OFFICIAL cO- 3 -V The World Bank 8 S . ' (202) 473-1000 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT F F A Cable Address: INTBAFRAD INTERNATIONAL DEVELOPMENT ASSOCIATION . . Cable Address: INDEVAS A ri I 2..- , 2014 Governor or a Deputy Governor of State Bank of Vietnam State Bank of Vietnam 49 Lf ThAi T6 Hanoi Vietnam Re: IDA Financinig 5330-VN (Vietnam- Central Hig!hlands Poverty Reduction Project) Additional Instructions: Disbursement Letter Excellency: I refer to the Financing Agreement between the International Development Association ("Association") and the Socialist Republic of Vietnam ("Recipient") for the above-referenced Project, dated I 2-i, Z.oVq. The Financing Agreement provides that the Association may issue additional instructions regarding the withdrawal of the proceeds of IDA Financing 5330-VN ("Financing"). This letter ("Disbursement Letter"), as revised from time to time, constitutes the additional instructions. The attached World Bank Disbursement Guidelines for Projects, dated May 1, 2006, ("Disbursement Guidelines") (Attachment 1), are an integral part of this Disbursement Letter. The manner in which the provisions in the Disbursement Guidelines apply to the Financing is specified below. Sections and subsections in parentheses below refer to the relevant sections and subsections in the Disbursement Guidelines and, unless otherwise defined in this letter, the capitalized terms used have the meanings ascribed to them in the Disbursement Guidelines. L Disbursement Arrang-ements (i) Disbursement Methods (section 2). The following Disbursement Methods may be used under the Financing: * Reimbursement * Advance * Direct Payment * Special Commitment (ii) Disbursement Deadline Date (subsection 3.7). The Disbursement Deadline Date is four months after the Closing Date specified in the Financing Agreement. Any changes to this date will be notified by the Association. II. Withdrawal of Financing Proceeds (i) Authorized Signatures (subsection 3.1). An authorized signatory letter in the Form attached (Attachment 2) should be furnished to the Association at the address indicated below providing the name(s) and specimen signature(s) of the official(s) authorized to sign Applications: Page 1 of 31 The World Bank 8th Floor 63 Ly Thai To Street Ha Noi, Vietnam Attention: Ms. Victoria Kwakwa, Country Director, Vietnam (ii) Applications (subsections 3.2 - 3.3). Please provide completed and signed (a) Applications for withdrawal, together with supporting documents, and (b) Applications for Special Commitments, together with a copy of the commercial bank letter of credit, to the address indicated below: The World Bank 26th Floor, One Global Place 5th Avenue Corner 25th Street Bonifacio Global City Taguig City, Philippines 1634 Attention: Loan Department (iii) Electronic Delivery (subsection 3.4). The Association may pennit the Recipient to electronically deliver to the Association Applications (with supporting documents) through the Association's Client Connection, web-based portal. The option to deliver Applications to the Association by electronic means may be effected if: (a) the Recipient has designated in writing, pursuant to the terms of subparagraph (i) of this Section, its officials who are authorized to sign and deliver Applications and to receive secure identification credentials ("SIDC") from the Association for the purpose of delivering such Applications by electronic means; and (b) all such officials designated by the Recipient have registered as users of Client Connection. If the Association agrees, the Association will provide the Recipient with SIDC for the designated officials. Following which, the designated officials may deliver Applications electronically by completing Form 2380, which is accessible through Client Connection (https://clientconnection.worldbank.org). The Recipient may continue to exercise the option of preparing and delivering Applications in paper form. The Association reserves the right and may, in its sole discretion, temporarily or permanently disallow the electronic delivery of Applications by the Recipient. (iv) Terms and Conditions of Use of SIDC to Process Applications. By designating officials to use SIDC and by choosing to deliver the Applications electronically, the Recipient confirms through the authorized signatory letter its agreement to: (a) abide by the Terms and Conditions of Use of Secure Identification Credentials in connection with Use of Electronic Means to Process Applications and Supporting Documentation ("Terms and Conditions of Use of Secure Identification Credentials") provided in Attachment 3; and (b) to cause such officials to abide by those terms and conditions. (v) Minimum Value of Applications (subsection 3.5). The Minimum Value of Applications for Reimbursement, Direct Payment and Special Commitment are as follows: CPO United States Dollars (USD) 170,000 equivalent, Dak Lak PPMU-USD 570,000 equivalent, Dak Nong PPMU -USD 380,000 equivalent, Kon Tum PPMU -USD 470,000 equivalent, Gia Lai PPMU -USD 540,000 equivalent, Quang Nam PPMU - USD 210,000 equivalent and Quang Ngai PPMU -USD 300,000 equivalent. (vi) Advances (sections 5 and 6). Type ofDesignated Accounts (subsection 5.3): 7 Segregated Designated Accounts as follows: CPO, Dak Lak PPMU, Dak Nong PPMU, Kon Turn PPMU, Gia Lai PPMU, Quang Nam PPMU and Quang Ngai PPMU Page 2 of 31 * Currency ofDesignated Accounts (subsection 5.4): United States Dollars * Financial Institution at which the Designated Accounts Will Be Opened (subsection 5.5): A commercial bank / financial institution acceptable to the Association * Ceiling (subsection 6.1): CPO USD 1.7 million, Dak Lak PPMU-USD 5.7 million, Dak Nong PPMU -USD 3.8 million, Kon Turn PPMU -USD 4.7 million, Gia Lai PPMU -USD 5.4 million, Quang Nam PPMU -USD 2.1 million and Quang Ngai PPMU -USD 3 million III. Reporting on Use of Financing Proceeds (i) Supporting Documentation (section 4). Supporting documentation should be provided with each Application for withdrawal as set out below: * For requests for Reimbursement: 0 Customized Statement of Expenditure in the form attached (Attachment 4) for all expenditures paid under Category (2) of Schedule 2, Section IV.A.2. of the Financing Agreement. o Statement of Expenditure in the form attached (Attachment 5) for all expenditures/contracts incurred under Category (1) of Schedule 2, Section IV.A.2. of the Financing Agreement, that are not subject to the Association's prior review. o List of payments against contracts incurred under Category (1) of Schedule 2, Section IV.A.2. of the Financing Agreement, that are subject to the Association's prior review, in the form attached (Attachment 6) together with Records evidencing eligible expenditures (e.g., copies of receipts, supplier invoices, bills of lading). * For reporting Eligible Expenditures paid from the Designated Accounts: 0 Customized Statement of Expenditure in the form attached (Attachment 4) for all expenditures paid under Category (2) of Schedule 2, Section IV.A.2. of the Financing Agreement. o Statement of Expenditure in the form attached (Attachment 5) for all expenditures/contracts incurred under Category (1) of Schedule 2, Section IV.A.2. of the Financing Agreement, that are not subject to the Association's prior review. o List of payments against contracts incurred under Category (1) of Schedule 2, Section IV.A.2. of the Financing Agreement, that are subject to the Association's prior review, in the form attached (Attachment 6) together with Records evidencing eligible expenditures (e.g., copies of receipts, supplier invoices, bills of lading). o Designated Account reconciliation statement (Attachment 7) with bank statement(s). * For requests for Direct Payment: o Records evidencing eligible expenditures, e.g., copies of receipts, supplier invoices. (ii) Frequency of Reporting Eligible Expenditures Paid from the Designated Accounts (subsection 6.3): Quarterly Page 3 of 31 IV. Other Important Information For additional information on disbursement arrangements, please refer to the Disbursement Handbook available on the Association's public website at http://www.worldbank.org and its secure website "Client Connection" at http://clientconnection.worldbank.org. Print copies are available upon request. If you have not already done so, the Association recommends that you register as a user of the Client Connection website (https://clientconnection.worldbank.org). From this website you will be able to download Applications, monitor the near real-time status of the Financing, and retrieve related policy, financial, and procurement information. All Recipient officials authorized to sign and deliver Applications by electronic means are required to register with Client Connection before electronic delivery can be affected. For more information about the website and registration arrangements, please contact the Association at . If you have any queries in relation to the above, please contact us at ctrln-manila@worldbank.org using the above Project name and Financing number as a reference in the subject line. Yours sincerely, Victoria Kwakwa Country Director, Vietnam East Asia and Pacific Region Attachments 1. World Bank Disbursement Guidelines for Projects, dated May 1, 2006 2. Form for Authorized Signatures 3. Terms and Conditions of Use of Secure Identification Credentials in connection with Use of Electronic Means to Process Applications and Supporting Documentation, dated March 1, 2013 4. Form of Customized Statement of Expenditure for Category 2 5. Form of Statement of Expenditure for Category 1. 6. Form of Payments Against Contracts Subject to the Association's Prior Review. 7. Form of Designated Account Reconciliation Statement. Page 4 of 31 Attachment 1 THE WORLD BANK DISBURSEMENT GUIDELINES FOR PROJECTS MAY 2006 Page 5 of 31 WORLD BANK DISBURSEMENT GUIDELINES FOR PROJECTS LOAN DEPARTMENT May 1, 2006 Page 6 of 31 Copyright l 20 l [Le Inte-rnational Ikuik for Recorist nictior arn 1)evelopnient liI. INOR1L) BANK sis Il SiTeel. N.WV Wasingto. I).C. 210133. ( S.A- l irst Pritititig: July 2MIt) Page 7 of 31 CONTENTS Page I. Purpose ...........e ...... 2. Disbursement Methods ............ ....... 6 3. Withdrawal of Loan Proceeds ..................... 6 4. Supporting Documentation Requirements ........ 9 5. Designated Accounts.. ......................... 10 6. Terms and Conditions Applicable to Advances ........12 7. Ineligible Expenditures ........................... 14 S. Refinds ....................................... 3 31 Page 8 of 31 4 Page 9 of 31 World Bank Disbursement Guidelines for Projects May 1, 2006 1. Purpose 1.1 Flie purpose of these Guidelines is to set out the Bank's procedures for disbursement, of loan proceeds for projeets.' Specifically. the Guidelines explain (a) the different rietho(s used by the Bank to disburse loan proceedis. (b) the require- iments for withdrawal from Ihe Loan Account, .() the types of supporting (lolrnenitation that the borrower nay be re- (uired to provide to demontstrate the use of loan proceeds for eligible expendit ures, (d) the criteria for establishing des- igiated accounts. (e) the terins and conditions applicable to advances, (f the types of actions that the Bank imay take if it deterinines that loaI proceeds are not neecded or have been used for ineligible purposes. and (g) the consequence of refutinds. 'Ak"ik- includes 111111) and I)A: Ioan~ includes vredit and grant:"bor- rower~ iiciludes the borrower of an IBRI) loan, l)A credit. or Projet Prepa- ralion I acility advance and tfie recpient of a grant and iloan Agreement' includes the agr(Tieimt with the Bank providing for a vreit, grant. or ad- vanc. IIese )isbursement Guidelines applv to all loans, credits. advatices under fie Project Preparat ion atilil y and granits fmanced under t he In- stiltutional l)eelopment lud and Clobal Iiviroitent läcility unless oth- erwise provided in Operational Policv 10,210, Ghd actnrmnno l aidinj opt mwn |fort hcorning hese cuidelines also apply to other reipient- execeld grants frialed from trust funds unless. exceptionally. the terins of he agreenent with the donior make provision for different requiremneti s. I hey do not applv o I)evelopment Policy loans. 5P Page 10 of 31 2. Disbursement Methods 2.1 1 he Bank establshes disburseient arrangements for an op- eration iii consiltation with the borrower and taking into onsid1erati j mur eralir. an assessient of the borrower's fiancial management and procureient arrangements, the )rocureniii plain and cash flow needs of the operation. and its disbursement exiene wiith the borrower. 2.2 lie Bank disburses proceeds from the Loan Accouut est ab- lished for each loan. i o or on lhe order of the borrower. using one or more of he disbursement met hods set forth below. as deterinined by the Bank. (a) Reimbursement: Ilhe Bank may reimburse the bor- rower for expenditures eligible for fmnancing pursuant to the Loan Agreeient (~eligible expenditures ) that the borrower has prefinanced from its own resources. (b) Advance: 1 he Bank may advance loan proeceds into a designated accoilut of the borrower to finance eligible expenditures as they are incurred and for which sup- porting dociuent s will be provided at a later date (see section 5. "Designated Accournts"1. (c) Direct Payment: The Bank may make payments. at the borrower's request, directly to a third party eg. supplier. contractor. consultant'l for eligible expendi- tures. (d) Special Commitient: Iie Bank may pay amounts to a third party for eligible expenditures under special commiitients eitered into. in writing. at the borrower's request and on terns and conditions agreed between the Bank and the borrower. 3. Withdrawal of Loan Proceeds 3.1 Authorized Signatures. Before loan proceceds nay be withdrawn or cornmitted from the Loan Account. the au- | 6 Page 11 of 31 i horized represent ative of the lborrower (as desigiated in t he Loan Agreement ) nuist firnish to the Bank (a) the name s' of the officialf.s) authorized to sign applications for with- drawal and applications for a special commitment (collec- tively. -Applications") , and bI the autheit icated specimen signatureis) of the official(s]. The borrowNer iniLst indicate clearly if more than one signature is re9quired on Applica- iions and iust notify tlie Bank promiiptly of any changes in signature authoritv. 3.2 Applications. Applications nmst be provided to the Bank in such form and include such information as the Bank may reasonably request. Application forms are available onlinle froin the Client Connection Web site at http: cl ncounm c- tion. worIdbank. ory or from the Bank upon request. 3.3 For withdrawal from the Loan Account for advances. the borrower should provide an original signed application for withdrawal. For witlidrawal from the Loan Account for re- imbursements and direet payments and for reporting on the ise of advances. the borrower should provide an original signed application for withdrawal together with one copy of supporting docuinents (see seCtion I. -Supporting Doci- mentation Requirenents"). For a special commitment from the Loan Account. the borrower should provide an original signed application for a special commitment together with one copy of the letter of credit. The Bank reserves the right not to accept or review duplicate copies of Applications and supporting documents and may at its discretion return or destrov the duplicates. 3.4 Electronic Delivery. le Bank may authorize the bor- rower to ise electronic means. in a manner and on terins and conditions specified by the Bank. to deliver Applications and supporting documentation to the Bank. Applications and support ing documentation delivered in accordance with this subsection will be deemed to have been provided to the Bank for the purposes of satisfying the requirenents of sub- sctions 3.2 and 3.3 of these Guidelines. 7' Page 12 of 31 3.5 Minimum Value of Applications. The Bank est ablishes a ininimuun vale for Applications for reimuburseient . diret payiinit. and special coimmitiment. The Bank reserves the right not to accept Applications that are below such mini- m1um vahie. 3.6 Loan Disbursing Period. Thie Bank processes Appli- cations only after the Loan Agreeient has been declared effeetive in ac(cordance with the terns of the Loan Agree- mient. Tihe experditures for which the Applications are made imis be: (a) paid for i)' on or after the date of the Loan Agreement. or :ii* in the case of operations that permit retroactive fimaicin 1g. on or after the carlier date specifled in the Loan Agreement for that purpose: aid (b) incurred on or before the closing date specified or re- ferred to in the Loan Agreeinent ( C'losing Date"), ex- cept as otherwise specifically agyed with the Bank. 3.7 flie loan disbursing period ends on the fial date established by the Bank for revcipt by the Bank of applications for with- drawal and supporting doeuientation (th e ")isbursemienit Deadline Date" The Disbursement Deadline Date may be the same as the Closing Date, or up to four monthis after the Closing Date. Normally. to support orderly project comple- fion and closure of the Loan Account, the Bank does not ac- cept applications for withdrawal or suppoloring (ocumientiat ion received after the Disbursement Deadline Date. lie borrower shiould promiptly inform the Bank of any expected imiplemen- lation delays or exceptional administrative issues before these dates. Fihe Bank notifies the borrower of anv exception that the Bank may make to the [)isbursement Deadline Date. 3.8 Disbursement Conditions. If the Loan Agreement con- tains a disbursemnent condition for a specific expenditure cat- egorv. the Bank will disburse loan proceeds for that category orly after the disbursement condition has been fulfilled and the Bank has notifted thae borrower to this effeet. 18 Page 13 of 31 4. Supporting Documentation Requirements 4.1 1 Hie borrower provides support inig documenta iotii to the Bank to show that loan )roceeds have beeii or arc being used to finance eligible vxpenditures. 4.2 For sjecial coimititmeits. the commercial bank I)roviles its (onifirmation directly to the Bank that conditions for release of )ayuents conmitted for withdrawal have been iiet. 4.3 Types of Supporting Documentation. [he Baik re- (qu1ires either copies of the original documients evidenicing eligible expen(litures t 1ecords" ) or sumnary reports of ex- jeniditure f -Sunurrary Reports") iii such form aid substance as the Banik may specify. Recor(ds inclIde such documents as invoices aid receipts. A Summary Report may be either :a) the interim un-audited financial report reuired under the Loan Agremcent ("Interim Financial Report-) or (hi a statement of expenditire summuarizing eligible expenldi- tures paid during a stated period ("Statement of Expendi- tire"'. In all cases, the borrower is responsible for retaiinio the original documents evidecing eligible expenditures and iiaking them available for audit or inspectiomi. 4.4 1 he Bank determines I he types of supl)ort ing document at ion that the borrower should provide. taking into consideration the disblrsemenit method used. Tie supj)orting dociumeita- lion may be the following:' (a) For applications for reimbursement: i) Interim Financial Reports. ii) Statements of Expenditure. Iiii! Records, or iv) Records required by the tank for spe- cific expenditures and Statements of Expeneditlire for all other expenditutires: (b) For reporting on the use of advances: (i) Interim Financial Reports. 1ii) Statements of Expxiditlire. Oii Records. or (iv) Records required by the Bank for spx- cific expenditures aid Statemenits of Ex)enditlre for all other expenditures: 91 Page 14 of 31 (c) For applications for direct payments: Records: anld (d) Any other supporting documettatioi that the Baik may request by notice to the borrower. 4.5 Failure to Provide Audited Financial Statements. If the borrower fails to provide aiy of the aldited Financial Statements required in accordance with, and within the pe- riod of time specified in. the Loan Agreement. the Batik may at its discretion decide not to accept applications for with- drawal supported by Sununary Reports. even if such reports are accompanied by Records. 5. Designated Accounts 5.1 the borrower rmky open otie or more designated accounts into which the Bank may. at the borrower's request. de- posit amouits withdrawn from the Loan Account for the purpose of paying for eligible expenditures as t hey are in- curred i -Desigiiated Account"). Before the Bank authorizes establishment of a Designated Account. the borrower must have adequate administrative capability. iternal controls. and accounting and auditing procedures to ensure effective use of the Designated Account. 5.2 the Hank may decide not to permit the use of Designated Accounts in new projects if the borrower has failed to re- fund undocumented advances in the Designated Account of any other loan to. or guaraiteedX by. the borrower within two months after the Disbursemenit Deadline Date for such loan. 5.3 Type of Designated Account. A Designated Account max be established in one of the two ways set out below. as ap- propriate for the operation concerned. as determined and iiotified by the Bank. 110 Page 15 of 31 (a) Segregated A ccount: this is an account of tc borrower iinto which only proceeds of tihe loaii ima be deposited: or (b) Pooled Account: this is an accoint of the borrower inito whtich t lie loan proceeds and proceeds of other fi- nancing for the operation (e.g.. borrower resources and/ or financing by other development partners) may be de- posit ed, 5.4 Currency of the Designated Account. Designated Ac- counis must be in a curreicy acceptable to the Bank. In couit ries that have a freely convertible urrency. 1)esignat ed Accouits may be held iii the currency of the borrower or any freely convertible currecy. The Bank may also agree to local currency Designated Accounts when, in.å r alia. IIe country's currency (even if not freely convertible) is stable aid the expenditures to be fåmanced are primarily iii lo- cal currency. The borrower bears all risks associated with foreign exchaige fluctuations betiween (a) the curreicy of denominatioi of the loan and that of the borrower's Desig- nated Account. and (b) the lcurren of denominiatioi of the borrower's Designated Account and the currency or curren- cies of project expenditures. 5.5 Financial Institution. Designat ed Accouits must be opened and mainttaine(d in a financial. institution accept- able to the Bank on terms and conditions accept able to the Bank. To be acceptable to the Bank. the financial institution proposed by the borrower should geierally rneet all the fol- lowing requirements: (a) be finaicially souid: (b) be authorized to maintain the )esignated Account in the currency agreed between the Bank aid the bor- rower: (c) be audited regularly, and receive satisfactory audit re- ports: Page 16 of 31 (d) be able to execute a large ninmtber of transactions promptly: (e) be able to perform a wide range of banking services sat- isfactorily: (f) be able to provide a detailed stateieti of the Desig- nated Account: (g) be part of a satisfactory correspoin(lent bankinrig network: and (h) charge reasonable fees for its services. 5.6 [he Bank reserves the right not to accept a financial insti- tution for the opening and/or maintenance of a Designated Account if sulch institution has asserted or asserts a claim to set off. seize, or attach the proceeds of any Bank loan on deposit in a Designated Account maintainied by it. 6. Terms and Conditions Applicable to Advances 6.1 Ceiling. The Bank notifies the borrower of the maximum amuount of loan proce