MICHEL KERF Country Director Central America and the Dominican Republic Latin America and the Caribbean Region 19-Aug-2021 _________________________ H. E. Luis Fernando Mata Echeverri Minister of Finance Secretary of State in the Office of Finance General Directorate of Public Credit Tegucigalpa, M.D.C. Republic of Honduras Re: IDA Credit 6401-HN (Social Protection Integration Project) Additional Instructions: First Amendment to the Disbursement and Financial Information Letter Excellency: I refer to the Financing Agreement between the Republic of Honduras (the “Recipient”) and the International Development Association (the “Association”) for the above-referenced Project. The General Conditions, as defined in the Financing Agreement, provide that the Recipient, through Sub-secretaría de Integración Social - SSIS, may from time to time request withdrawals of Credit amounts from the Credit Account in accordance with the Disbursement and Financial Information Letter, and such additional instructions as the Association may specify from time to time by notice to the Recipient. The General Conditions also provide that the Disbursement and Financial Information Letter may set out Project specific financial reporting requirements. This letter constitutes such Disbursement and Financial Information Letter (“DFIL”), and may be revised from time to time. This is the first amendment of the Disbursement Letter dated July 17, 2019 for the above referenced project. This letter restates Section II to add the compliance review requirement of Conditional Cash Transfer (CCT) payments and Section III (i) and (ii) to update the additional disbursement instructions provided for CCTs and for Contingent Emergency Response Component. All other provisions and attachments of the Disbursement Letter dated July 17, 2019, shall remain in force and effect. I. Disbursement Arrangements, Withdrawal and Reporting of Uses of Credit Funds. The Disbursement Guidelines for Investment Project Financing, dated February 2017, (“Disbursement Guidelines”) are available in the Association’s public website at https://www.worldbank.org and its secure website “Client Connection” at https://clientconnection.worldbank.org. The Disbursement Guidelines are an integral part of the DFIL, and the manner in which the provisions in the guidelines apply to the Credit is specified below. (i) Disbursement Arrangements The table in Schedule 1 sets out the disbursement methods which may be used by the Recipient, through SSIS, information on registration of authorized signatures, processing of withdrawal applications (including minimum value of applications and processing of advances), instructions on supporting documentation, and frequency of reporting on the Designated Account. (ii) Electronic Delivery. Section 11.01 (c) of the General Conditions. The Recipient, through SSIS, will deliver Withdrawal Applications (with supporting documents) electronically through the Association’s web-based portal “Client Connection” at https://clientconnection.worldbank.org. This option will be effected after the officials designated in writing by the Recipient who are authorized to sign and deliver Withdrawal Applications have registered as users of “Client Connection”. The designated officials will deliver Applications electronically by completing the Form 2380, which is accessible through “Client Connection”. By signing the Authorized Signatory Letter, the Recipient confirms that it is authorizing such persons to accept Secure Identification Credentials (SIDC) and to deliver the Application and supporting documents to the Association by electronic means. The Recipient, through SSIS, may exercise the option of preparing and delivering Withdrawal Applications in paper form on exceptional cases (including those where the Recipient, through SSIS, encounters legal limitations), and which were previously agreed with the Association. By designating officials to use SIDC and by choosing to deliver the Applications electronically, the Recipient confirms through the authorized signatory letter its agreement to: (a) abide by the Terms and Conditions of Use of Secure Identification Credentials in connection with Use of Electronic Means to Process Applications and Supporting Documentation, available in the Association's public website at https://worldbank.org and “Client Connection”; and (b) to cause such official to abide by those terms and conditions. II. Financial Reports and Audits (Section 5.09 of the General Conditions). (i) Financial Reports. The Recipient, through SSIS, must prepare and furnish to the Association not later than forty-five (45) days after the end of each calendar semester, interim unaudited financial reports (“IFR”) for the Project covering the semester. (ii) Audits. Each audit of the Financial Statements must cover the period of one fiscal year of the Recipient, or any other period agreed with the Association. The audited Financial Statements for each such period must be furnished to the Association, through SSIS, not later than six (6) months after the end of such period. (iii) Compliance Review of CCT payments must be conducted every six months, or other period agreed by the Bank, for compliance reviews of the CCT payments, under terms of reference acceptable to the Bank. The Compliance Review will be submitted to the Bank not later than 90 days after the end of the covered period. III. Additional Disbursement Instructions (i) Conditional Cash Transfers (Category 2, Component 1(b)) Category 2 will finance conditional cash transfers provided to eligible beneficiaries on a grant basis. Credit proceeds under Category 2 will be disbursed to a Designated Account used exclusively for this category. In the case that the Compliance Review, as required under Section IV. 1 of Schedule 2 of the Financing Agreement, identifies instances of ineligible expenditures paid, the SSIS will be responsible for identifying those ineligible expenditures already documented to the Bank in previous customized SOEs (Attachment 3) and for resolving the ineligible expenditures by either: (i) demonstrating the eligibility of the questioned amounts; (ii) presenting other conditional cash transfers made with counterpart funds in lieu of ineligible expenditures; or (iii) refunding the amount to the Designated Account. Any remaining unpaid amount at the Financial Institution, not yet transferred to beneficiaries, should be deducted from the last advance to the Designated Account. (ii) Contingent Emergency Response Component (Component 4) This component will finance Emergency Expenditures required for Honduras’ emergency response activities under Component 4. The list of eligible expenditures and the funds flow arrangements will be defined in the CERC Manual and in the Emergency Action Plan once an Eligible Crisis or Emergency has occurred in accordance with the conditions established in the financing agreement. The expenditures will be documented through Statement of Expenditures (SOE) in the format provided in Attachment 2 or any other customized report as defined in the CERC Manual. IV. Other Information. For additional information on disbursement arrangements, please refer to the Loan Handbook available on the Association’s website (http://www.worldbank.org/) and “Client Connection”. The Association recommends that you register as a user of “Client Connection”. From this website you will be able to prepare and deliver Applications, monitor the near real-time status of the Credit, and retrieve related policy, financial, and procurement information. For more information about the website and registration arrangements, or if you have any queries in relation to the above, please contact the Association by email at AskLoan@WorldBank.org using the above reference. Yours sincerely, ______________________________ Michel Kerf Country Director Central America and the Dominican Republic Latin America and the Caribbean Region Attachments 1. Form of Authorized Signatory Letter 2. Statement of Expenditure (SOE) 3. Customize Statement of Expenditures 4. Sample Designated Account Activity Statement Schedule 1 : Disbursement Provisions Basic Information Country Republic of Honduras Section III.B.2. of Schedule 2 to the Closing Date Recipient Ministry of Finance Financing Agreement. Credit IDA 6401-HN Number Disbursement Social Protection Integration Deadline Date Name of the Project Four months after the closing date. Project Subsection 3.7 ** Disbursement Methods and Supporting Documentation Disbursement Methods Methods Supporting Documentation Section 2 (**) Subsections 4.3 and 4.4 (**) Direct Payment Yes  Copy of records; Reimbursement Yes  Statement of Expenditure (SOE), in the format provided in Attachment 2 of the DFIL, for expenditures under Category 1.  Customized Statement of Expenditures, in the format provided in Attachment 3 of the DFIL, for expenditures under Category 2. Advance Yes  Statement of Expenditure (SOE), in the format provided in Attachment 2 of the DFIL, for (Designated Account) expenditures under Category 1.  Customized Statement of Expenditures, in the format provided in Attachment 3 of the DFIL, for expenditures under Category 2.  Designated Account Activity Statement in the form provided in Attachment 4 with a copy of the Designated Account Bank Statement. Special Commitments No Not Applicable Designated Account (Sections 5 and 6 **) Designated Account A (Category 1) Type Segregated Ceiling Fixed Financial Institution - Central Bank of Honduras Currency USD Name Frequency of Reporting Quarterly Amount $1,500,000 Subsection 6.3 (**) Designated Account B (Category 2) Type Segregated Type Variable Financial Institution - Central Bank of Honduras Currency USD Name Frequency of Reporting, Forecast of six (6) months cash flow of Quarterly Amount Subsection 6.3 (**) programmed CCT payments Minimum Value of Applications (subsection 3.5) The minimum value of applications for Reimbursements and Direct Payments is USD 500,000 equivalent. Authorized Signatures (Subsection 3.1 and 3.2 **) Withdrawal and Documentation Applications (Subsection 3.3 and 3.4 **) Authorized Signatures: A letter in the Form attached (Attachment 1) should be furnished to the Association at the address indicated below providing the name(s) and specimen signature(s) of the official(s) authorized to sign Applications: The World Bank 1818 H Street, N.W. Washington, DC 20433, USA Attention: Mr. Michel Kerf, Country Director Applications: Completed Applications for withdrawal, together with supporting documents, should be provided through the Association’s Client Connection, web-based portal, following the instructions for electronic delivery. In the case the Recipient, through SSIS, does not have internet access, the Association may permit the delivery of Applications for withdrawal, together with supporting documents, to the following address: Banco Mundial SCN Quadra 02, Lote A Ed. Corporate Financial Center, 7º andar 70712-900, Brasília, D.F. – Brazil Attention: Loan Operations Additional Instructions ** Sections and subsections relate to the “Disbursement Guidelines for Investment Project Financing ”, dated February 2017. Attachment 1 [Letterhead] Ministry of Finance [Street address] [City] [Country] [DATE] International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Re: Credit No. IDA Credit 6401-HN (Social Protection Integration Project) Attention: _______________________, Country Director I refer to the Credit Agreement (“Agreement”) between the International Development Association (the “Association”) and the Republic of Honduras (the “Recipient”), dated _______, providing the above Credit]. For the purposes of Section 2.03 of the General Conditions as defined in the Agreement, any 1[one] 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 Credit. For the purpose of delivering Applications to the Association, including by electronic means, 2[each] of the persons whose authenticated specimen signatures appears below is authorized on behalf of the Recipient, acting 3[individually] 4[jointly], to deliver Applications, and evidence in support thereof on the terms and conditions specified by the Association. This confirms that the Recipient is authorizing such persons to accept Secure Identification Credentials (SIDC) and to deliver the Applications and supporting documents to the Association by electronic means. In full recognition that the Association shall rely upon such representations and warranties, including without limitation, the representations and warranties contained in the Terms and Conditions of Use of Secure Identification Credentials in connection with Use of Electronic 1 Instruction to the Recipient: 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 Association. 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 that is sent to the Association. 3 Instruction to the Recipient: use this bracket if any one of the authorized persons may sign; if this is not applicable, please delete. Please delete this footnote in final letter that is sent to the Association. 4 Instruction to the Recipient: use this bracket only if several individuals must jointly sign each Application; if this is not applicable, please delete. Please delete this footnote in final letter that is sent to the Association. Means to Process Applications and Supporting Documentation (“Terms and Conditions of Use of SIDC”), the Recipient represents and warrants to the Association that it will cause such persons to abide by those terms and conditions. This Authorization replaces and supersedes any Authorization currently in the Association records with respect to this Agreement. [Name], [position] Specimen Signature: ____________________ [Name], [position] Specimen Signature: ____________________ [Name], [position] Specimen Signature: ____________________ Yours truly, / signed / ______________ Attachment 2 Attachment 3 ESTADO DE GASTOS JUSTIFICADOS Y DESEMBOLSADOS DESDE_________ HASTA___________ Organismo Financiador Banco Mundial Institución Sub Secretaria de Integración Social SSIS/PRAF Gerencia Administrativa Unidad Coordinadora del Proyecto (UCP/SSIS/PRAF) Numero de Convenio _______ Expresado en Dólares de lso Estados Unidos de América (USD) Categoría de Gasto del Convenio 2 - Transferencias Monetarias Condicionadas (Bono Urbano) Numero de Solicitud GASTOS NO ELEGIBLES Total pagos Pagos TMCs Pagos TMCs - Numero de beneficiario y TMCs pendientes (TMCs/Gastos TMCs del esta Departamento/Municipio de justificar pendientes de periodo justificación autorizar BM) Departamento de Cortes Municipio de Choloma Cantidad de Beneficiarios Monto TMCs pagadas Municipio de San Pedro Sula Cantidad de Beneficiarios Monto TMCs pagadas Departamento de Francisco Morazán Municipio de Tegucigalpa Cantidad de Beneficiarios Monto TMCs pagadas Departamento de XXXX Municipio de XXX Cantidad de Beneficiarios Monto TMCs pagadas Total de beneficiarios Comision bancaria Total pagos TMCs Total pagos TMCs y Comisión Bancaria Nota: adjuntar resumen de pago a beneficiarios por Institución bancaria Nombre Institución Cantidad de Monto TMCs Comisión bancaria Bancaria/Municipio Beneficiarios pagadas Attachment 4 CONCILIACION DE LA CUENTA DESIGNADA Préstamo / Crédito / Donación Nº: Nombre del Banco: Número de la Cuenta: USD 1. Total de Depósitos - 2. Menos Total que ya fue documentado - 3. Saldo Pendiente (por documentar) - 4. Saldo de la Cuenta Designada en / / (de acuerdo al Estado Bancario Adjunto) - 5. Monto a ser documentado en la presente Solicitud Nº ____ - 1 6. Más monto pendiente de reposición por el BIRF - 2 7. Más retiros efectuados aún no solicitados al BIRF - 8. Menos montos debitados después de la fecha del estado bancario adjunto - 9. Menos intereses generados por la Cuenta Designada - 10. Total (4 + 5 + 6 + 7+ 8 - 9) - 11. Discrepancias entre (3 y 10) - Observaciones: 1 Valor pendiente de reposición por el BIRF Solicitud Nº Monto - - - - 2 Retiros efectuados aún no solicitados al BIRF Fecha Descripción Monto Obs.: La moneda da conciliación bancaria debe ser la misma moneda de la Cuenta Designada 1. Llenar con la suma de todos los importes que fueron adelantados por el Banco a la Cuenta Designada* 2. Llenar con la suma de todos los importes que ya fueron documentados al Banco* 3. Línea 1 menos Línea 2* 4. Llenar con el importe que se ve en el saldo del estado bancario enviado para la cuenta designada. 5. Llenar con el importe total que será documentado en la presente solicitud 6. Llenar sólo en el caso de tener previas solicitudes que ya fueron pagadas por el Banco, pero cuyos valores todavía no están reflejadas en el estado bancario enviado. 7. Llenar con el valor que fue retirado de la Cuenta Designada y que todavía no ha sido reportado y/o se encuentra en la cuenta operativa (detallar montos en las observaciones) 8. Llenar solamente si algún importe fue retirado de la Cuenta Designada después de la fecha del estado bancario de la Cuenta Designada que está siendo presentado 9. Llenar solamente en el caso que la Cuenta Designada tenga generado intereses. * Disponible para consulta en el Client Connection (Desembolsos -> Cuentas Designadas/UN)