........................................................................... 7 B A L A N C E S H E E T ...... ......... .... ....-............... ... -.............. - -.. ..... .......... ---............. . . .......... .......--- --- .........-.--a RECONCILIATION STATEMENT FOR THE BALANCE OF THE PROJECT'S ACCOUNTS ..................... 9 STATEMENT OF PROJECT'S USD DESIGNATED ACCOUN ................................. -......... 10 STATEMENT OF PROJECT'S UZS DESIGNATED ACCOUNT...................- ..................... . ..........11 NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS....................................................A.TE..S12 1. PROJECT BACKG RO UND ... ...... .............. ... ...... ................ . .. 12 I 2. PROJECT ACCOUNTING POLICY ....13.. ........ ... .. .. ... ......................... . 13 3. PRESENTED FINANCIAL STATEMENTS.... ........ . .. ............ ............ .................. 15 4 C ASH AND CASH EQ UIVALENTS ...... ...... .......... ... -............ .......1................ -- 15 5 . F IX E D A S S E T S ................ ... - - ..... ............... . ...... ...... .......15.......... .... ... 16 6 STATEMENT OF EXPENDITURE (SOE) PROCEDURES.... .......... .. ........................... 17 7, PROJECT BUDGET PERFORMANCE. ............. ........ --- ........... ..... -... .. 17 8. BUDGET PERFORMANCE ON THE FINANCING THE PROJECT EXPENDITURES / DISBURSEMENTS. 18 9. DIRECT PAYMENT PROCEDURES. .. ...................... ... ...... ... ........ . . 18 10. C UMULATIVE EXPENDITURES .... .................. ...... . .. . ..... ....... - - . . . - 18 1 1 T A X ES.... -.. ...19.................. ... ...... .......... ....... .... .. .. - ... 1 9 12. STATEMENT OF PROJECTS CO-FINANCING ACCOUNT . ... ..... . ........... . 19 3 INDEPENDENT AUDITOR'S REPORT To the Management of Regional Roads Development Project Implementation Unit under Republican Road Fund under the Cabinet of Ministers of the Republic of Uzbekistan We have audited the accompanying Special Purpose Financial Statements (hereinafter - Financial Statements) of the "Regional Roads Development Project" (hereinafter - Project) financed against the Financing Agreement of the International Development Association (hereinafter - IDA) and against budget funds of the Government of the Republic of Uzbekistan (hereinafter - Government, GOU), based on the provisions of the Financing Agreement No.5679-UZ dated 28 October 2016 (hereinafter - the Financing Agreement), for the period from 1 January 2018 to 31 December 2018. The Special Purpose Financial Statements comprise Statement of Sources and Uses of Funds, Statement of Uses of Funds by Project Categories, Statement of SOE, Balance Sheet, Reconciliation Statement for the Balance of the Project's Accounts, Project's Designated Accounts Statements for the period from 1 January 2018 to 31 December 2018, and a summary of significant accounting policies and other explanatory information (Notes to the Special Purpose Financial Statements). The Special Purpose Financial Statements have been prepared by the Regional Roads Development Project Implementation Unit under Republican Road Fund under the Cabinet of Ministers of the Republic of Uzbekistan (hereinafter - PIU) according to the International Public Sector Accounting Standards (hereinafter - IPSAS), based on the cash flow method, issued by the International Public Sector Accounting Standards Board of the International Federation of Accountants. Responsibility of the managers for drawing up financial statement The management of the PIU is responsible for preparation and fair presentation of these Special Purpose Financial Statements based on the cash flow basis in accordance with IPSAS. 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 responsibility Our responsibility is to express an opinion on the accompanying Special Purpose Financial Statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISA), published by International Federation of Accountants. Those standards require that we should follow ethical norms, plan and perform the audit to obtain reasonable assurance that there is no incorrect or false data in the Special Purpose Financial Statements. Audit stipulates carrying out the procedures, which are aimed to get audit proofs as regards numeric data and information, contained in the Special Purpose Financial Statements. Choosing the procedures is based on auditor's professional judgment, including the estimation of risks of substantial misrepresenting of financial statement as a result of fraud or mistakes. In the process of estimation of above-mentioned risks, Auditor considers internal control system related to the preparation and authentic submission of financial statement of the organization to develop audit procedures, which are necessary in the present circumstances, but not to express opinion on the effectiveness of organization's internal control system. An audit also includes evaluating principles of accounting policies used and estimates made by the management, as well as evaluating the overall presentation of the Financial Statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. K2>.A\(.jix,JH Pi ~l~I Auditor's opinion In our opinion, the above-stated Special Purpose Financial Statements give a true and fair view of the sources and uses of the "Regional Roads Development Project" funds for the period from 1 January 2018 to 31 December 2018 and complies with conditions of the Financing Agreement and IPSAS. Moreover, (a) with respect to SOEs, adequate supporting documentation has been maintained to support claims to the Association for reimbursement of expenditures incurred; and (b) the expenditures comply with objectives stipulated in the Financing Agreement No.5679-UZ. In our opinion, the Special Accounts Statements on IDA Credit No. 5679-UZ for the period from 01 January 2018 to 31 December 2018 give a true and fair view of the financial position of the Special Accounts of the Project as at 31 December 2018 and of the cash flows for the for the year then ended and complies with the World Bank's guidelines. Basis of Accounting 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 the Project to comply with the financial reporting provisions on the requirements conditions of the Financing Agreement and IPSAS. 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. Auditor: i, TAR-FINANS LLC /2 2A, Chust Street, Tashkent, 100077, Uzbekistan 25 March 2019 "Regional Roads Development Project" IDA Credit No.5679-UZ 5 STATEMENT OF SOURCES AND USES OF FUNDS for the period from 1 January 2018 to 31 December 2018 (USD) Cumulative from Indicator Note Actual 2018 Actual 2017 the beginning of the Project Financing IDA Funds Replenishment to Project USD Designated 3 100 000,00 0,00 400 000,00 Account Direct Payments 3 360 000,00 0,00 360 000,00 Total IDA Funds 460 000,00 0,00 760 000,00 Government Funds GOU counterpart financing in cash 3 34 430,74 29 990,62 82 998,08 Total Government Funds 34 430,74 29 990,62 82 998,08 Total on direct financing 494 430,74 29 990,62 842 998,08 TOTAL FINANCING 494 430,74 29 990,62 842 998,08 Expenses Direct Financing Funds 1. Rehabilitation of Regional Roads 3 360 000,00 0,00 360 000,00 2. Road sector Institutional Strengthening 0,00 0,00 0,00 3. Project Management 3 157 565,57 145 223,30 431 254,60 4. Unallocated 0,00 0,00 0,00 Financial costs in the investment period 3 9 127,91 5 610,66 14 738,57 Total 526 693,48 150 833,96 805 993,17 Exchange rate difference 3 4,10 0,00 4,10 TOTAL EXPENSES 526 697,58 150 833,96 805 997,27 Excess of Receipts over Payments (32 266,84) (120 843,34) 37 000,81 Opening Balance Project's UZS Designated Account 1 068,65 371,99 Project's USD Designated Account 68 199,00 189 739,00 Total 4 69267,65 190110,99 Net Available Funds 37 000,81 69 267,65 37 000,81 Closing Balance Project's UZS Designated Account 22,81 1 068,65 22,81 Project's USD Designated Account 36 978,00 68 199,00 36 978,00 Total 4 37 000,81 69 267,65 37 000,81 Signed by management on 14 February 2019 N. A. Fayzullaev' M. F. 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" ® ,�N, fo2 �i ,� Q � ���й � � � � j о р� Q� � � �о ��Nsй м v i�.=_ �- й г� и� , "Regional Roads Development Project" IDA Credit No. 5679-UZ 7 STATEMENT OF SOE for the period from 1 January 2018 to 31 December 2018 (USD) No. of Withdrawal Application Amount Category application 3. Project Management WA-2 230732,35 230732,35 WToro 230732,35 230732,36 Signed by management on 14 February 2019 N. A. Fayzullaev M. F. Sattorova PlU Director Accounting specialist of PlU Statement of SOE is to be read in conjunction with Notes (Pages from 12 to 19) thereto forming an integral part of the Special Purpose Financial statements, "Regional Roads Development Project" IDA Credit No.5679-UZ 8 BALANCE SHEET for the period from 1 January 2018 to 31 December 2018 (USD) as at 31 December as at 31 December Indicator Note 2018 2017 ASSETS Cash and cash equivalents 4 37 000,81 69 267,65 TOTAL ASSETS 37 000,81 69 267,65 FUNDING IDA financing 7 760 000,00 300 000,00 GOU financing 7 82 998,08 48 567,34 Project cumulative expenditures 10 (805 993,17) (279 299,69) Exchange rate difference (4,10) TOTAL FUNDING 4 37 000,81 69 267,65 Signed by management on 14 February 2019 N. A. Fayzullaev < M. F. Sattorova PIU Director Accounting specialist of PIU Balance Sheet is to be read in conjunction with Notes (Pages from 12 to 19) thereto forming an integral part of the Special Purpose Financial statements. "Regional Roads Development Project" IDA Credit No. 5679-UZ 9 RECONCILIATION STATEMENT FOR THE BALANCE OF THE PROJECT'S ACCOUNTS for the period from 1 January 2018 to 31 December 2018 (USD) Indicator Note 2018 2017 Current cash balance on the Project Designated Accounts 4 69267,65 190110,99 Opening Balance according to the Balance Sheet Financed by IDA to USD Designated Account of the Project 4 100 000,00 0,00 Expenditures incurred on the Project from Designated Accounts 4 (132 266,84) (120 843,34) Current cash balance on the Project Designated Accounts 37000,81 69267,65 Closing Balance according to the Balance Sheet Current cash balance on the Project Designated Accounts 4 37000,81 69267,65 Closing Balance according to the Accounts Difference 0,00 0,00 Signed by management on 14 February 2019 N. A. Fayzullaev M. F. Sattorova PIU Director Accounting specialist of PIU Reconciliation Statement for the Balance of the Project's Accounts is to be read in conjunction with Notes (Pages from 12 to 19) thereto forming an integral part of the Special Purpose Financial statements. "Regional Roads Development Project" IDA Credit No. 5679-UZ 10 STATEMENT OF PROJECT'S USD DESIGNATED ACCOUNT for the period from 1 January 2018 to 31 December 2018 Account No: 2021 0840 9004 9184 8001 Depositary bank: National Bank of Uzbekistan Address: 101, A.Temur street, Tashkent, Uzbekistan Related Credit 5679-UZ Currency: USD USD Balance as at January 1, 2018 68199,00 Inflow: IDA Financing 100 000,00 Total inflow: 100 000,00 Outflow: Sale of foreign currency 131 210,00 Expenses on related categories 11,00 Total Outflow: 131 221,00 Balance as at December 31, 2018 36 978,00 Signed by management on 14 February 2019 N. A. Fayzullaev M. F. Sattorova PIU Director Accounting specialist of PIU Statement of Project's USD Designated Account is to be read in conjunction with Notes (Pages from 12 to 19) thereto forming an integral part of the Special Purpose Financial statements. I U "Regional Roads Development Project" IDA Credit No.5679-UZ STATEMENT OF PROJECT'S UZS DESIGNATED ACCOUNT for the period from 1 January 2018 to 31 December 2018 Account No: 2021 0000 8004 9184 8001 Depositary bank: National Bank of Uzbekistan Address: 101, A.Temur street, Tashkent, Uzbekistan Related Credit 5679-UZ Currency: UZS USD 000' UZS Balance as at January 1, 2018 1 068,65 8 677,52 Inflow: Proceeds from sale of foreign currency 131 210,00 1 057767,88 Total Inflow: 131 210,00 1 057 767,88 Outflow: Expenses on related categories 132 251,74 1 066 255,19 Exchange rate difference 4,10 Total Outflow: 132 255,84 1 066 255,19 Balance as at December 31, 2018 22,81 190,21 Signed by management on 14 February 2019 N. A. Fayzullaev M. F. Sattorova PlU Director Accounting specialist of PIU Statement of Project's UZS Designated Account is to be read in conjunction with Notes (Pages from 12 to 19) thereto forming an integral part of the Special Purpose Financial statements. "Regional Roads Development Project" IDA Credit No.5679-UZ 12 NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS for the period from 1 January 2018 to 31 December 2018 1. Project background On June 23, 2015 the Board of Directors of the World Bank (hereinafter - WB, Bank) has approved the financing of the "Regional Roads Development Project" (hereinafter - Project).On October 28, 2016 the International Development Association(hereinafter - IDA, Association) and Republic of Uzbekistan have signed the Financing Agreement and IDA lent to Uzbekistan Credit No.5679-UZ to facilitate implementation of "Regional Roads Development Project" for the amount 145 million Special Drawing Rights (hereinafter - SDR) which is USD 200 million. Pursuant to the Sub-lending Agreement dated December 2, 2016 and signed between the Ministry of Finance on behalf of the Republic of Uzbekistan and Republican Road Fund under the Cabinet Ministry of Republic of Uzbekistan) (hereinafter - Road Fund) the whole amount was sub-lent to the Agency (Subsidiary Loan). Subsidiary loan funds are made available to the Republic of Uzbekistan for Project financing shall only be used for the Intention and on the Terms and Conditions of the Financing Agreement. Pursuant to the Sub-lending Agreement, the Road Fund is organization in charge for the repayment of loan and interest. The Project aims to have two broad objectives: (i) reduce road user costs on the Project roads; and (ii) develop a sustainable investment program for regional road asset management. The Project oblasts are Tashkent, Ferghana, Andijan and Namangan oblasts. Project financing plan is as follows: Source of financing USD IDA 200 000 000 Total 240 000000 On the basis of Decree No.2611 of the President of the Republic of Uzbekistan dated 23 September 2016 "On measures of implementation of "Regional Roads Development Project" with participation International Development Association "the Road Fund is an executive agency responsible for the target and effective use of credit proceeds and Project implementation, and Khokimiyats of Tashkent Namangan Ferghana and N Andijan oblasts are responsible for the timely and effective implementation of the Project. In order to optimize logistics and economic effectiveness Regional Roads Development Project Implementation Unit under Republican Road Fund under the Cabinet of Ministers of the Republic of Uzbekistan (hereinafter - PlU) was created. The PlU is registered by the Resolution 010290-10 dated 12 August 2015 of the Khokim of Yunus-Abad district of Tashkent City. PlU is a public non-commercial enterprise with the following main objectives: N * To achieve the goals and objectives of the Project; * To establish and enable Monitoring and Evaluation system for the project implementation; *To ensure the targeted and effective timely disbursement of project funds for the project implementation; *Management of the procurement of goods and services, in line with the IDA and national regulatory requirements, and others. N PlU is located at: 29, Istiqlol Street, Tashkent, Republic of Uzbekistan. The Project consists of the following parts: N Part 1: Rehabilitation of Regional Roads Rehabilitating and improving selected sections of existing priority regional roads in the Project Oblasts, and integrating road safety measures into the design of said sections. All through the provision of goods, works N and consultants' services. N.... . ........ .................. .. ............... ........ .......... ........... ................ .. ...................... .... .. . . . .. . . . . . . . . . . . . . . - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . .. . . . . . . . . . . . . "Regional Roads Development Project" IDA Credit No,5679-UZ 13 Part 2: Road Sector Institutional Strengthening (i) Currying out a review of the Uzbekistan's existing road asset management capacity; (ii) Supporting the development of regional roads rehabilitation programs; (iii) Supporting the economic development of the road construction industry (including, inter alia, training programs for road construction and technical design institutes); (iv) Strengthening the technical capacity of the Republican Road Fund; and (v) Currying out a review of the Uzbekistan road sector policy and institutional framework. All through the provision of goods, consultants' services, training, and incremental operating costs. Part 3: Project Management Providing support to the PIU for the purposes of inter alia, Project management, monitoring and evaluation (including, inter alia, procurement, financial management and safeguards supervision). All through the provision of goods, consultants' services, training, and incremental operating costs. The expected duration of the Project defined from September 2015 to September 2021. IDA credit proceeds under the Project implementation are available to cover the following eligible costs: IDA Financing No. Categor In SDR In USD In % (exclusive of - - taxes and duties) 1 Rehabilitation of Regional Roads 131 260 000 181 048 276 100% of all expenditures 2 Road sector Institutional Strengthening 3620 000 4993 103 100% of all expenditures 3 Project Management 6 740 000 9296552 100% of all expenditures 4 Unallocated 3380000 4662069 100% of all expenditures Total 145 000 000 200 000 000 Government proceeds under the Project implementation are available to cover the following eligible costs: No. CaegoryGOU Financing No. Category - In USD In% 1 Other costs, including: 2296400 100% of all expenditures 1. Rehabilitation of Regional Roads 2 296 400 2 Single Social Payment* including: 193 500 100% of all expenditures 3. Project Management 193500 3 Exemptions from taxes and duties 24812500 100% of all expenditures 1. Rehabilitation of Regional Roads 22 312 500 2. Road sector Institutional Strengthening 2400 000 3. Project Management 100 000 4 Financial costs in the investment period 12 697600 100% of all expenditures Total 40 000 000 * The Source of financing of Single Social Payment is funds of Republican Road Fund 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. "Regional Roads Development Project" IDA Credit No.5679-UZ 14 2.1. Basis for the preparation of the Special Purpose Financial Statements Statement of Sources and Uses of Funds, Statement of Uses of Funds by Project Categories, Statement of SOE, Balance Sheet, Reconciliation Statement for the Balance of the Project's Accounts, Designated Accounts Statements 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 by Project Categories, Statement of SOE, Balance Sheet, Reconciliation Statement for the Balance of the Project's Account sand Designated Accounts Statements 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: 1. IDA Financing: * when suppliers of material resources or services are paid by the IDA from the Credit Account (hereinafter - Credit Account) under Direct payment procedures or by the Letter of Credit; * when the funds from the IDA's Credit Account were transmitted to the Project Designated accounts (hereinafter - the Designated Account) opened with Central Operating Department of the National Bank Foreign Economic Activity of the Republic of Uzbekistan (hereinafter - National Bank RUz). 2. Government financing: * Once the funds are transferred from the Road Fund accounts to the PIU accounts (Co-financing Account) opened in the Treasury Ministry of Finance of the Republic of Uzbekistan; * By Funds for financing and expenses on Single Social Payment (SSP) before the first financing date of IDA - when funds are transferred accounts of Republican Road Fund to the Project's Designated account opened in the National Bank RUz; * In kind of tax and duty exemptions accounted on the basis of the certificates (notes/letters) furnished by the Project suppliers and subcontractors subjected to the general taxation requirements (VAT, mandatory contributions and fees to the public ear-marked funds, customs fees). 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 by the Letter of Credit, or from Designated accounts, and Co-financing account. 2.4. Reporting currency and exchange rate methodology Uzbekistan's national currency is Uzbek Soum (UZS). IDA Fund's 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 two Designated Accounts: USD and UZS (IDA Credit No.5679-UZ) for financing eligible expenditures within IDA's share. The Project also has Co-financing Account for financing Project's expenditures by GOU. For preparing Project's financial statements the following principles of foreign exchange rate conversion used: * for receipts and expenses in local currency (UZS) attributed to co-financing, the rate of Central Bank of Uzbekistan (CBU) effective at the date of receipt. * Co-financing of UZS expenditures from the Project Designated Account through USD exchange at the CBU exchange rate effective on the date of payment. * for IDA funds, expenses in UZS are restated in USD at the acquiring commercial bank exchange rate, effective on the date of conversion. * UZS balances of Project bank accounts are revalued at the official exchange rate of PIU effective at the reporting date. As at 31 December 2018 the CBU's UZS to USD official exchange rate was UZS 8,339.55 / USD 1. "Regional Roads Development Project" IDA Credit No. 5679-UZ 15 3. Presented financial statements Project Financial Statements are prepared by the Management of the PIU, which coordinates implementation of the Project based on the Uzbekistan Presidential Resolution No.2611 dated 23 September 2016. The Project Special Purpose Financial Statements have been signed for and on behalf of PIU Director Mr. N. Fayzullaev, and Accounting specialist of PIU Ms. M. Sattorova on 14 February 2019. The Project Financial Statements have been prepared in line with IPSAS based on the cash flow method: 3.1. Statement of Sources and Uses of Funds This Statement details information of the reporting period on financing and uses of funds of the Project by sources controlling by PIU. During the reported period, the Project was funded: / by IDA in the amount of USD 460,000.00 - financing USD 360,000.00 made under Direct Payments Procedure (pis. see Note 9) and USD 100,000.00 are the replenishment of the Project USD Designated Account under the SOE Procedure (pis. see Note 6); / by GOU counterpart financing for the amount of USD 34,430.74 - in cash funds to cover the Project recurrent costs in the amount of USD 25,302.83 (pis. see Note 12) and expenses at financial costs at the amount of USD 9,127.91. The total Project expenditures for the reporting period amount USD 526,697.58 including IDA Funds USD 492,262.74, GOU Funds USD 34,430.74 and exchange rate difference in the amount of USD 4,10. 3.2. Statement of Uses of Funds by Project Components This Statement has detailed the information on the Expenditures of the Project Reported Period by the Project categories by all sources of revenues. During the reported period, the Project was expended: / by IDA in the amount of USD 492,262.74 - expenses USD 360,000.00 under category < incurred under the Direct Payments Procedure (pis. see Note 9) and expenses USD 132,262.74 under category <> incurred under the SOE Procedure (pis. see Note 6); / by GOU co-financing for total of USD 34,430.74 - Project Management costs (Single Social Payment) in the amount of USD 25,302.83 (pis. see Note 12) and financial costs in the amount of USD 9,127.91. 3.3. Statement of SOE This Statement has detailed the information Statement of Expenditures of the Project Reported Period withdrawn to IDA. 3.4. Balance Sheet This report includes data on the accumulated Project funds, financing and cumulative Project expenditures as on December 31, 2018. 3.5. Reconciliation Statement for the Balance of the Project's Accounts This report documents information on the verification of IDA-financed with actual Project expenditures. 4. Cash and cash equivalents The PIU opened two bank accounts in the National Bank of Uzbekistan. The Project's accounts and their purposes are listed below: "Regional Roads Development Project" IDA Credit No.5679-UZ 16 4.1. Project's Designated Accounts The Project has two Designated Accounts: USD and UZS (IDA Credit No.5679-UZ) for financing eligible expenditures within IDA's share. The Project's Designated Accounts purposes are listed below: Project's USD Designated Account USD Designated Account was opened by PIU on 24 December 2016 - on the date of the first IDA disbursement. From 1st January 2018 through 31st December 2018 the total IDA disbursement was USD 100,000.00. USD Designated account USD 99,989.00, exclusive bank charges of USD 11.00. USD 131,210.00 was transferred to the Project Designated Account in UZS (exchange transaction) to cover eligible Project costs. Project's UZS Designated Account PlU's UZS Designated account was opened on 21st August 2015 for financing Project eligible costs. Total costs covered from the PIU's UZS Designated account over the reporting period was USD 132,255.84, including exchange rate difference of USD 4.10. 4.2. Project's Co-financing Account Co-financing account is used to cover expenditures, funded by the Government. This account receives remittances from the Republican Road Fund accounts. Total amount of Government financing of the Single Social Payment expenses for the period from 1 January 2018 to 31 December 2018 comprised USD 25,302.83 in UZS equivalent. The total amount of expenditures, incurred for the reporting period from the Co-financing account is USD 25,302.83. Balances of the Project's bank accounts are reflected in the following table: Account currency 000' UZS USD Balance as at January 1, 2018 Project's UZS Designated Account 8 677,52 8 677,52 1 068,65 Projects USD Designated Account 68 199,00 553 780,65 68 199,00 Total Project Funds as at January 1, 2018 562458,17 69 267,65 Balance as at December 31, 2018 Project's UZS Designated Account 190,21 190,21 22,81 Project's USD Designated Account 36 978,00 308 379,88 36 978,00 Total Project Funds as at December 31, 2018 308 570,09 37 000,81 5. Fixed Assets The fixed assets of the Project consist of office equipment, furniture and other purchased for the use of PIU for the period of the Project implementation. Cost of the fixed assets includes purchase price and other direct acquisition costs (custom duties and consumables).Costs of current refurbishment and maintenance are accounted when they occur and entered in the Accounts as Project expenditures. Fixed assets administered by the PIU and procured from the Project funds are structured as following: Office equipment Furniture Vehicles Others Total At 1 January 2018 10 318,60 6 008,71 - 232,67 16 559,98 Purchase - 18 083,34 - 18 083,34 Disposal At 31 December 2018 10 318,60 6 008,71 18 083,34 232,67 34643,32 During the reporting period, the Project has procured car in amount USD 18,083.34. N M "Regional Roads Development Project" IDA Credit No. 5679-UZ 17 6. Statement of Expenditure (SOE) procedures SOE procedure used by the Project to replenish funds to the Designated Account in accordance with the conditions of the Financing Agreement and IDA Guidelines' requirements. Summary of expenditures under the SOE procedures for the period 1 January 2018 till 31 December 2018 is stated in the following table: Total Amount reported under SOEs for 2018 132 262,74 Less expenditures no submitted to IDA on 31 December 2018 (132 262,74) Less: historical expenditure for SOE No.2 submitted to IDA in 2018 230 732,35 Less: expenditure are netted off IDA on the account of advance payment as per SOE No.2 (130 732,35) Subtotal 100 000,00 Of which: replenished to Designated Account 100000,00 Subtotal 100 000,00 Difference 0,00 7. Project budget performance Cumulative from the beginning of the Project IDA FUNDS Advance Payment 400 000,00 Direct Payments 360 000,00 Total Financing by IDA Funds 760 000,00 Total budget by IDA Funds 200 000 000,00 Financing percentage of IDA Funds 0,38% GOU FUNDS GOU counterpart financing in cash 68259,51 Financial costs in the investment period 14 738,57 GOU in kind contribution 0,00 Total GOU Financing 82 998,08 Total budget in cash 15187500,00 Percentage of cash financing 0,55% Total GOU Budget 40 000 000,00 Total Percentage of GOU Financing 0,21% Total Project Financing 842 998,08 Total Project Budget 240 000 000,00 Total Percentage of Project Financing 0,35% ......N............ ......... "Regional Roads Development Project" 18 IDA Credit No.5679-UZ 8. Budget performance on the financing the Project expenditures I Disbursements Cumulative from the 2018 beginning of the Project IDA FUNDS I Rehabilitation of Regional Roads 360 000,00 360000,00 2. Road sector Institutional Strengthening 0,00 0,00 3. Project Management 132 262,74 362 995,09 4. Unallocated 0,00 0,00 Total Project Expenditures by IDA Funds 492 262,74 722995,09 Total budget by IDA Funds 37 314 200,00 200 000 000,00 IDA Funds disbursement rate 1,32% 0,36% GOU FUNDS 1. Rehabilitation of Regional Roads 0,00 0,00 3. Project Management 25 302,83 68 259,51 Financial costs in the investment period 9 127,91 14738,57 GOU in kind contribution 0,00 0,00 Total Project Expenditures by GOU Funds 34430,74 82998,08 Total budget in cash expenditures 2 122 900,00 15 187 500,00 Cash disbursement rate 1,62% 0,55% Total budget of exemptions from taxes and duties 6848100,00 24 812 500,00 Non-cash disbursement rate 0,00% 0,00% Total budget by GOU Funds 8971 000,00 40 000 000,00 GOU funds disbursement rate 0,38% 0,21% Total Project Expenditures 526 693,48 805993,17 Total Project Budget 46 285 200,00 240 000 000,00 Project disbursement rate 1,14% 0,34% *In September 2017 due to introduction of the Foreign Exchange Policy by the GOU emerged the need to adjust the cost of capital construction and re-bidding. As an outcome of additional works for contracting new contractors the 2017 and 2018 budget performance was transferred to the next reporting periods. 9. Direct payment procedures The List of Direct payments made by the Project for the period from January 1, 2018 to December 31, 2018 is M summarized below: USD No. Application Supplier Category Amount 3 KUNHWA ENGINEERING AND Rehabilitation of Regional Roads 360 000,00 CONSULTING Total 360 000,00 10. Cumulative Expenditures On 31 December 2018 cumulative project expenditures include Direct payments to the suppliers of goods (works and services), expenditures from the Project Designated Accounts and from the Co-financing account. "Regional Roads Development Project" IDA Credit No.5679-UZ 19 USD --Cunulative fromi tihe Project Expenditures Note C uive rt beginning of thePojc Direct payments 9 360 000,00 Payments from the Project Designated Accounts 8 362995,09 Expenditures of the counterpart financing 8 82998,08 Exchange rate difference 4,10 Total Cumulative Expenditures 805 997,27 11. Taxes Services and goods acquired from IDA funds are exempted from all taxes and levies based on Tax Code of the Republic of Uzbekistan. 12. Statement of Project's Co-financing Account Account No: 2340 2000 3001 0000 1010 00014 Depositary bank: Treasury Ministry of Finance of the Republic of Uzbekistan Address: 5, Mustaqillik Avenue, Tashkent, Uzbekistan Related Credit 5679-UZ Currency: UZS USD 000' UZS Balance as at 1 January, 2018 0,00 0,00 N Inflow: Road Fund Financing 25 302,83 205 797,44 Total Inflow: 25 302,83 205 797,44 Outflow: Expenses on related categories 25 302,83 205 797,44 Total Outflow: 25 302,83 205 797,44 Balance as at December 31, 2018 0,00 0,00 N N N