Belcomtehinvest State Enterprise Special purpose financial statements under Additional Financing for Water Supply and Sanitation Project No. 8352-BY for the period from January 1, 2018 to December 31, 2018 Minsk |12019 Additional Financing for Water Supply and Sanitation Project Loan No. 8352-BY TABLE OF CONTENTS STATEMENT ON THE MANAGEMENTS RESPONSIBILITY FOR PREPARATION AND APPROVAL OF THE SPECIAL PURPOSE FINANCIAL STATEMENTS UNDER THE PROJECT FOR THE PERIOD FROM JANUARY 01, 2018 TO DECEMBER 31, 2018................................................................................3 INDEPENDENT AUDITOR'S OPINION ..............................................IN....................................................... 4 PROJECT SOURCES AND USES OF FUNDS STATEMENT FOR THE PERIOD FROM JANUARY 1, 2018 TO D EC EM BER 31, 2018....................................... ................................................................... . 7 USES OF FUNDS FOR THE PERIOD FROM JANUARY 1, 2018 TO DECEMBER 31, 2018 8 STATEMENT OF WITHDRAWAL FOR THE PERIOD FROM JANUARY 1, 2018 TO DECEMBER 31, 2 0 18 ..................................................................... ............ ....................................................................201. 12 DESIGNATED ACCOUNT STATEMENT FOR THE PERIOD FROM JANUARY 1, 2018 TO DECEMBER 3 1 , 2 0 18 .................................................... .....- - .. .. -....... . . . .......................................................... 13 NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS FOR THE PERIOD FROM JANUARY 1, 2018 TO D EEM BER 31, 2018 ..................................................E.B. ...................................................... 14 Additional Financing for Water Supply and Sanitation Project Loan No. 8352-BY STATEMENT ON THE MANAGEMENT'S RESPONSIBILITY FOR PREPARATION AND APPROVAL OF THE SPECIAL PURPOSE FINANCIAL STATEMENTS UNDER THE PROJECT FOR THE PERIOD FROM JANUARY 01, 2018 TO DECEMBER 31, 2018 The Management of is responsible for preparation of the special purpose financial statements under the Additional Financing for Water Supply and Sanitation Project (hereinafter - the Project) being implemented by Belcomtehinvest State Enterprise, that present fairly in all material respects the financial g position of the Project as at December 31, 2018, as well as funds received and used under the Project for the period from January 01, 2018 to December 31, 2018 in accordance with the International Public Sector Accounting Standards (IPSAS). While preparing the special purpose financial statements under the Project, the Management is responsible for: * adequate choice and application of accounting policies' principles; * presentation of information including that on accounting policies in a form which ensures relevance, reliability, comparability and transparency of such information; * compliance with the requirements of IPSAS and disclosure of all significant deviations from IPSAS in the Notes to the special purpose financial statements under the Project. The Management is also responsible for: * development, introduction and maintaining of effective and reliable internal control system under the Project; * maintenance of accounting in a form that allows to address the substance and explain transactions under the Project, and also to provide information of sufficient accuracy on the financial position of the Project at any date and ensure compliance with IPSAS; * taking all possible reasonable steps to safeguard of the assets of the Project; * detecting and preventing facts of financial and other irregularities. The present special purpose financial statements under the Project for the period from January 01, 2018 to December 31, 2018 were approved by the Management on May 31, 2019. On behalf of the Management: V.L. Morozov M.E. Obrazova Director Chief Accountant 3 FBK-BEL LLC PKF Our ref. No. 05-01/172 of June 14, 2019 INDEPENDENT AUDITOR'S OPINION To the Management of the Water Supply and Sanitation Project and Belcomtehinvest State Enterprise. Opinion We have audited the special purpose financial statements under the Water Supply and Sanitation Project financed by the International Bank for Reconstruction and Development (hereinafter - IBRD) according to Loan Agreement No. 8352-BY of April 8, 2014 between the Republic of Belarus and IBRD (hereinafter - the Agreement) that include Project Sources and Uses of Funds Statement, Uses of Funds, Statement of Withdrawal and Designated Account Statement as at December 31, 2018 and for the period from January 01, 2018 to December 31, 2018, as well as notes to the special purpose financial statements including disclosure of the fundamental principles of the accounting policies. In our opinion, the accompanying special purpose financial statements under the Project fairly in all material respects represent the financial position of the Project as at December 31, 2018, as well as received and used Project funds for the period from January 01, 2018 to December 31, 2018 in accordance with the International Public Sector Accounting Standard "Financial Reporting under the Cash Basis of Accounting" developed by the International Public Sector Accounting Standards Board of the International Federation of Accountants. Basis for Opinion We conducted our audit in accordance with the requirements of Law of the Republic of Belarus of July 12, 2013 "On Auditing Activity", the National Rules on Auditing Activities effective in the Republic of Belarus, the International Standards on Auditing (hereinafter - "ISAs"). Our responsibilities under these standards are further described in the section "Auditor's Responsibilities for the Audit of the Special Purpose Financial Statements" of this Auditors Report. We are independent of Belcomtehinvest State Enterprise in accordance with the Code of Ethics for Professional Accountants of the Intemational Ethics Standards Board for Accountants ("IESBA Code"), and we have fulfilled our other ethical responsibilities in accordance with the IESSA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Restriction on Distribution and Use This Auditors Report is intended solely for the use of Belcomtehinvest State Enterprise for presentation of information to IBRD on the Project funds received and used. This Auditor's Report is not intended for the use of third parties, and we do not bear any responsibility or liability to any other parties Belcomtehinvest State Enterprise in respect of this Auditor's Report. In case of taking a decision by such parties based on the contents of this Auditor's Report, the third parties are liable for such decisions. FBK-Bel Limited Liability Company 201-22A Logoisky highway I Minsk 1 220090 I Republic of Belarus Tellfax +375 (17) 355 42 23 | E-mail fbk@fbk.by I www.fbk.by TIN 690398039 FBK.Bel LLC is a member firm of the PKF International Limited family of legally independent firms and does not accapt any responsibility or liability for the actions or inactions of any individual member or conespondent firm or firms, 4 FBK-BEL LLC Pci Responsibilities of the Management and Those Charged with Governance for the Special Purpose Financial Statements under the Project The Management of the Project is responsible for preparation and fair presentation of the special purpose financial statements under the Project prepared in accordance with the International Public Sector Accounting Standard "Financial Reporting under the Cash Basis of Accounting" developed by the International Public Sector Accounting Standards Board of the International Federation of Accountants and for the internal control system that the Management considers necessary for preparation of the special purpose financial statements under the Project that is free from material misstatement, whether due to fraud or error. Auditor's Responsibilities for the Audit of the Special Purpose Financial Statements under the Project Our objective is to obtain reasonable assurance on whether the special purpose financial statements are free from material misstatement, whether due to fraud or error, and to issue an auditors 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 the 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 economic decisions of users taken on basis of these special purpose financial statements. Within the frames of the audit held in accordance with the ISAs, we apply professional judgment and maintain professional skepticism throughout the audit. We also: * identify and assess the risks of material misstatement of the special purpose financial statements whether due to fraud or error; design and perform audit procedures responsive to those risks; 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 that resulting from an error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control system; * obtain an understanding of the internal control system 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 internal control system; * evaluate appropriateness of the accounting policies used and reasonableness of accounting estimates and related disclosures made by the Management; * evaluate presentation of the special purpose financial statements as a whole, their structure and contents, including disclosures, as well as whether the special purpose financial statements present the underlying transactions and events in a manner that ensures their reliable representation. FBK-BEL LLC PKF We communicate with the Management and those charged with governance regarding, among other matters, the planned scope and timing of f1p audit as well as significant audit findings, including any significant deficiencies in the internal control 1ystem that we identify in the course of the audit. A Director A.G. Reneisky June 14, 2019 Audited organisation: Belcomtehinvest State Enterprise; office 220, 25 Kalvarijskaya st., Minsk, 220079, the Republic of Belarus; State registration: was registered by Minsk Municipal Executive Committee on September 9, 2008 in the Unified State Register of legal entities and individual entrepreneurs under No. 191061556; Taxpayers identification number - 191061556. Auditing organisation: FBK-Bel Limited Liability Company (FBK-Bel LLC); office 201, 22A Logoisky highway, Minsk, 220090, Republic of Belarus; State registration: was registered by Minsk City Executive Committee on February 6, 2009 in the Unified State Register of legal entities and individual entrepreneurs under No.690398039; Taxpayer's identification number - 690398039. Additional Financing for Water Supply and Sanitation Project Loan No. 8352-BY PROJECT SOURCES AND USES OF FUNDS STATEMENT FOR THE PERIOD FROM JANUARY 1, 2018 TO DECEMBER 31, 2018 (in US Dollars) Period Cumulative from January 1, 2018 to December 31, 2018 OPENING CASH BALANCES Designated account 31 Current BYN account statement 0 TOTAL 31 PLUS: SOURCES OF FUNDS IBRD/IDA: 39 776 675 82 000 490 TOTAL FINANCING 39 776 675 82 000 490 LESS: EXPENDITURES BY COMPONENTS Additional Financing for Water Supply and Sanitation 38132948 78678588 Project Support to the Preparation and Sustainability of 359174 1 799883 Investments Capacity Building, Project Implementation and 29201 41636 Management, Monitoring and Evaluation Front-end Fee of the Bank 225 000 TOTAL EXPENDITURES 38521323 80745107 CLOSING CASH BALANCES Designated account 1 255 383 Current BYN account statement 0 TOTAL 1 255 383 On behalf of the Management: V1L. Morozov M.E. Obrazova Director Chief Accountant Belcomtehinvest State Enterprise Belcomtehinvest State Enterprise Notes on pages 14-15 are an integral part of the present special purpose financial statements 7 Additional Financing for Water Supply and Sanitation Project Loan No. 8352-BY USES OF FUNDS FOR THE PERIOD FROM JANUARY 1, 2018 TO DECEMBER 31, 2018 Project components/Subcomponents/Activity Period Cumulative from January 1, 2018 to December 31, Component 1: Additional Financing for Water Supply2018 and Sanitation Project 1.1. Rehabilitation of Water Supply and Sanitation 1. 1.1. Reconstruction of treatment facilities in2341 Gantsevichi, Brest Oblast, 2nd start-up complex.23048 1.1.2. Sewerage in Verkhnedvinsk 2350819 1. 1.3. Sewerage system in Glubokoe 795 577 5 584 998 1.1.4. Reconstruction and expansion of water supply networks and facilities in Rogachev. 1st start-up complex 4404 466 (stage 2) 1.1.5. Reconstruction and expansion of water supply networks and facilities in Rogachev. 2nd start-up 949978 complex (stage 2) 1.1.6. Reconstruction of the sewerage system of the sewer basin NofA Grodno. 2nd start-up comlex 78 1.1.7. Construction of waste water treatment facilities in46205748 Berezino4664056748 1.1.8. Construction of water intake with iron removal5403 station in Smolevichi. 2nd Construction Phase 1.1.9. Construction of the main sewerage collector in 796 I ~ ~ ~Mogileyv 8 9 7 6 1.1.10. Reconstruction of water supply networks and 38361533074 facilities in Shklov. Construction phase 2 and 3f38 407 5774 1.1.11. Reconstruction of water supply networks andremoval354 facilities in Bykhov. 2868r689 3s359 248 1.1.12.Construction of an iron removal station in agro- 41211 824212 town Motel of Ivanovo District 1.1.13. Construction of water supply networks in settlements Sokolniki, Senno and Ekiman, Vitebsk 706 981 1 774 442 Oblast 1.1.14. Reconstruction of water intake "Belenok" in 7710 308414 Drogichin (1 stages) 1.1.15. Reconstruction of water intake "Belenok" in1225732 Drogichin (2 stages) 6 1.1.16. Construction of new main wastewater pumping 764182 1295406 station in Gantsevichi (correction) 76 18- 9 0 1.1.17. Construction of water supply networks in 268 Krichev.2nd stage 266 086 1.1.18. Wastewater treatment facilities in Svisloch town 1 069 244 1 243 444 1.1.19. Construction of an iron removal station for underground waters at the head water intake of Rechitsa 1 111 268 2 122 418 Town 1.1.20. Construction of water supply networks in 305012 623393 Krichev. 1 nd stage 305 012 623 393 1.1.21. Sewage treatment plant in Rogachev. I 4737007 6048398 construction phase 4 737 007 6 048 398 1.1.22. Reconstruction of sewerage system in Logoisk, 3 298 056 3561 912 Notes on pages 14-15 are an integral part of the present special purpose financial staternents 8 Additional Financing for Water Supply and Sanitation Project Loan No. 8352-BY Project components/Subcomponents/Activity Period Cumulative from January 1, 2018 to December 31, 2018 _____ 3rd start-up facility 2018 1.1.23. Sumarokovo" water intake networks and 494250 639796 structures. Iron removal stations in villages. 2 phase. 494 250 639 796 1.1.24. Sumarokovo" water intake networks and 531 504 688367 structures. Iron removal stations in villages, 3 phase. 531 504 688 367 1.1.25. Construction of an iron removal station in Vyazje 90914 124039 village of Ocipovichi region. 90 914 124 039 1.1.26. Reconstruction of the sewage system in Borisov. 2nd stage. Reconstruction of 2 pressure collectors with a 2353993 2353993 diameter of 500 mm from main WWPS No.2 to the waste water treatment facilities 1.1.27. "Construction of water supply networks with iron removal station in agro-town Svatoschitsy of 261342 261 342 Dubrovensky region (1st phase)". (Project revision - cost estimates recalculation) 1.1.28. Construction of sewerage collector No.3 from Gorkogo Str. to WWPS No.3 in Bobruisk. 2 stage.- 5 393 858 5 393 858 Correction 1.1.29. Reconstruction of sewerage treatment facilities in Mstislavl22 501 22 501 1.1.30. Construction of sewerage collector No.3 from Gorkogo Str. to WWPS No.3 in Bobruisk. 1 stage. 999 752 999 752 Correction 1.1.31, Reconstruction of iron removal station in 210392 210392 residential area Farinovo of Polotsk region 1.1.32. Construction of war iron removal station in residential area Usvizh-Buk of Tolochin region 149 878 149 878 1.1.33. Construction of water intake with iron removal 154092 154092 station in residential area Bogdanovo of Senno region 154 92 14 09 1.1.34. Iron removal station in urban-type settlement 126572 126572 Obol' of Shumilino region 126 572 126 572 1.1.35. Construction of water supply facilities and choice of treatment technology near Molodezhnaya and 166166 166166 Uritskogo streets of Beshenkovichi municipal town of Vitebsk oblast 1.1.36. Construction of artesian well, iron removal plant, water tower and water supply networks in residential 309 908 309 908 area Koptevichi of Chashniki region 1.1.37. Construction of iron removal plant in municipal 577744 577744 town Bolbasovo 1.1.38. Water intake with iron removal station in Marina 150539 150539 Gorka, including FS (second half of retention) 150 539 150 539 1.1.39. Water supply networks and facilities of "Zaborny Gumny" residential district in Braslavl (11 construction 139 739 139 739 phase) 1.1.40. Reconstruction of water supply networks and 5727 5727 facilities in Shklov (second half of retention) 5 727 5 727 1.1.41. Reconstruction of two artesian wells with construction of iron removal plant in the settlement of 14 264 14 264 Yun'ki Postavy district 1.1.42. Construction of water supply facilities with iron removal plant in the agro-town of Zaronovo Vitebsk 23426 23 426 district Notes on pages 13-15 are an Integral part of the present special purpose financial statements g Additional Financing for Water Supply and Sanitation Project Loan No. 8352-BY Project componentslSubcomponentslActivity Period Cumulative from January 1, 2018 to December 31, 2018 Total Component 1 38132643 78678278 Component 2: Support to the Preparation and Sustainability of investments 2.1. Development of Feasibility Study, all Stages of Design and Cost-estimate Documentation and Bidding Documents, Assistance In Conduct of Bidding procedure and Bid evaluation 2.1.1. Treatment facilities of Pinsk. Modernization of 108108 240240 waste water sludge treatment system 2.1.2. Engineering and economical comparison of waste water treatment in Borovuha (construction of waste water treatment plants in Borovuha and pressure pipes 232 140 for waste water transfer at SPS-1 in Novopolotsk) and further development of design and cost-estimate 2.1.3. Reconstruction of water supply system of urban- 113060 type settlement Oktiabrsky, Gomel Oblast . 113 060 2.1.4. Construction of sewage treatment facilities in 234540 Oshmiany 234 540 2.1.5. Construction of facilities complex for waste water sludge utilization in Grodno (Municipal Utility Unitary 12 012 84 084 Enterprise "Grodnovodokanal") 2.1.6. Reconstruction and expansion of treatment 159911 facilities and sewage systems in Slutsk 159 911 2.1.7. Reconstruction of treatment facilities in Soligorsk 33752 160133 2.1.8. Construction of treatment facilities in Zaslavl 24 566 114 513 2.1.9. Reconstruction of water supply system with construction of water intake and iron removal plant in 111 892 Cherven 2.1.10. Treatment facilities of Pinsk. Modernization of waste water sludge treatment system 2.1.11. Construction of sewage treatment facilities in Oshmiany 2.1.12. Construction of facilities complex for waste water sludge utilization in Grodno (Municipal Utility Unitary Enterprise "Grodnovodokanal") 2.1.13. Reconstruction of sewage networks and facilities in Byhov 2.1.14. Water treatment and sewerage networks of Borovukha rural settlement 2.1.15. Reconstruction and expansion of facility and sewage system in Slutsk 2.1.16. Sewerage system of Zaslavl Town 2.1.17. Reconstruction of treatment facilities in Soligorsk 2.1.18. Reconstruction of water supply system of urban- type settlement Oktiabrsky, Gomel Oblast 2.1.19. Reconstruction of water supply system with construction of water intake and iron removal plant in Cherve 2.2. Investment Component Management and Monitoring of its implementation 2.2.1. Development of the Client's technical 70 059 Notes on pages 13-15 are an integral part of the present special purpose financial statements 10 Additional Financing for Water Supply and Sanitation Project Loan No. 8352-BY Project components/Subcomponents/Activity Period Cumulative from January 1, 2018 to December 31, 2018 requirements (Berezino) 2.2.2. Technical assistance in contract management 165814 222403 (Mogilev) 2.2.3. Water intake with iron removal station including Feasibility Study (Smolevichi) 2.2.4. Construction of the main sewerage collector in Mogilev Town 2.3. Activities aimed at increasing the efficiency of the work of water and sewage utilities 2.3.1. Analysis of engineering design norms with regard to practices of implementation of similar norms in European countries and development of the drafts of the relevant documents 2.3.2. Benchmarking 2.3.3. Energy audit with potential analysis at 6 Housing and Utilities enterprises 2.3.4. Individual consultant (translator) 14743 56343 Total Component 2 358995 1799318 Component 3 :Capacity Building, Project Implementation and Management, Monitoring and Evaluation 3.1. Training 3.1.1. Training of PCT specialists 24401 27222 3.2. Auditing 3.2.1. Audit of Reporting 4800 14400 3.3. Strengthening of Social Accountability regarding water and sanitation services 3.3.1. Strengthening of Social Accountability regarding water and sanitation services Total Component 3 29 201 41 622 Component 4: Front-end Fee of the Bank 4.1. Front-end Fee of the Bank 4.1.1. Front-end Fee 225,000 Total Component 4 225,000 Component 5: Bank Fee 5.1. Bank's commission free 5.1.1. Bank's commission free 484 889 Total Component 5 484 889 Total Project Expenditure 38521323 80745107 On behalf of the Management: V.L. Morozov M.E. Obrazova Director Chief Accountant Belcomtehinvest State Enterprise Belcomtehinvest State Enterprise Notes on pages 13-15 are an Integral part of the present special purpose financial statements 11 Additional Financing for Water Supply and Sanitation Project Loan No. 8352-BY STATEMENT OF WITHDRAWAL FOR THE PERIOD FROM JANUARY 1, 2018 TO DECEMBER 31, 2018 (in US Dollars) Withdrawal Date of Replenishment of Total Transaction application, withdrawal from Designated Account type No. the loan account 35 29.12.2017 2900000 2900000 DA-B 36 30.01.2018 2900000 2900000 DA-B 37 08.02.2018 2 700 000 2 700 000 DA-B 38 15.03.2018 3000 000 3 000 000 DA-B 39 26,04.2018 2 600 000 2 600 000 DA-B 40 08.06.2018 1 400 000 1 400 000 DA-B 41 11.06.2018 1500000 1 500000 DA-B 43 26.06.2018 2700000 2700000 DA-B 44 11.07.2018 1600000 1600000 DA-B 45 01.08.2018 1 900 000 1 900 000 DA-B 46 15,08.2018 1 000 000 1 000 000 DA-B 48 04.09.2018 2 900 000 2 900 000 DA-B 50 28.09.2018 2 900 000 2 900 000 DA-B 51 08.11.2018 2900000 2900000 DA-B 52 19.12.2018 2900000 2900000 DA-B Total 35 800 000 35 800 000 On behalf of the Management: V.L. Morozov M.E. Obrazova Director Chief Accountant Belcomtehinvest State Enterprise Belcomtehinvest State Enterprise Notes on pages 14-15 are an Integral part of the present special purpose financial statements 12 Additional Financing for Water Supply and Sanitation Project Loan No. 8352-BY DESIGNATED ACCOUNT STATEMENT FOR THE PERIOD FROM JANUARY 1, 2018 TO DECEMBER 31, 2018 (In US Dollars) Account No. BY93BLBB36200191061556001004 Bank Belinvesbank JSC Opening balance at January 1, 2018 31 Plus: IBRD advance during the period 35800000 Less: Amount of eligible expenditures paid during the 34538208 present period Less: Amount of funds transferred to the transit account 6 440 DA closing balance as at December 31, 2018 1255383 On behalf of the Management: V.L. Morozov M.E. Obrazova Director Chief Accountant Belcomtehinvest State Enterprise Belcomtehinvest State Enterprise Notes on pages 14-15 are an Integral part of the present special purpose financial statements 13 Additional Financing for Water Supply and Sanitation Project Loan No. 8352-BY NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS FOR THE PERIOD FROM JANUARY 1, 2018 TO DECEMBER 31, 2018 1. DESCRIPTION In accordance with the Loan Agreement, signed on April 8, 2014 between the Republic of Belarus and the International Bank for Reconstruction and Development, loan in the amount of 90 million US Dollars was granted for the development of water supply and sanitation in the territory of the Republic of Belarus (hereinafter - the Project). The Project consists of the following components: Component A: Rehabilitation of Water Supply and Sanitation Provision of goods, works and consultants' services for: (a) rehabilitation and construction of deep wells, pumping stations, transmission mains, distribution network, ground and elevated reservoirs and iron removal plants, and other water supply facilities; and (b) rehabilitation and construction of wastewater collection systems and wastewater treatment plants including upgrade of monitoring stations and laboratories, and other water sanitation facilities. Component B: Support to the Preparation and Sustainability of Investments Provision of goods and consultants' services for, inter alia: (a) (i) preparation of feasibility studies, preliminary designs and bidding documents; and (ii) carrying out of bids evaluation; all for activities under Part A of the Project and/or future investments in the water and wastewater sector; (b) construction management, including supervision, monitoring and evaluation of physical implementation of activities under Part A of the Project; and (c) development of benchmarking systems and review of design norms. Component C: Capacity Building, Project Implementation and Management, Monitoring and Evaluation (a) Provision of goods, consultants' services and training to the Project Coordination Team (PCT) to assist in the implementation, management and auditing of the Project; (b) Strengthening social accountability mechanisms on water and wastewater services through, inter alia the provision of support to: (i) Selected Water and Wastewater Service Providers to develop communication plans to improve their communication with their customers through, inter alia: (A) the development and/or update of websites; and (B) the enhancement of the information contained in existing websites and/or information displayed publicly in their premises; and (ii) strengthen existing grievance redress mechanisms to enhance service delivery. The Project is being implemented by Belcomtehinvest State Enterprise. Belcomtehinvest State Enterprise keeps accounting records and primary documents with respect of the funds transferred to its accounts. 2. ACCOUNTING POLICIES Fundamental accounting principles - these financial statements under the Project are prepared based on the cash basis which complies with the International Public Sector Accounting Standards developed by the International Public Sector Accounting Standards Board of the International Federation of Accountants. Project funding is recognised to be the source of the Project funds at the moment of receipt of the funds. Project costs are recognised to be the use of Project funds at the moment of effecting the payment. Transactions in foreign currencies - these financial statements are presented in US Dollars unless otherwise stated. Transactions in other currencies are translated into US Dollars at the exchange rate 14 Additional Financing for Water Supply and Sanitation Project Loan No. 8352-BY effective at the date of a transaction. Basis for preparation of the financial statements is the accounting data of Belcomtehinvest State Enterprise. Accounting for transactions under the Project is separated from accounting for funds of other funding sources of Belcomtehinvest State Enterprise. 3. DESIGNATED ACCOUNT Designated account is an account in US Dollars in GOPERU Belinvestbank JSC (the Republic of Belarus), intended to control payments related to the Project implementation in the established amounts that do not require separate approval by IBRD in accordance with the terms of the Agreement 4. SETTLEMENT ACCOUNT IN BYN This is an account in BYN for credit, storage of funds received from sale of foreign currency - loan funds. 5. BASIS FOR FINANCING Expenses of Category 1 (Goods, works and consulting services) in the amount of 100% are financed from proceeds of the IBRD Loan. Category 2 represents a Front-end Fee in the amount of 225 thousand US Dollars withheld by IBRD for its own benefit from the loan account in accordance with the Agreement. The allocation of the Loan by types of expenses covered is presented as follows: Category of expenses Loan amount Category 1 Goods, works and consulting services 89 775 000.00 Category 2 Front-end Fee 225 000.00 Total 90 000 000.00 The aforementioned planned indicators are established for the whole Project period as a whole, therefore they are not presented in comparison with actual expenses for the period from January 1, 2018 to December 31, 2018. 6. WITHDRAWAL METHOD Withdrawal methods used within the reporting period include transfers from IBRD to the Designated Account with further withdrawal by Belcomtehinvest State Enterprise and direct payments executed by IBRD on behalf of Belcomtehinvest State Enterprise based on provided withdrawal applications. 7. RECONCILIATION OF FINANCING RECEIVED FROM IBRD, WITH THE ACTUAL EXPENDITURES OF THE PROJECT Withdrawal applications Expenses incurred from January 1, 2018 to December 31, 2018 38 521 323 Total expenses Incurred for the period from January 1, 2018 to 38 521 323 December 31, 2018 Funds received from IBRD for the period from January 1, 2018 to December 31, 2018: Replenishment of the Designated Account 35 800 000 Direct payments 3 976 675 Plus: Balance on the Designated Account at January 1, 2018 31 Plus: Current BYN Account Statement at January 1, 2018 0 Less: Balance on the Designated Account at December 31, 2018 1 255 383 Less: Current BYN Account Statement at December 31, 2018 0 Total expenses Incurred for the period from January 1, 2018 to 38 521 323 December 31, 2018 15 FB*-Bel LLC Numbe tied together (iftee ts A.G. Reneisky