OFFICAL TFol0 o The World Bank 1818 H Str t N.W. (202) 473-1000 INTERNATIONAL BA 0 FOR RECONSTRUCTION AND DEVELOPMENT Was mingonD.C. 20433 Cable Address: INTBAFRAD INTERNATIONAL DE )ELOPMENT ASSOCIATION U.S.A. Cable Address: INDEVAS 292 , 2012 H. E. J can Ping Chairperson African Union Commission Addis Ababa Federal Democratic Republic of Ethiopia AFRICA: African Medicines Regulatory Harmonization (AMRH) Initiative Project Grant No. TF012036 Additional Instructions: Disbursement Excellncy: I refer to the Grant Agreement ("Agreement") between the International Bank for Reconstruction and the International Development Association ("World Bank") acting as administrator of grant funds provided by various donors ("Donors)" under the Global Medicines Regulatory Harmo i ization Initiative Trust Fund, and the African Union, represented by the African Union Commission (the "Recipient") for the above-referenced project, of even date, herewith. The Agreement provides that the World Bank may issue additional instructions regarding the withdrawal of the proceeds of Grant No. TF012036 ("Grant"). This letter ("Disbursement Letter"), as revised from time to time, constitutes the additional instructions. The attached World Bank Disbtirsement Guidelines for Projects, dated May 1, 2006, ("Disbursement Guidelines") (Attachm-.nt 1), are an integral part of the Disbursement Letter. The manner in which the provisions in the Disbursement Guidelines apply to the Grant is specif ed below. Sections and subsections in parentheses below refer to the relevant sections and subsections in the Disbursement Guide.ines and, unless otherwise defined in this letter, the capital zed terms used have the meanings ascribed to them in the Disbursement Guidelines. I. Disbursement Arrangements (i) Disbursement Methods (section 2). The following Disbursement Methods may be used under the Grant: * Reimbursement q, * Advance * Direct Payment Special Commitment . a (ii) Dj.sbursement Deadline Date (subsection 3.7). The Disbursement Deadline Date is 4 7ET months after the Closing Date specified in the Grant Agreement. Any changes to this date will be A .11. notifie:- by the World Bank. II. Withdrawal of Grant Proceeds (i) Auiaorized Signatures (subsection 3.1). A lettei in the Form attached (Attachment 2) should be furnished to the World Bank at the address indicated below providing the rame(s) and specimen signature(s) of the official(s) authori;ed to sign Applications: The World Bank P. 0. Box 5515 Addis Ababa, Ethiopia Attention: Elizabeth Lule, Acting Director for Regional Integration Africa Region (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 indica:ed below: The World Bank P. O. Box 5515 Addis Ababa, Et"iiopia Attention: Loan Department (iii) Efectronic Delivery (subsection 3.4) The World Bank may permit the Recipient to electronically deliver to the World Ban- Applications (with supporting documents) through the World Bank's Client Connection, web-based portal. The option to deliver Applications to the World Bank by electronic means may be effected if: (a) the Recipient has designated in writing, pursua-it to the terms of subparagraph (i) of this Section, its officials who are authorized to sign and deliver Applications and to receive secure identification devices ("Tokens") from the World Bank far 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 World Bank 3grees, the World Bank will provide the Recipient with Tokens 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 World Bank 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 Tokens to Process Applications. By designating officials to accept Tokens and by choosing to deliver the Applications electronically, the Recipient -LA.M. confinns through the authorized signatary letter its agreement to: (a) abide by the Terms and Cond ions of Use ofSecure Identificaiion Devices in connection with Use of Electronic M co 7, OR to Pro,.c,ss Applications and Supporting Documentation ("Terms and Conditions of Use of Token;") provided in Attachment [3]; and (b) to deliver the Terms and Conditions of Use of Token; to each such official and to cause such official to abide by those terms and conditions. (v) Mi,,imum Value ofApplications (subsection 3.5). The Minimum Value of Applications is 20% of the amount advanced to the Designated Account. (vi) Advances (sections 5 and 6). Type of Designated Account (subsection 5.3): Segregated Currency ofDesignated Account (subsection 5.4): USD * Financial Institution at which the Designated Account Will Be Opened (subsection 5.5): A commercial bank / financial institution acceptable to the World Bank. Ceiling (subsection 6.1): USD 200,000 III. Reporting on Use of Grant Proceeds (i) Supporting Documentation (section 4). Supporting documentation should be provided with each application for withdrawal as set out below: * For requests for Reimbursement and Advances of eligible expenditures paid from the Designated Account: o Records evidencing eligible expenditures (e.g., copies of receipts, supplier invoices) for payments for Consultants' Services against contracts valued at USD100,000 or more; o Statement of Expendilure in the form attached (Attachment 4) for all other expenditures / contracts; and o List of payments against contracts that are subject to the World Bank's prior review, in the form attached (Attachment 5). * For requests for Direct Payment and Special Commitments: records evidencing eligible expenditures, e.g., copies of receipts, supplier invoices (ii) Frequency of Reporting Eligible Expenditures Paid from the Designated Account (subsection 6.3): Monthly. IV. Other Important Information For additional information on cisbursement arrangements, please refer to the Disbursement Handbook available on ihe World Bank's public website at co G4~UTIV% 4t\ EUR https:/,;iww.worldbank.org and its secure website "Client Connection" at https:/,clientconnection.worldbank.org. Print copies are available upon request. If you have not already done so, the World Bank 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 Grant, 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 effected. For more information about the website and registration arrangements, please contact the World Bank by email at . If you have any queries in relation to the above, please contact the Finance Officer at LOA-TF Service account using the above reference. Yours sincerely Ritva S. Reinikka Director, Human Development Sector Africa Region Attaclunents 1. World Bank Disbursement Guideli,!es for Projects, dated May 1, 2006 2. Form for Authorized Signatures 3. Terms and Conditions of Use of Secure Identification Devices in connection with Use of El?ctronic Means to Process Applications and Supporting Documentation, dated January 20, 20: 0 4. Sample form of "Statement of Expenditure" 5. Sample form of Payments Against Contracts Subject to the World Bank's Prior Review ,G\~UTIV,c n L.U Attachment [21 [Letterhead] East Af rican CommunityArusha, Tanzania [DATE] The World Bank 1818 l Street, N.W. Washington, D.C. 20433 United States of America Attention: Elizabeth Lule, Acting Director, Regional Integration Africa Region Dear Ms Lule: Re: AFRICA: African Medicines Regulatory Harmonization (AMRH) Initiative Project Grant No. I refer to the Grant Agreement ("Agreement") between the International Bank for Recons:ruction and the International Development Association ("World Bank") acting as administrator of grant funds provided by various donors ("Donors)" under the Global Medicines Regulatory Harmonization Initiative Trust Fund, and the African Union, represented by the African Union Commission (the "Recipient") for the above-referenced project,, dated , providing the above Grant. For the purposes of Section 3.04 (b) of the Standard Conditions, as defined in the Agreement, any [I0ne] of the persons whose authenticated specimen signatures appear below is authorized on behalf of the Recipient to sign applications for withdrawal and applications for a special commitment under this Grant. For the purpose of delivering Applications to the World Bank, 2[each] of the persons whose authenticated specimen signatures appears below is authorized on behalf of the Recipent, acting 3[individually] 4[jointly], to deliver Applications, and evidence in support thereof on the terms and conditions specified by the World Bank. Instruenion to the Recipient when sending this letter to the World Bank: Stipulate if more than one person needs to sign Applications, and how many or which positions, and if any thresholds apply. Please delete this footnote in final letter that is sent to the World Bank. 2 Instruction to the Recipient: Stipulate if more than one person needs to jointly sign Applications, if so, please indicate the actual number Please delete this footnote in final letter th,t is sent to the World Bank. Instn (lion to the Recipient: Use this bracket if ary one of the authorized persons may sign; if this is not applicable, ple \cUT1V delete. j.'ease delete this footnote in final letter that is sent to the World Bank. ( 4 Instfuction to the Recipient: Use this bracket onI if several individuals must jointly sign each Application; if this is & applica)le, please delete. Please delete this footnote in final letter that is sent to the World Bank. ~A 5[This confirms that the Recipient is authorizing such persons to accept Tokens and to deliver the Applications and supporting documents to the World Bank by electronic means. In full recognition that the World Bank shall rely upon such representations and warranties, includ :ig without limitation, the representations and warranties contained in the Terms and Conditois of Use of Secure Identification Devices in connection with Use of Electronic Means to Process Applicea,ons and Supporting Documentatin ("Terms and Conditions of Use of Tokens"), the Recipi? t represents and warrants to the World Bank that it will deliver to each such person a copy of the Terms and Conditions of Use of Tokens and will cause such persons to abide by those terms and conditions.] This Authorization replaces and supersedes any Authorization currently in the World Bank records with respect to this AgreE ment. [Name], [position] Specimen Signature: [Name], [position] Specimen Signature: [Name], [position] Specimen Signature: Yours truly, / signed / (COOI? .A. ti. Instruction to the Recipient: Add this paragraph if the Recipient wishes to authorize the listed persons to accept Tokens and to deliver Applications by electronic means; if this is not applicable, please delete the paragraph. Please delete this footnote in final letter t/.i is sent to the World Bank. Attachment 131 Terms and Conditions of Use of Secure Identification Devices in connection with Use of Electronic Means to Process Applications and Supporting Documentation January 20, 2010 Tae World Bank (Bank)' will provide secure identification devices (Tokens) to permit the Borrower2 to deliver applications for withdrawal and applications for special commitments under the Agreement(s) and supporting documentation (such applications and supporting documentation together referred to in these Terms and Conditions of Use as Applications) to the Bank electronically, on the terms and conditions of use specified herein. A. Identification of Users. 1. The Borrower will be required to identify in a completed Authorized Signatory Letter (ASL) duly delivered to and received by the Bank each person who will be authorized to deliver Applications. The Bank will provide Tokens to each person identified in the ASL (Signatory), as provided below. The Borrower shall also immediately notify the Bank if a Signatory is no longer authorized by the Borrower to act as a Signatory. 2. Each Signatory must register as a user on the Bank's Client Connection (CC) website (https://clientconnection.worldbank.org) prior to delivery of Tokens. Registration on CC will require that the Signatory establish a CC password (CC Password). The Signatory shall not reveal his/her CC Password to anyone or store or record the CC Password in written or other form. Upon registration as a CC user, the Signatory will be assigned a unique identifying account name. B. Distribution, Initialization and Return of Tokens. 1. The Bank will physically deliver a Token to each Signatory in a manner to be determined by and satisfactory to the Bank. 2. At the time of delivery of a Token to a Signatory, the Signatory will receive a copy of these Terms and Conditions of Use for purposes of initializing the Token. 3. The Bank will verify that the Token, Temporary Password and Terms and Conditions of Use have been duly delivered to and received by the CC User. "Bank" includes IBRD and IDA. cPe 2 "BorTower" includes the borrower of an IBRD loan, IDA credit, or Project Preparation Facility advance and uv recipienti of a grant. : ~ C,x -~D~~' A4% 4. Promptly upon receipt of the Token and Terms and Conditions of Use, the Signatory will access CC using his/her account name and CC Password and register his/her Token and set a personal identification number (PIN) to be used in connection with the use of his/her Token, after which the Token will be initialized for use by the Signatory exclusively for purposes of delivering Applications. Upon initialization of the Token, the Signatory will be a "Token User". The Bank will maintain in its database a user account (Account) for each Token User for purposes of managing the Token of the Token User. Neither the Borrower nor the Token User will have any access to the Account. 5. Prior to first use of the Token by the Token User for delivering Applications, the Borrower shall ensure that the Token User has received training materials provided by the Bank in use of the Token. 6. Tokens shall be promptly returned to the Bank upon request of the Bank. C. Manaement of Tokens. 1 . Tokens will remain the property of the Bank. 2. Use of the Token is strictly limited to use in the delivery of Applications by the Token User in the manner prescribed by the Bank in the Agreement(s) and these Terms and Conditions. Any other use of the Token is prohibited. 3. The Bank assumes no responsibility or liability whatsoever for any misuse of the Token by the Token User, other representatives of the Borrower, or third parties. 4. The Borrower undertakes to ensure, and represents and warrants to the Bank (such representation and warranty being expressly relied upon by the Bank in delivery of a Token to each Token User) that each Token User is provided, understands and will abide by, these Terms and Conditions of Use, including without limitation the following: Security 4.1. The Token User shall not reveal his/her PIN to anyone or store or record the PIN in written or other form. 4.2. The Token User shall not allow anyone else to utilize a Token to deliver an Application to the Bank. 4.3. The Token User shall always logout from CC when not using the system. Failure to logout properly can create a ,oute into the system that is unprotected. 4.4. If the Token User believes a third party has learned his/her PIN or has lost his/her Token he/she shall immediately notify clientconnectiongworldbank.org. c00 MODRAND 0 2 EDP "0 4.5. The Borrower shall immediately notify the Bank at clientconnection@?worldbank.org of any lost, stolen or compromised Tokens, and take other reasonable steps to ensure such Tokens are disabled immediately. Care of Tokens 4.6. Tokens contain delicate and sophisticated instrumentation and therefore should be handled with due care, and should not be immersed in liquids, exposed to extreme temperatures, crushed or bent. Also, Tokens should be kept more than five (5) cm from devices that generate electromagnetic radiation (EMR), such as mobile phones, phone- enabled PDAs, smart phones and other simnilar devices. Tokens should be carried and stored separate from any EMR device. At close range (less than 5 cm), these devices can output high levels of EMR that can interfere with the proper operation of electronic equipment, including the Token. 4.7 Without derogating from these Terms and Conditions of Use, other technical instructions on the prc per use and care Tokens are available at http://www.rsa.com. 5. Replacement 5.1. Lost, damaged, compromised (in terms of 4.5, above) or destroyed Tokens will be replaced at the expense of the Borrower. 5.2. The Bank reserves the right, in its sole discretion, not to replace any Token in the case of misuse, or not to reactivate a Token User's Account 6. Reservation of Right to disable Token 6.1. The Borrower shall reserve the right to revoke the authorization of a Token User to use a Token for any reason. 6.2. The Bank reserves the right, in its sole discretion, to temporarily or permanently disable a Token, de-activate a Token User's Account or both. 4 TL, Attachment [4] Statement of Expenditures (SOE) Payments made during the period from to Date: Application No.: For expenditures against the contracts not subject to the Bank Prior Review Grant No. SOE No.: 1 2 3 4 5 6 7 8 9 Item Category Currency and Currency and Eligible % Amount Currency and Exchange Rate Remarks No. No. (**) Total Amount of Total Amount of from Eligible for Amount Paid from (Col. 7 divided Contract Invoice Covered Schedule 2 of Grant (4 x Designated by Col. 6) by Application Credit 5) Account (if (Net or Agreemem I-ppladux) Retention) TOTALS Supporting documents for this SOE retained at (insert location) SCO0, (*) A separate SOE form should be used for retroactive Grant cun (**) Items should be grouped by category; or alternatively, a separate SOE form may be used for each a category .0A~ 1U R Attachment 151 Payments Made during Reporting Period Against Contracts Subject to the Bank's Prior Review MUTI. A111 CO)) 'URS~ WORLD BANK DISBURSEMENT GUIDELINES FOR PROJECTS LOAN DEPARTMENT May 1, 2006 C CO0coo 41Tv& MIDRC-, URA.1 Copyright 0 2006 The International Bank for Reconstruction and Development/ THE WORLD BANK 1818 H Street. N.W. Washington, D.C. 20433, U.S.A. First Printing: July 2006 CONTENTS Page 1. Purpose ......... 5 2. Disbursement Method, ........................................ 6 3. Withdrawal of Loan Proceeds ..........6.......6 4. Supporting Document ition Requirements .. ......... 9 5. Designated Accounts.......................... 10 6. Terms and Conditions Applicable to Advances ........... 12 7. Ineligible Expenditure3 ...........................14 8. Refunds ................................... 15 NO COO 0 L UR-c 30 "ON World Bank Disbursement Guidelines for Projects May 1, 2006 1. Purpose 1.1 The purpose of these Guidelines is to set out the Bank's procedures for disbursement of loan proceeds for projects.1 Specifically, the Guidelines explain (a) the different methods used by the Bank to disburse loan proceeds, (b) the require- ments for withdrawal 'rom the Loan Account, (c) the types of supporting documentation that the borrower may be re- quired to provide to cemonstrate the use of loan proceeds for eligible expenditures, (d) the criteria for establishing des- ignated accounts. (e) the terms and conditions applicable to advances, (f) the types of actions that the Bank may take if it determines that loan proceeds are not needed or have been used for ineligibk purposes, and (g) the consequence of refunds. "Bank" includes IBRD and IDA; "loan" includes credit and grant: "bor- rower" includes the borrower cf an IBRD loan, IDA credit, or Project Prepa- ration Facility advance and the recipient of a grant; and "Loan Agreement' includes the agreement with the Bank providing for a credit, grant, or ad- vance. These Disbursement Guidelines apply to all loans, credits, advances under the Project Preparatior Facility, and grants financed under the In- stitutional Development Fund and Global Environment Facility unless oth- erwise provided in Operational Policy 10.20, Global Environment Facility Operations (forthcoming). These Guidelines also apply to other recipient- executed grants financed from trust funds unless, exceptionally, the terms of the agreement with the donor make provision for different requirements. They do not apply to Development Policy loans. 51 ,UTt 0 ~N A~~J Womu) BANK Dimnisi1Nsan I GuInEIu-:s FoR Pauarrs OJEE C 2. Disbursement Methods 2.1 The Bank establishes disbursement arrangements for an op- eration in consultation with the borrower and taking into consideration, inter alia, an assessment of the borrower's financial management and procurement arrangements, the procurement plan and cash flow needs of the operation, and its disbursement experience with the borrower. 2.2 The Bank disburses proceeds from the Loan Account estab- lished for each loan, to or on the order of the borrower, using one or more of the disbursement methods set forth below, as determined by the Bank. (a) Reimbursement: The Bank may reimburse the bor- rower for expenditures eligible for financing pursuant to the Loan Agreement ("eligible expenditures") that the borrower has prefinanced from its own resources. (b) Advance: The Bank may advance loan proceeds into a designated account of the borrower to finance eligible expenditures as they are incurred and for which sup- porting documents will be provided at a later date (see section 5, "Designated Accounts"). (c) Direct Payment: The Bank may make payments, at the borrower's request, directly to a third party (e.g., supplier, contractor, consultant) for eligible expendi- tures. (d) Special Commitment: The Bank may pay amounts to a third party for eligible expenditures under special commitments entered into, in writing, at the borrower's request and on terms and conditions agreed between the Bank and the borrower. --A- 3. Withdrawal of Loan Proceeds 3.1 Authorized Signatures. Before loan proceeds may be withdrawn or committed from the Loan Account. the au- 6 C .\ '~j~LJR & LoAN DEPARTMENT - MAY 1, 2006 thorized representative of the borrower (as designated in the Loan Agreement) must furnish to the Bank (a) the name(s) of the official(s) authorized to sign applications for with- drawal and applications for a special commitment (collec- tively, "Applications") and (b) the authenticated specimen signature(s) of the official(s). The borrower must indicate clearly if more than one signature is required on Applica- tions and must notify -he Bank promptly of any changes in signature authority. 3.2 Applications. Applications must be provided to the Bank in such form and include such information as the Bank may reasonably request. A:plication forms are available online from the Client Connection Web site at http://clientconnec- tion.worldbank.org or from the Bank upon request. 3.3 For withdrawal from [he Loan Account for advances, the borrower should provide an original signed application for withdrawal. For withdrawal from the Loan Account for re- imbursements and dircet payments and for reporting on the use of advances, the borrower should provide an original signed application for withdrawal together with one copy of supporting documents (see section 4, "Supporting Docu- mentation Requiremer-ts"). 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 destroy the duplicates 3.4 Electronic Delivery. The Bank may authorize the bor- rower to use electronic means, in a manner and on terms and conditions specified by the Bank, to deliver Applications and supporting documentation to the Bank. Applications and supporting documentation delivered in accordance with this subsection will be deemed to have been provided to the Bank for the purposes of satisfying the requirements of sub- sections 3.2 and 3.3 of these Guidelines. coo'. 71 Wom,i) BANK D in er Gus Foa PNo.wers 0 3.5 Minimum Value of Applications. The Bank establishes a minimum value for Applications for reimbursement, direct payment, and special commitment. The Bank reserves the right not to accept Applications that are below such mini- mum value. 3.6 Loan Disbursing Period. The Bank processes Appli- cations only after the Loan Agreement has been declared effective in accordance with the terms of the Loan Agree- ment. The expenditures for which the Applications are made must be: (a) paid for (i) on or after the date of the Loan Agreement, or (ii) in the case of operations that permit retroactive financing, on or after the earlier date specified in the Loan Agreement for that purpose; and (b) incurred on or before the closing date specified or re- ferred to in the Loan Agreement ("Closing Date"), ex- cept as otherwise specifically agreed with the Bank. 3.7 The loan disbursing period ends on the final date established by the Bank for receipt by the Bank of applications for with- drawal and supporting documentation (the "Disbursement Deadline Date"). The Disbursement Deadline Date may be the same as the Closing Date, or up to four months after the Closing Date. Normally, to support orderly project comple- tion and closure of the Loan Account, the Bank does not ac- cept applications for withdrawal or supporting documentation received after the Disbursement Deadline Date. The borrower should promptly inform the Bank of any expected implemen- tation delays or exceptional administrative issues before these dates. The Bank notifies the borrower of any exception that the Bank may make to the Disbursement Deadline Date. 3.8 Disbursement Conditions. If the Loan Agreement con- tains a disbursement condition for a specific expenditure cat- egory, the Bank will disburse loan proceeds for that category ci C00only after the disbursement condition has been fulfilled and the Bank has notified the borrower to this effect. 8 SWLOAN DITAirNNT - MAY 1, 2006 4. Supporting Documentation Requirements 4.1 The borrower provides supporting documentation to the Bank to show that lo-n proceeds have been or are being used to finance eligible expenditures. 4.2 For special commitments, the commercial bank provides its confirmation directly to the Bank that conditions for release of payments committed for withdrawal have been met. 4.3 Types of Supp6rtir,g Documentation. The Bank re- quires either copies oF the original documents evidencing eligible expenditures ("Records") or summary reports of ex- penditure ("Summary Reports") in such form and substance as the Bank may specify. Records include such documents as invoices and receipts. A Summary Report may be either (a) the interim un-audited financial report required under the Loan Agreement ("Interim Financial Report") or (b) a statement of expenditure summarizing eligible expendi- tures paid during a stated period ("Statement of Expendi- ture"). In all cases, the borrower is responsible for retaining the original documents evidencing eligible expenditures and making them availablE for audit or inspection. 4.4 The Bank determines the types of supporting documentation that the borrower shoi1d provide, taking into consideration the disbursement method used. The supporting documenta- tion may be the follow ing: (a) For applications for reimbursement: (i) Interim Financial Reports, (ii) Statements of Expenditure, (iii) Records, or (iv) Records required by the Bank for spe- cific expenditures and Statements of Expenditure for all other expenditurei; (b) For reporting on the use of advances: (i) Interim Financial Reports., (ii) Statements of Expenditure, (iii) Records, or (iv) Records required by the Bank for spe- cific expenditures and Statements of Expenditure for all other expenditures; '.ORANE) A.-tjR . WVoiiu) BANK< Dism7isNIENT GUI DELINT-s, Fon PR~OJECTS (c) For applications for direct payments: Records; and (d) Any other supporting documentation that the Bank may request by notice to the borrower. 4.5 Failure to Provide Audited Financial Statements. If the borrower fails to provide any of the audited Financial Statements required in accordance with, and within the pe- riod of time specified in, the Loan Agreement, the Bank may at its discretion decide not to accept applications for with- drawal supported by Summary Reports, even if such reports are accompanied by Records. 5. Designated Accounts 5.1 The borrower may open one or more designated accounts into which the Bank may, at the borrower's request, de- posit amounts withdrawn from the Loan Account for the purpose of paying for eligible expenditures as they are in- curred ("Designated Account"). Before the Bank authorizes establishment of a Designated Account, the borrower must have adequate administrative capability, internal controls, and accounting and auditing procedures to ensure effective use of the Designated Account. 5.2 The Bank 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 guaranteed by, the borrower within two months after the Disbursement Deadline Date for such loan. 5.3 Type of Designated Account. A Designated Account may be established in one of the two ways set out below, as ap- propriate for the operation concerned, as determined and notified by the Bank. A 10 cool LL.U I OX 1 Ems 4 LOAN DEPAWRME.NT - MAY 1, 2006 (a) Segregated Account: this is an account of the borrower into which only p:oceeds of the loan may be deposited; or (b) Pooled Account: this is an account of the borrower into which the 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- posited. 5.4 Currency of the Designated Account. Designated Ac- counts must be in a currency acceptable to the Bank. In countries that have a :reely convertible currency, Designated Accounts may be held in the currency of the borrower or any freely convertible currency. The Bank may also agree to local currency Designated Accounts when, inter alia, the country's currency (even if not freely convertible) is stable and the expenditures to be financed are primarily in lo- cal currency. The borrower bears all risks associated with foreign exchange fluctuations between (a) the currency of denomination of the loan and that of the borrower's Desig- nated Account, and (!) the currency of denomination of the borrower's Designated Account and the currency or curren- cies of project expencitures. 5.5 Financial Institution. Designated Accounts must be opened and maintained in a financial institution accept- able to the Bank on terms and conditions acceptable to the Bank. To be acceptable to the Bank, the financial institution proposed by the borr3wer should generally meet all the fol- lowing requirements: (a) be financially sound; (b) be authorized to maintain the Designated Account in the currency agreed between the Bank and the bor- rower: (c) be audited regularly, and receive satisfactory audit re- ports; 1,cTI 0 iiXi :r.A-M Wom, BANx Dis)sRSEMENT GuimiENs Foi PNomes (d) be able to execute a large number of transactions promptly; (e) be able to perform a wide range of banking services sat- isfactorily; (f) be able to provide a detailed statement of the Desig- nated Account; (g) be part of a satisfactory correspondent banking network; and (h) charge reasonable fees for its services. 5.6 The Bank reserves the right not to accept a financial insti- tution for the opening and/or maintenance of a Designated Account if such 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 maintained by it. 6. Terms and Conditions Applicable to Advances 6.1 Ceiling. The Bank notifies the borrower of the maximum amount of loan proceeds that may be on deposit in a Desig- nated Account (the "Ceiling"). The Bank, at its discretion, may establish the Ceiling as either (a) a fixed amount, or (b) an amount that is adjusted from time to time during project implementation based on periodic forecasts of project cash flow needs. 6.2 Applications for Advances. The borrower may apply for an advance in an amount up to the Ceiling less the aggre- gate amount of those advances previously received by the borrower for which the borrower has not yet provided sup- porting documentation. Normally, to support orderly closure of the Loan Account, the Bank does riot advance loan pro- ceeds into the Designated Account after the Closing Date. 6.3 Frequency of Reporting Eligible Expenditures Paid A r.0 .from the Designated Account. The borrower reports on SCOo, the use of loan proceeds advanced to the Designated Account G4~UTI~~ 1 I112 LLAN ELI 4 a ULOAN DiPauiMENT - MAY 1, 2006 at intervals specified by the Bank by notice to the borrower ("Reporting Period"). The borrower should ensure that all amounts deposited in the Designated Account are accounted for and their use reported prior to the Disbursement Dead- line Date. After this date, the borrower must refund to the Bank any advances stil unaccounted for or remaining in the Designated Account. 6.4 Withholding Advances. The Bank is riot required to make any deposit into the Designated Account if: (a) The Bank determi ries that payment of the deposit would result in exceeding the Ceiling (see subsection 6.2, "Ap- plications for Advinces"); (b) The Bank is not satisfied that the borrower's planned project expenditures justify the deposit. The Bank may, by notice to the borrower, adjust the amount it deposits or withhold further deposits into the Designated Ac- count until it is satisfied that the financial needs of the project warrant further deposits; (c) The borrower fails to take the action required pursuant to the determinations made by the Bank under subsec- tions 7.1 and 7.2 of these Guidelines: (d) The borrower fails to provide any of the audited Finan- cial Statements required in accordance with, and within the period of time specified in, the Loan Agreement; (e) The Bank determines that all further withdrawals of loan proceeds should be made by the borrower directly from the Loan Account; or (f) The Bank has notified the borrower of its intention to suspend in whole :r in part the borrower's right to make withdrawals from the Loan Account. 6.5 Excess Advances. i at any time the Bank determines that any amount deposited in the Designated Account will not be required to cover further payments for eligible expenditures ("Excess Amount"), it may, at its discretion, require the borrower to take one of the two actions listed below. Upon 13 1 X RN ~. 'tU F7- Wonim BAxK Disnuwsi,:NT GuiDEmuNES Fon Pia.rrs MEM O notification by the Bank, the borrower must promptly take the action requested: (a) Provide evidence satisfactory to the Bank within a pe- riod specified by the Bank that the Excess Amount will be used to pay for eligible expenditures. If the evidence is not furnished within the time period specified, the borrower must promptly refund the Excess Amount to the Bank; or (b) Refund the Excess Amount promptly. 7. Ineligible Expenditures 7.1 Ineligible Expenditures Generally. If the Bank deter- mines that any amount of the loan was used to pay for an expenditure that is not eligible pursuant to the Loan Agree- ment ("ineligible expenditure"), the Bank may, at its dis- cretion, require the borrower to take one of the two actions listed below. Upon notification by the Bank, the borrower must. promptly take the action requested: (a) Refund an equivalent amount to the Bank; or (b) Exceptionally, provide substitute documentation evi- dencing other eligible expenditures. 7.2 Ineligible Expenditures Paid from the Designated Account. If the Bank determines that any payment out of the Designated Account was not justified by the evidence furnished to the Bank or was made for an ineligible expen- diture, the Bank may, at its discretion, require the borrower to take one of the actions listed below. Upon notification by the Bank, the borrower must promptly take the action requested: (a) Provide the additional evidence requested by the Bank; (b) Deposit an equivalent amount into the Designated Ac- count; ~~UTIV~\ I1 114 jF' 0) ~MRAN LOANI DEPARPNFr - MAY 1, 2006 (c) Refund an equivalent amount to the Bank; or (d) Exceptionally, provide substitute documentation evi- dencing other elig.ble expenditures. 8. Refunds 8.1 Borrower Decision to Refund. The borrower may, upon notice to the Bank, refund all or any amount of the loan on deposit in the Designated Account to the Bank for credit to the Loan Account. 8.2 Consequence of Refunds. The Bank shall determine whether refunds made to the Bank in accordance with sec- tions 6 and 7 and subsection 8.1 of these Disbursement Guidelines will be credited to the Loan Account for subse- quent withdrawal or for cancellation. Borrowers should be aware that refunds of loan proceeds may result in swap ter- mination fees and/or unwinding costs for amounts for which the interest rate basis or currency has been converted or hedged. 8.3 Other Obligations Unaffected by Refunds. Refunds of amounts of the loan do not affect any remedies of the Bank under the Loan Agreement. 15 1 7-