REPORT ON THE IBRD LOAN ACCOUNT OF THE MINISTRY OF WATER AND FOREST LOAN (8597 - RO) FOR THE INTEGRATED NUTRIENTS POLLUTION CONTROL PROJECT FOR THE PERIOD STARTING FROM JANUARY 01th, 2018 UP TO DECEMBER 31st, 2018 MINISTRY OF WATER AND FOREST LOAN (8597 - RO) FOR THE INTEGRATED NUTRIENTS POLLUTION CONTROL 31 DECEMBER 2018 - all the amounts are expressed in EUR, unless otherwise stated IND EPEN DENT A UDITO R'S R EPO RT ....................................................................................................... 3 LIS T O F A B B R EV IA TIO N S ................................. .................................................................................... 6 G E N E R A L IN FO R MATIO N ................................................................................................................I-,.... 7 1. STATEMENT OF RESOURCES AND USES OF FUNDS .................................................................. 12 2. STATEM ENT O F EXPENDITURES ................................................................................................... 15 3. FINANCIAL STATEM ENT O F THE LOAN........................................................................................ 17 4. PROJECT COMMITMENTS AS AT 31 DECEMBER 2018................................................................ 18 5. ACCOUNTING POLICIES AND RECORDS ...................................................................................... 20 6. BANK ACCOUNTS UTILIZED WITHIN THE PROJECT,STATEMENT OF DESIGNATED ACCOUNT21 NOTES TO THE PROJECT FINANCIALSTATEMENTS .............................................................................. 23 MOORE STEPHENS MOORE STEPHENS KSC ASSURANCE SRL 175 Calea Floreasca, Floreasca Tower Building, 13th floor, District 1 Bucharest - Romania +4 0374 490 074 +4 0374 094 191 info@rmoorestephens-ksc.ro We have audited the accompanying Project Financial Statements of of the Integrated Nutrients Pollution Control Project which comprise statement of resources and uses of founds, statement of expenditures, financial statement of loan, statement of treasury account and other explanatory notes for the period January 01, 2018 - December 31, 2018. The project is funded the International Bank for Reconstruction and Development (IBRD) through the Loan no. 8597 - RO signed on April 14, 2016, ratified through the decision no. 46 on April 03, 2017. In our opinion, the accompanying Project Financial Statements for the year ended 31 December 2018 is prepared, in all material respects, in accordance with the basis of accounting procedures and to meet the requirements of the General Conditions for the loans issued by IBRD. We conducted our audit in accordance with International Standards on Auditing (ISAs), including ISA 800 "Special Considerations - Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks". Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Project Financial Statements section of our report. We are independent of the Project in accordance with ethical requirements that are relevant to our audit of the financial statements in Romania, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. We draw attention to Note 5 to the Project Financial Statements, which describes the basis of preparation. The Project Financial Statements are prepared to assist the Project to meet the requirements of the Contract. As a result, the Project Financial Statements may not be suitable for another purpose. Our report is intended solely for the UMP and IBRD, should not be distributed to parties other than the UMP or the IBRD. Our opinion is not modified in respect of this matter. Management is responsible for the preparation of the Project Financial Statements in accordance with the General Conditions for the loans issued by IBRD, and for such internal control as management determines is necessary to enable the preparation of the Statements that are free from material misstatement, whether due to fraud or error. MOORE STEPHENS In preparing the Project Financial Statements, management is responsible for assessing the UMP's ability to continue as a going concern in accordance with agreements provisions, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless management either intends to liquidate the UMP or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the UMP's financial reporting process. Our objectives are to obtain reasonable assurance about whether the Project Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue and 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 a basis of these Financial Statements. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the Project 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 and 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 Project'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 Project'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 Project Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusion are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Project to cease to continue as a going concern. MOORE STEPHENS We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and sigcant audit findings, including any significant deficiencies in internal control that we identify;during our audit. MAMAS KOUTSOYIANNIS.- registered on the Romantan Gtamber of Financial Auditors no. 1515/25.09.2003 registered with the Authority for the Public Oversight of the Statutory Audit Activity (ASPAAS) with the number AF 19 TEMP 140 / 11,02.2019 On behalf of OC STEPHENS KSC SURANCE S.R.L.: registered with the Chamber of Financial Auditors in Romania with number 1266 / 07.09.2015 registered with the Authority for the Public Oversight of the Statutory Audit Activity (ASPAAS) with the number FA 19 TEMP 29 / 11.02.2019 Bucharest, June 13, 2019 MINISTRY OF WATER AND FOREST LOAN (8597 - RO) FOR THE INTEGRATED NUTRIENTS POLLUTION CONTROL 31 DECEMBER 2018 - all the amounts are expressed in EUR, unless otherwise stated LIST OF ABBREVIATIONS GoR - Government of Romania INPCP - Integrated Nutrients Pollution Control Project INPCP-AF - Integrated Nutrients Pollution Control Project Additional Financing IBRD - International Bank for Reconstruction and Development Loan - the IBRD Loan (8597 - RO) for the Integrated Nutrients Pollution Control Project MoPF - Ministry of Public Finance MoWF - MINISTRY OF WATERS AND FORESTS PMU - Project Management Unit established within MoWF for the implementation of the INPCP MINISTRY OF WATER AND FOREST LOAN (8597 - RO) FOR THE INTEGRATED NUTRIENTS POLLUTION CONTROL 31 DECEMBER 2018 - all the amounts are expressed in EUR, unless otherwise stated GENERAL INFORMATION Reporting entity The Project is implemented by the Ministry of Water and Forest of Romania by means of the PMU within the entity. Loan Agreement The Government of Romania implemented starting with 2008 the "Integrated Nutrients Pollution Control Project" - the Original Project (INPCP), having a total value of EUR 60 million, financed through an International Bank for Reconstruction and Development loan, a Global Environmental Facility grant and local funds. The INPCP became effective on December 8, 2008 for a total IBRD loan of EUR 50 million (LN 4873-RO) and GEF Grant of US$5.5 million (WBTF058040-RO), respectively. The Project Development Object is to support the Government of Romania to meet the European Union (EU) Nitrates Directive requirements by (a) reducing nutrient discharges to water bodies, (b) promoting behavioral change at the commune level, and (c) strengthening institutional and regulatory capacity. After the first loan, no. 4873-RO, ratified by law 228/2008, Romania has received the Additional Loan, no. 8597-RO in amount of 48 million Euros from the International Bank for Reconstruction and Development (IBRD) to support the implementation of the "Integrated Nutrients Pollution Control Project-Additional Financing". The Loan agreement no. 8597 RO between Romania and IBRD was signed at Bucharest on April 14, 2016 and ratified by law no. 46/03.04.2018. The subsidiary agreement between Ministry of Public Finance and Ministry of Water and Forest was signed on May 08, 2017. The Integrated Nutrients Pollution Control Project - Additional Financing (financed by the IBRD loan no. LN8597-RO) continues to support the scaling up of activities initiated under the original Project. The Project remains highly relevant for Romania's obligations related to the implementation of the requirements of EU Nitrates Directive, in light of continued challenges Romania is facing with nutrient pollution countrywide, and successful experiences gained by the original Project; it continues to be the only project in Romania that finances direct investments in rural communities, bringing, at the same time important environmental as well as social- economic benefits. INPCP-AF helps with promoting environmentally-friendly, sustainable development of natural resources and agriculture in rural areas and strengthening Romania's institutional and regulatory capacity for meeting EU requirements. The Project Development Objective (PDO) is to support the Borrower with a view of meeting the requirements of the EU Nitrates Directive at national level. This shall be accomplished by: a) Investment promotion in local communities for reducing nutrient discharges in water courses; b) Enhancing institutional capacity and coordination within ministries, institutions, agencies and all relevant stakeholders at local and national level for the regulation, implementation, monitoring and inspection of the requirements of the EU Nitrates Directive, and c) Promoting behavioral changes and good agricultural practice at local community level. MINISTRY OF WATER AND FOREST LOAN (8597 - RO) FOR THE INTEGRATED NUTRIENTS POLLUTION CONTROL 31 DECEMBER 2018 - all the amounts are expressed in EUR, unless otherwise stated The Loan was declared effective on April 13, 2017, and has a closing date of March 31, 2022 and a four-month grace period ending on July 31, 2022. Destination of Borrowed Funds The Project is structured in four parts, as described below: Part 1: Investments in Local Communities to Reduce Nutrient Pollution (EUR 35 million) Part II: Institutional Strengthening and Capacity Building (EUR 5.5 million) Part III: Public Awareness and Information Support (EUR 3.5 million) Part IV: Project Management (EUR 4 million). The aforementioned parts of the Project are further presented below: Part 1: Investments in Local Communities to Reduce Nutrient Pollution. Implementation of Sub-projects proposed by Beneficiaries in any of the areas set forth in the Operational Manual, including the following: (i) developing local community storage, composting and handling systems, packing/pelleting stations and biogas facilities, all to promote better management of livestock and household waste; (ii) planting of vegetative buffer strips, including tree planting and afforestation; (iii) sewage and wastewater treatment activities; and (iv) provision of equipment to upgrade the existing manure storage and/or composting facilities Part Il:Institutional Strengthening and Capacity Building. 1. Providing support to: (a)ANAR to monitor and report to the MEWF and EU on the quality of surfacewater and groundwater under the EU Nitrates Directive and the EU Water Framework Directive, through inter alia: (i) the acquisition of equipment for groundwater wells; (ii) the construction of groundwater wells; (iii) the acquisition of laboratory equipment and related software; and (iv) the provision of technical assistance for, inter alia, the carrying out of studies and the development of software; and (b) institutions represented in the Inter-Ministerial Committee for Application of the EU Nitrates Directive (ICA). 2. Carrying out of a comprehensive training program for the staff of the relevant national, regional and county level agencies on monitoring, control and reporting under the EU Nitrates Directive and EU Water Framework Directive. 3. Improving the capacity building system able to support the scaling up, at the national level, of the implementation process of the EU Nitrate Directive and Water Framework Directive. 4. Providing technical assistance to: (i) update the Code of Good Agricultural Practices and revise action programs; and (ii) carry out activities to promote the adoption by the farmers of the improved nutrient management practices set forth in the Code of Good Agricultural Practices. MINISTRY OF WATER AND FOREST LOAN (8597 - RO) FOR THE INTEGRATED NUTRIENTS POLLUTION CONTROL 31 DECEMBER 2018 - all the amounts are expressed in EUR, unless otherwise stated 5. Developing knowledge and training activities (through providers), and supporting on-farm demonstrations to improve the adoption and compliance by farmers of the Code of Good Agricultural Practices. Part III: Public Awareness and Information Support. 1. Carrying out of public awareness activities at the local, river basin, national and regional levels, including meetings, workshops, field trips, study tours and mass media events and products, to introduce the Project and its benefits, to promote improved rural sanitation and implementation of good agricultural practices. 2. Providing training and support to potential Beneficiaries during the preparation and implementation of Sub-projects. Part IV: Project Management Supporting the PMU in connection with Project implementation, monitoring, reporting, evaluation and impact assessment through the provision of (i) funds for Incremental Operating Costs and for the acquisition of goods (including cars); and (ii) non-consultant services and consultants' services including, inter alia, audit and social surveys; and (iii) training. The Loan has only one disbursement category The following table sets forth the types of items to be financed out of the proceeds of the Loan under the single disbursement category and the percentage of expenditure to be financed from the Loan: Loan allocation In compliance with the Loan Agreement, the categories of expenditures financed through the IBRD loan proceeds comprise of the following: Code Category Description Amount Amount allocated allocated from from the loan RON the loan EUR 1 Goods, works, non-consulting services, consultants' services (including audits), training and incremental operating costs for the parts of the Project set out in Schedule 1 to the Agreement. 48.000.000 216.873.600 Total project financing 48.000.000 216.873.600 Disbursement is monitored in the Loan currency - Euro. Note: For the purposes of determining the value of the loan, the euro / lei rate used was that registered on 13 April 2017, the date of entry into force of the project, at the NBR exchange rate 4,5182 lei / euro. MINISTRY OF WATER AND FOREST LOAN (8597 - RO) FOR THE INTEGRATED NUTRIENTS POLLUTION CONTROL 31 DECEMBER 2018 - all the amounts are expressed in EUR, unless otherwise stated The Project is financed from the State Budget through the State Treasury. The MoPF makes withdrawals from the Loan based on the statement of expenditures (SOEs) and documentation provided by the PMU within MoWF. All eligible expenditures are 100% financed from the Loan, tax included. For the purposes of this report: a) the terms "Statement of Expenditures" and "Summary Sheets" mean expense pre-defined reports prepared by the PMU and used by the Borrower to submit to the IBRD with the applications for reimbursement of payments made by the PMU for project purposes. b) the term "State Treasury Account" means: a bank account opened at the State Treasury of Bucharest where MoWF is receiving the requested financing from the MoPF. No Designated Account is used for the project. MoWF would use pre-financing from State Budget funds and then the MoPF would disburse periodically funds from the IBRD loan using the reimbursement method for project eligible payments incurred. The Treasury makes the monthly budgetary openings as requested, and the Project would receive its allocations in title number 65 in the Treasury system. The Borrower would submit withdrawal applications for the eligible expenditures. The supporting documentation for disbursements would include summary sheets and statement of expenditures The account in commercial bank used for foreign expenditures under the project is: - R025RNCB0484154021370004 for Euro currencies - R041RNCB0484154021370007 for USD currencies MINISTRY OF WATER AND FOREST LOAN (8597 - RO) FOR THE INTEGRATED NUTRIENTS POLLUTION CONTROL 31 DECEMBER 2018 - all the amounts are expressed in EUR, unless otherwise stated GOVERNMENT OF ROMANIA - MINISTRY OF WATER AND FOREST IBRD LOAN (8597-RO) FOR THE INTEGRATED NUTRIENTS POLLUTION CONTROL PROJECT Project Financial Statements for the period starting from January 01th 2018 up to December 31th 2018 MINISTRY OF WATER AND FOREST LOAN (8597 - RO) FOR THE INTEGRATED NUTRIENTS POLLUTION CONTROL 31 DECEMBER 2018 - all the amounts are expressed in EUR, unless otherwise stated 1. STATEMENT OF RESOURCES AND USES OF FUNDS 1.1. Statement of the IBRD Loan Account as at 31 December 2018 - disbursed amounts Loan No 8597 RO - INPCP EUR EUR 31-Dec-17 31-Dec-18 Loan amount approved 48.000.000 48.000.000 Less: Total drawings from loan 165.237 5.608.303 Loan amount not disbursed 47.834.763 42.391.697 31-Dec-17 31-Dec-1 8 IBRD loan Opening disbursed amounts - 165.237 Disbursements 165.237 5.443.066 Closing disbursed amounts 165.237 5.608.303 Net amounts 165.237 5.608.303 Not disbursed amounts in balance 47.834.763 42.391.697 RON RON 31-Dec-17 31-Dec-18 Loan amount approved 216.873.600 216.873.600 Less: Total drawings from loan 757.098 26.154.544 Loan amount not disbursed 216.116.502 190.719.056 31-Dec-17 31-Dec-18 IBRD loan - 757.098 Opening disbursed amounts 757.098 25.397.446 Disbursements 757.098 26.154.544 Closing disbursed amounts 757.098 26.154.544 Net amounts 216.116.502 190.719.056 Not disbursed amounts in balance MINISTRY OF WATER AND FOREST LOAN (8597 - RO) FOR THE INTEGRATED NUTRIENTS POLLUTION CONTROL 31 DECEMBER 2018 - all the amounts are expressed in EUR, unless othenvise stated 1.2.Statement of the IBRD Loan Account as at 31 December 2018 - disbursed amounts Transferred Transferred Cumulated Cumulated Sources - Sources April Sources Sources until Sources until Project IBRD 13, 2017 - January 01, December 31, December 31, Allocation contribution December 31, 2018- 2017 2018 per 2017 December 31, component 2018 EUR EUR EUR EUR EUR Part I - 1.900.361 - 1.900.361 35.000.000 Pad II - 2.706.100 - 2.706.100 5.500.000 Part Ill - 121.413 - 121.413 3.500.000 Part IV 165.237 715.192 165.237 880.429 4.000.000 TOTAL 165.237 5.443.066 165.237 5.608.303 48.000.000 Sources - Transferred Transferred Cumulated Cumulated Project IBRD Sources April Sources Sources until Sources until Allocation contribution 13, 2017 - January 01, December 31, December 31, per December 31, 2018- 2017 2018 component 2017 December 31, 201 RON RON RON RON RON Part I - 8.867.120 - 8.867.120 158.137.000 Part II - 12.626.709 - 12.626.709 24.850.100 Part Il - 566.517 - 566.517 15.813700 Part IV 757.098 3.337.100 757.098 4.094.198 18.072 800 TOTAL 757.098 25.397.446 757.098 26.154.544 216.873.600 During the year 2017 the withdrawal application No.1 for the period June 06th, 2017-October 20th, 2017 in amount of EUR 165.237 (RON 757.098) was disbursed; withdrawal applications no. 2-9 for the period 21.10.2017 - 30.11.2018 in amount of EUR 5.443.066 (RON 25.397.446) were disbursed in 2018; the withdrawal application no. 10 in amount of EUR 642.878 (RON 2.992.804) was disbursed by IBRD in 2019, for expenditures corresponding to 01.12.2018-31.12.2018. MINISTRY OF WATER AND FOREST LOAN (8597 - RO) FOR THE INTEGRATED NUTRIENTS POLLUTION CONTROL 31 DECEMBER 2018 - all the amounts are expressed in EUR, unless otherwise stated 1. STATEMENT OF RESOURCES AND APPLICATION OF FUNDS (CONTINUED) 1.3.Summary of Funds Received and Uses of Funds at December 31, 2018 April 13, 2017 - 01 January 2018- Cumulative at Cumulative at Description December 31, 31 December December 31, 31 December 2017 - EUR 2018 -EUR 2017 - EUR 2018- EUR Opening cash balance - Add: cash receipts 260.624 5.990.557 260.624 6.251.181 Funds pre-financed by MoPF and disbursed by IBRD in 2017 165.237 5.443.066 165.237 5.608.303 Funds pre-financed by MoPF and disbursed by IBRD in 2018 95.387 642.878 95.387 642.878 Less: project expenditures 260.624 5.990.557 260.624 6.251.181 Closing cash and cash equivalents balance . - . Description April 13, 2017 - 01 January 2018- Cumulative at Cumulative at December 31, 31 December 31 December 31 December 2017 - RON 2018 -RON 2017 - RON 2018 -RON Opening cash balance - . . . Add: cash receipts 1.198.304 27.949.044 1.198.304 29.147.348 Funds pre-financed by MoPF and disbursed by IBRD in 2017 757.098 25.397.446 757.098 26.154.544 Funds pre-financed by MoPF and disbursed by IBRD in 2018 441.206 2.992.804 441.206 2.992.804 Less: project expenditures 1.198.304 27.949.044 1.198.304 29.147.348 Closing cash and cash equivalents balance MINISTRY OF WATER AND FOREST LOAN (8597 - RO) FOR THE INTEGRATED NUTRIENTS POLLUTION CONTROL 31 DECEMBER 2018 - all the amounts are expressed in EUR, unless otherwise stated 2. STATEMENT OF EXPENDITURES 2.1 Uses of funds - IBRD contribution Period end at Period end at December 31, 2017 December 31, 2018 -EUR- -EUR- Payments through treasury account 260.624 5.990.557 Total 260.624 5.990.557 Period end at Period end at December 31, 2017 December 31 2018 -RON- -RON- Payments through treasury account 1.198.304 27.949.044 Total 1.198.304 27.949.044 2.2 Uses of funds - IBRD contribution Period end at Period end at December 31, 2017 December 31, 2018 Using of funds - lBRD contributions per component -EUR- -EUR- Payments through treasury account Part 1 - Investments in Local 2.091.811 Communities to Reduce Nutrient Pollution Part 2 - Institutional Strengthening - 2.712.018 and Capacity Building Part 3 - Public Awareness and 758 522.224 Information Support Part 4 - Project Management 259.866 664.504 Total 260.624 5.990.557 MINISTRY OF WATER AND FOREST LOAN (8597 - RO) FOR THE INTEGRATED NUTRIENTS POLLUTION CONTROL 31 DECEMBER 2018 - all the amounts are expressed in EUR, unless otherwise stated Period end at Period end at December 31, 2017 December 31, 2018 -RON -RON Payments through treasury account Part 1 - Investments in Local 9.753.475 Communities to Reduce Nutrient Pollution Part 2 - Institutional Strengthening - 12.645.312 and Capacity Building Part 3 - Public Awareness and 3.464 2.435,040 Information Support Part 4 - Project Management 1.194.840 3.115.217 Total 1.198.304 27.949.044 MINISTRY OF WATER AND FOREST LOAN (8597 - RO) FOR THE INTEGRATED NUTRIENTS POLLUTION CONTROL 31 DECEMBER 2018 - all the amounts are expressed in EUR, unless otherwise stated 3. FINANCIAL STATEMENT OF THE LOAN Total disbursements as at 31 December 2018 Loan 1BRD 8597 - RO December 31, December 31, 2017 - EUR- 2018 - EUR- Opening disbursed amounts 165.237 Total Opening disbursed amounts - 165.237 Disbursements 165.237 5.443.066 Total Disbursements 165.237 5.443.066 Closing disbursed amounts 165.237 5.608.303 Total closing disbursed amounts 165.237 5.608.303 Net amount - loan amount 48.000.000 48.000.000 Unused loan account 47.834.763 42.391.697 December 31 December 31 2017 -RON- 2018 - RON- Opening disbursed amounts 757.098 Total Opening disbursed amounts - 757.098 Disbursements 757.098 25.397.446 Total Disbursements 757.098 25.397.446 Closing disbursed amounts 757.098 26.154.544 Total closing disbursed amounts 757.098 26.154.544 Net amount - loan amount 216.873.600 216.873.600 Unused loan account 216.116.502 190.719.056 During the year 2017 the withdrawal application No,1 for the period June 06th-October 20th, 2017, in amount of EUR 165.237(RON 757.098) was disbursed, EUR 5.443.066 (RON 25.397.446) were disbursed in 2018; the withdrawal application no. 10 in amount of EUR 642.878 (RON 2.992.804) was disbursed by IBRD in 2019, for expenditures corresponding to 01.12.2018-31.12.2018. Ог А" '*' �+ г _ ео � �3 ..�. `у СО ,. р�р �Г1 !.. � СЛ � 9D Q�� � ц�j N � С¢ �ц D iL' .С7 т- г � N� О о � t7? LC5 OJ О� ,� ц� � т д' Ф Н� ш�� ° v ш � rvv- ги-- avi rr-. °D Г сл ° ° � � г д} © д а6 ��.,'., С' 1 � :C7 � .-. � � ' � °о � � Со? � (fl V � д® ��' _ � ,"� «у сп сэ с� о о ® ° n � Q аа � ш aui " ° v '� г.� � � aocr '-` р м c�i � � i � � т со � ® аа о r� а и сл ш о r� � w ш � � `г° �г�у `л .,аз,у ��'га й � о � й � с° с�•> г � � � ш с'� м �г' ао ао г и а� �- � U�0 ni � г`э N � � � со м- т У' ц гга rn с � г г о � -га � w � �� � � с П± �,. � ш �i5 � (D О N О 1+ 4i' �С} s'f lf} � г w,. и ��s ^ � � г v г� о ° r- т � о ro г- `*� v И N ��� ��. qo г� и5 �ct га ц7 �г, ао о � cxs сд , т rз J ш � +а �- � ао сд ui ои acS �ri аз г ° О.'� �° г ' "' г`�v стэ � � r�- � а�о ti � й � ° °rn рС о р �' в �л •- г � � �, � � �э Q ' �, €.а � z `� " а р� � � ` с z z � г г � гr т � � � z � сх ... ы et� Q t'� � 4 О � � � � � О О � � ,'��i � � о� с� � ш � � ш ш ш ш ш г,� [� ш ш з �� � а' �� � т_ � � с°у � о �,т,,,, 'fi � р ro е с с � с с � с с С с б е с а ш � � � � � � � � � � � � � � � 9� т tll р, � G с с с � � е е с � б б �б б ц� wy � , т ги cv т w ro т са св т с� т т т - и м� +• т Е Е Е Е Е Е Е Е Е Е Е Е Е Е С� q�� W Qp г С7 6 О О б О О О О О 6 4 6 6 � 2 �"у � � � tY дС iY � (У � f,Y СС � � СУ СУ ш - � .� t� я ® .� й �о �о то _ � «s °C F'- � F� т й п � а�q `�q ¢� � � ��'. � � Q � � ,б � J � а о о � � � � Н� С � � � � и�°а �_ � ш�4 �Q о�� т и � j� ш ш � а �� г -"� � 'иО т� � � °� с,ш,� � e!s U�. °�s _U � � � й I С± Z_ f`�6 F- �1 i� � V�} � ¢ с а � о Е � а� `v Ш д � г.�i? й�п I о- си Ь- �rs т_' и � ш ш Q1 � LL- .: з и �� с J� ги з ш-° °г5 ш тз = ш� � �rs а, � б� LLJ LL! _ : Е О с� б � с, б.- б v..., б � и � и') U з [] _ � � о � о [� � r� и `� о с �' гио � `� � `� ,бц т `� v ш о о- от б Е сЛ т U � U �„ _ �Н` � � с) и т� =о �� �а �а- и о G � _ ., �(5S '_ �� О N П3 ш_ �_ш � ш_ Q 'С7 О= �©� �г � `_� � ш�� о гбаL t� z�� Za4 zd� U � и? т%, ©� г а t� т с.� � б ш б � С� � т гл � т иа � т С� � и �ry ш�� ��Г�_°�-° р г� иtз, гл -�� г д�, и-�с» �с�� �r�� � и ш ��� "+, о `р г� й ., т � LL' ш � � ` � � � � � � г,. v q� ti �у �у an у flo � го � �' �ц о� N - Ог-т � ш .�•. д`��г�г�' �г�«� �г �г �,г r�� � г,г � 4 � ss м о сз с� сб о ° сэ г о � � с Е �.� Е еу Е с� й Е cv Е с� Е сч Е су Е с� Е сз ш Е ш rз >-ца� О � оа �r_'й�->�-�� а� -т`�г и . "' _ °' . °'c.s оа_о аз"! с-г�асо�`'w �' ©О W а' U глг >� о U� U� U� 3_ �г ,, лг ,,,а„ 4U г.� ti) fц ts') о с'S з р о q? Пi Сц N N Ш cV Ql ty о� U Q С7 � U р � О i% Z Ш � � ог ог Zс" дс„ zеч всч, Gt.- []г С]г гг- �n, z г Ос� �с� г�С р � � .- cv м v Фгг ccs ti са аз в г с� мi v О г С г г �- г г ��� о г ..- � � С Ф �-' � � '� � � ,,, �. r f С с6 � гУ} Cry ��....... м �. W _ QO �4 С дУ �� г д д � О О С7 N� 00 О Ci �.. О О д д ��' О д д N�, � таШ Ем � � N � ° � � � � - �у й С] 'i" iy�i L � h. S.2 '= ,� � '� N Q д � И О � 0�0� � ��-- � Ц} (D tD tФ �...,. � � ('(7... р.. {'+) �' � � .., ��� � й_+r О) Га г�+ V �р и � гд � � 7 t з г+] � � О� О О � 4 ш� г ш oi aNa � � и д � � � о �� -- р r, .- ив р �- �.-� с п3 р i5 � � е� � оэ r,э � � N � f� � Ш � N й � п�i � о � ® �? °ц'у _w с4 _ш � м р гэ `° °) ;� О 7� с4 д� � {V � аб � � � М С�7 С7 с+'? `t � � � � �� U � � � :J' г Е � О (U _ � О � � � � Ш И �� LL � р `� д � Г ас3 tv V' ,�. ® � Х � ��� а U м д� г� � о аэ �° � а в`Фi � г`- г` г` ,� °� �, [ц j rJ��� д Z .� М � ® N OQ � ti О? N (9 � V V N � � об ч- v. �,- � С7 И � Г пу � т а (� � е � � 9i с Li � � ; Г з � � Gi V fц s_ © '"'� Ш �т � � � � Z � v � � t3 ❑+�. � с Z � Z г tY � СС � Z � Z Z Z Z Z Z Z г]7 � м- е�` � о о о о� � �� о сэ о fl о а о а сз � а ❑� Q� [� � � [� ш ш ш ш [� �[r се � гr te � гz ш с� ^ ,с� � р� � ш т � � � cL ш и ,� � � � с с с с с с с с с с с с с е с �' � sчi сц т с с м п3 гц го ro кц гл г� ео га гsз сп �j � Я�? р °� с � � св пs � � .� .С с � с � с � с с J� Ш и . т пs гп Е Е �q гв г� го su гп са гв са t�з го пs а гs � Е Е Е Е Е Е Е Е Е Е Е Е Е Е Е ��� ��у � О О О fU ill �� © Ф О �... © О О О Cf О С? О © �.� fi3 � � (х [У [У С7 U f1' Q' � � CL � [i' Ci 1У ОС CL � Н ..-. � � � г q�j = J ал � � dU ❑ W1 � � с Ф [L � +�-• � RF J.,� Е � � fб � Cr с й и у � � и � ш и Е � Ш� и~? С'а � г и ш �.._.°- _ � � j � [r° г � � � .,� ,�,aEi � � � о � � J � ш р � � � в! � � � ; � � 13 � Н � wQ V � и С J Ш tJ? Z J У � ш еЛ� гП СiЭ [Л сЛ F, � Q� RS L �, � � о � � Ш xS tY с гll U � '�г � � ва -i � N J � CLS uW � w �л �-° v ш� ���� Е ш t� д С� Сз � � сл � � ш с � = Е ,� с� с� сз сз .t ,р U � �� р Q сЛ n р сЛ Z и � м� U в �' т� � � = р сл �� С? о д � � 4 Ш ° � С� а рС � а с� ��� �� 4 } � ш ar � � о С] n � д Ф � з й (� �! N�_ z т = U и `о � �� гл гл гг� гл С� � cr �� ��ага � � з �_¢ ш U�ш о� аз� �? т т т т � г� ш Е= � и и ��ъ сл z cn гn ��� сп � гл tл С7 О f7 С? ш и � �.� �°� �� � � вл "' ^ t _ _ _ _ ' � �� i� 1 �' fln й _ г- � � � � $- У па . Ш г6 Ф _ . Ш т _ � N 5 ct = IX7 а0 оо '� а0 о� оо _ й7 ❑ 1'� т r�� C7 � « � � .� �. S''� s N � N h1 fV N N N � � [1 �� � г' г� Е с� r� т т � v г .с г � s _с r v �+� � ша, ¢,ао ;гч =а_о ссс, с�в La� =ао `_�-о_а `_т �оо �св Locs Ew `о_о-_т а) � LL OQ Ш.. U �. Q� д р i р„ д. ПсS С? R7 О� G7 �- О� О с- д� д � О � д � С7 � О � О Q д � О � � Ш �cv �cv Zм Qcv-�ev -�ni �г� Qсч �с*i Qе.г �nr �си �cw �na �cv �cv �Ссч � г�❑ � LL7 СО 1� 9D 67 О г N М V lt7 CU 1�- [С7 iS) С7 � � i� ®,,,, © �, � г т �- 'м � N N {`J N N N (V N N CV М ['''Z �� �г J м � � MINISTRY OF WATER AND FOREST LOAN (8597 - RO) FOR THE INTEGRATED NUTRIENTS POLLUTION CONTROL 31 DECEMBER 2018 - all the amounts are expressed in EUR, unless otherwise stated 5. ACCOUNTING POLICIES AND RECORDS Basis of preparation The special purpose Project Financial Statements are prepared under the historical cost convention, in accordance with and comply with relevant World Bank guidelines. The amounts presented in these financial statements are expressed in EUR (for monitoring the disbursement in the Loan currency) and RON (the currency of the expenses pre-financed from State Budget). The EUR amounts have been derived by applying the RON/EUR exchange rate as at the time of payment, for the internal payments using NBR exchange rate and for the external payments using auctions exchange rate given by the bank (Romanian Commercial Bank - BCR). Fixed assets Fixed assets are recognized at acquisition cost under property, plant and equipment category. Following their accounting transfer to the beneficiaries on the basis of the handlover minutes, they are recognized on costs (after all documents have been submitted by the vendor). Liabilities i) Recording the /oan The loan will be recorded as a use of funds as the withdrawals take place. The entire amount of the loan will not appear as a debt element in the accounting of the PIVIU as repayment is done by MoPF. ii) Acquisition of goods and setvices The acquisition of goods and services is recorded as assets and expenditures respectively at the time of the payment, and is allocated between the different sub-projects and activities to which they refer. PMU does not record the loan amounts received from the IBRD, this being done at MoPF level. Use of funds The funds used represent the amounts paid for the purpose of the Project by the PIVIU, funds pre- financed by the MoPF and channeled through the budgetary mechanism and classification within MoFW. Foreign currency translation Project expenditures are pre-funded from the State Budget, and then the eligible expenses are reimbursed from the Loan. The RON amounts are converted into EUR at the exchange rate RON/EUR of the National Bank of Romania, in force at the date of payments. MINISTRY OF WATER AND FOREST LOAN (8597 - RO) FOR THE INTEGRATED NUTRIENTS POLLUTION CONTROL 31 DECEMBER 2018 - all the amounts are expressed in EUR, unless otherwise stated 6. BANK ACCOUNTS UTILIZED WITHIN THE PROJECT, STATEMENT OF DESIGNATED ACCOUNT All the funds are received through the Ministry's State Treasury Account. The internal payments are done through this account and for the external payments the funds are transferred to the Ministry's bank account from BCR (The Romanian Commercial Bank). No material balances are maintained in the commercial bank accounts which are used solely for external payments as Treasury cannot accommodate payments in foreign currencies. Based on the Order of the Public Finance Ministry no 2004/2013, starting with 01 st of January 2014 the PMU does not represent a separate entity from the MoWF in relation to the Treasury account and only uses the following treasury account for the reimbursable funds: Account No. R074TREZ23A7005026501 OOX Depository Bank State Treasury Treasury Activity and Public Accounting of the Bucharest Municipality Branch Bucharest Municipality Address No. 6-8, Splaiul Unirii, 4t District, 040032 Related loan/credit Loan no. 8597 - RO Account Currency RON MINISTRY OF WATER AND FOREST LOAN (8597 - RO) FOR THE INTEGRATED NUTRIENTS POLLUTION CONTROL 31 DECEMBER 2018 - all the amounts are expressed in EUR, unless otherwise stated State treasury account as at 31 December 2017 in EUR IBRD Total IBRD Total EUR EUR RON RON Opening balance 1 January 2017 - . . Cash receipts from MoPF for funds 165.237 165.237 757.098 757.098 approved by funds providers Other cash receipts from MoPF: - pre-financing for costs to be supported 95.387 95.387 441.206 757 098 from IBRD funds - other Total cash receipts 260.624 260.624 1.198.304 1.198.304 Total payments from the State Treasury 260.624 260.624 1.198.304 1.198.304 Account Closing balance 31 DECEMBER 2017 - - . State treasury account as at 31 December 2018 in EUR IBRD Total IBRD Total EUR EUR RON RON Opening balance 1 January 2018 165.237 165.237 757.098 757.098 Cash receipts from MoPF for funds 5.443.066 5.443.066 25.397.446 25.397.446 approved by funds providers Other cash receipts from MoPF: - pre-financing for costs to be supported 642.878 642.878 2.992.804 25.397.446 from IBRD funds - other Total cash receipts 6.251.181 6.251.181 29.147.348 29.147.348 Total payments from the State Treasury 6.251.181 6.251.181 29.147.348 29.147.348 Account Closing balance 31 DECEMBER 2018 - - Note : PMU could use the Treasury account for several projects financed under reimbursable foreign loans, including the current one. The statement above represents only an extract of the project-related transactions channeled through the single Treasury account used by the Ministry. MoPF provides financing according to the budgets requested by the PMUs, therefore in case the budgets are not used, the remaining available financing may be reallocated to other projects. The expenses incurred are recorded separately under each project. Any remaining balances at the year-end are cancelled, as required by the budgetary legislation. MINISTRY OF WATER AND FOREST LOAN (8597 - RO) FOR THE INTEGRATED NUTRIENTS POLLUTION CONTROL 31 DECEMBER 2018 - all the amounts are expressed in EUR, unless otherwise stated NOTES TO THE PROJECT FINANCIAL STATEMENTS Note 1. Sources of funds in EUR Application for Amount requested withdrawal No. Payment details from State CCY Total Treasury Account 1 State Treasury Account 165.237 EUR 165.237 2 State Treasury Account 554.555 EUR 554.555 3 State Treasury Account 411.437 EUR 411.437 4 State Treasury Account 1.135.456 EUR 1.135.456 5 State Treasury Account 524.062 EUR 524.062 6 State Treasury Account 1.001.982 EUR 1.001.982 7 State Treasury Account 884.031 EUR 884.031 8 State Treasury Account 400.235 EUR 400.235 9 State Treasury Account 531.309 EUR 531.309 10 State Treasury Account 642.878 EUR 642.878 TOTAL 6.251.181 EUR 6.251.181 Note 2. Expenditure by components Expenses April 13, 2017- January 01, 2018 - Cumulative at Cumulative at December 31, December 31, 2018 December 31, December 31, 2017 2017 2018 -EUR- -EUR- -EUR- -EUR- Part I - 2.091.811 - 2.091.811 Part II - 2.712.018 - 2.712.018 Part Ill 758 522.224 758 522.982 Part IV 259.866 664.504 259.866 924.370 TOTAL IBRD financed 260.624 5.990.557 260.624 6.251.181 Expenses April 13, 2017- January 01, 2018 Cumulative at Cumulative at December 31, - December 31, December 31, December 31, 2017 2018 2017 2018 -RON- -RON- -RON- -RON- Part I - 9.753.475 - 9,753,475 Part II - 12.645,312 - 12,645.312 Part Ill 3.464 2.435.040 3.464 2438.504 Part IV 1.194.840 3.115.217 1.194.840 4.310.057 TOTAL IBRD financed 1.198.304 27.949.044 1.198.304 29.147.348 MINISTRY OF WATER AND FOREST LOAN (8597 - RO) FOR THE INTEGRATED NUTRIENTS POLLUTION CONTROL 31 DECEMBER 2018 - all the amounts are expressed in EUR, unless otherwise stated Nota 3. Legislation and Fiscal Environment in Romania The legislation and fiscal environment in Romania and their implementation into practice change frequently and are subject to different interpretations by various Ministries of the Government. Over recent years, Romania has undergone substantial legal and economic changes. Therefore, it is not possible to estimate what changes may occur or the resulting effect of any such changes on the Project development or future results of its development Nota 4. Project financial statements presentation The special-purpose Project Financial Statements are prepared on the cash basis of accounting. On this basis sources of funds are recognized when received rather than when earned, and uses are recognized when paid rather than when incurred. The special - purpose Project Financial Statements were prepared for complying with the Loan requirements and with the appropriate World Bank guidelines, and are not intended to be a complete presentation of the Project's operations. Nota 5. Subsequent events The project's implementation has continued by launching new bidding procedures, according to the project's Procurement Plan and Implementation Plan. For 2019, the project's budget provides an amount of RON 23 Million in budgetary credits, and RON 55 Million in commitment credits, respectively. Date: 13 June 2019 Mrs. NAIANA MILEA Mrs. STEFANIA BURBEA PMU Director Financial Manager, PMU Stamp of the Ministry of Waters and Forests