GrantThornton Project's Financial Statements and Independent Auditor's Report Cabinet of the Deputy Prime Minister for Economic Affairs and Coordination of Economic Departments "Local and Regional Competitiveness Project" - International Bank for Reconstruction and Development Grant number TFOA1779 For the period from 1 January 2019 to 31 December 2019 Cabinet of the Deputy Prime Minister for Economic Affairs and Coordination of Economic Departments "Local and Regional Competitiveness Project" iBRD Grant number TFOAI779 Contents Page Management Responsibility 1 Independent Auditor's Report 2 Statement of Sources and Uses of Funds 4 Statement of Uses of Funds by Project Activity 5 Balance sheet 7 Statement of Breakdown of Loans and Grants 8 Statement of Withdrawals - Designated Account 12 Statement of Designated Account - EUR 13 Statement of Treasury Account (Mirror Designated Account) - MKD 14 Statement of Petty Cash in EUR 15 Statement of Petty Cash in MKD 16 Statement of Special Accounts of Beneficiaries-MKD 17 Notes to Project's financial statements 18 - Cabinet of the Deputy Prime Minister for Economic Affairs and Coordination of Economic Departments "Local and Regional Competitiveness Project" IBRD Grant number TFOA1779 Management Responsibility The accompanying financial statements comprising the Statement of Sources and Uses of Funds, Statement of Uses of Funds by Project Activity, Balance sheet, Statement of Breakdown of Loans and Grants, Statement of Withdrawals, Designated Account Statements and related disclosure Notes (further referred as to "Projcct's Financial Staternents", of the Cabinet of the Deputy Prime Minister for Economic Affairs and Coordination of Economic Departments ("the Cabincet"), "Local and Regional Competitiveness Project" (further referred to as "the Project"), financed under International Bank for Reconstruction and Development Grant ("IBRD") numbered TF0A1779 as at and for the period from 1 January 2019 to 31 December 2019 included on pages 4 to 20, are the responsibility of, and have been approved by the Project's management. The accompanying Project's financial statements have been compiled by the Project's management, for the purposes of reporting to the Ministry and the International Bank for Reconstruction and Development, in conformity with the related requirements of the World Bank's financial reporting guidelines and in compliance with the relevant provisions set out in the Grant Agreement numbered TFOA1779 dated 14 January 2016. Project's management, in furtherance of the integrity and objectivity of the Project's financial statements, has developed and maintained an internal control structure, including the appropriate control environment, accounting systems and control procedures. Project's management believes that internal controls provide assurance that financial records are reliable and form a proper basis for the preparation of financial statements, and that assets are properly accounted for and safeguarded. There are, however, inherent imitations that should be recognized in considering the assurances provided by the internal control structure. The internal control process also includes management's communication to employees of policies, which govern ethical business conduct. Grant Thornton DOO Skopje, Independent Auditors, have been engaged to audit these Project's financial statements in accordance with the International Standards on Auditing accepted in the Republic of North Macedonia. Then report is include on pages 2 and 3. 15'July 2020 Dr. Dragi Raskovl A to a Sisak Stoja cc tovski Secrettheoveinent of Prj ct Director Fina/ial Management Republic of North Macedonia Specialist GrantThornton Independent Auditor's Report Grant Thornton DO Sv. Kiil I Metodij 52b-1/20 1000 Skopje Macedonia T +389 2 3214 700 F +389 2 3214 710 E Contact@mkgtcom To the Management of the Project %ww.granuthornton.mk We have audited the accompanying financial statements of the Cabinet of the Deputy Prime Minister for Economic Affairs and Coordination of Economic Departments ("the Cabinet"), "Local and Regional Competitiveness Project" (further referred to as "the Project"), financed under International Bank foi Reconstruction and Development, Grant numbered TF0A1779, comprising the Statement of Sources and Uses of Funds, Statement of Uses of Funds by Project Activity, Balance sheet, Statement of Breakdown of Loans and Grants, Statement of Withdrawals, Designated Account Statements and related disclosure Notes (further referred as to "the Project's Financial Statements") as at and for the period from 1 January 2019 to 31 December 2019 and included on pages 4 to 20. Management's responsibility for the Project's financial statements These Project's financial statements are compiled for the purposes of reporting to the Cabinet and the International Bank of Reconstruction and Development management, and are the responsibility of the management of the Project. The Project's management is responsible for developing and maintaining such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error. . The Project's Management policy is to prepare the accompanying Project's financial statements on the cash receipts and disbursement basis in conformity with the related requirements of the World Bank's financial reporting guidelines and in compliance with the relevant provisions set out in the Grant Agreement numbered TF0A1779 dated 14 January 2016. On this basis, cash receipts are recognized when received rather when earned and cash expenditures are recognized when paid rather than when incurred. Auditor's responsibility Our responsibility is to express an opinion on these Project's financial statements based on our audit. We conducted our audit in accordance with auditing standards accepted in the Republic of North Macedonial. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. 1 International Standards on Auditing ("ISA") issued by the International Auditing and Assurance Standards Board ("IAASB"), effective from 15 December 2009, translated and published in the "Official Gazette" of the Republic of Nicedonia no. 79 from 2010. Chartered Accountants krterfrmof GrantThorron [rim onalUd GrantThornton The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments the auditor considers internal control relevant to the Project's preparation and fair presentation of the financial statements 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the accompanying financial statements of "Local and Regional Competitiveness Project", financed under International Bank for Reconstruction and Development, Grant numbered TFOA1779, present fairly, in all material respects, the Project's financial position as at 31 December 2019, and the movements on the Sources and Uses of Funds, Statement of Uses of Funds by Project Activity, Statement of Breakdown of Loans and Grants, Statement of Withdrawals and Designated Account Statements for the period from 1 January 2019 to 31 December 2019, in conformity with the related requirements of the World Bank's financial reporting guidelines and in compliance with the relevant provisions set out in the Grant Agreement nufMfbered TFOA1779 dated 14 January 2016. Skopje, 17 July 2020 Grant Thornton DOO, Skopje Direcor Certified A ditor Suzana Stavrik Suzana Stavrik Chirtered Accountants Memter firm of GfrtTforron lntemfond Ud Cabinet of the Deputy Prime Minister for Economic Affairs and Coordination of Economic Departments 4 "Local and Regional Competitiveness Project" IBRD Grant number 7F0A1779 Financial Statements For the period from 1 January 2019 to 31 December 2019 Statement of Sources and Uses of Fuhds (Amounts in EUR) For the period from 1 January 2019 to 31 December 2019 Actual Planned Variance Current Cumulative Current Cumulative Current Cumulative period to date period to date period to date Sources of funds IBRD Grant 1,745,345 5,303,615 1,745,345 5,303,645 - National co-financing 503,243 503,243 503,243 503,243 - Infrastructure investments - co-financing 255,524 255,524 255,524 255,524 - Soft-infrastructure grants - co-financing 869,806 869,806 869,806 869,806 - Matching grants - co-financing 159,513 159,513 159,513 159,513 - Interests earned - - - -- Total sources of funds 3,533,431 7,091,701 3,533,431 7,091,701 - Uses of funds Financed by WB Component 2: Strengthening destination management & enabling environment 187,809 187,809 187,809 187,809 - 2.1 Central level capacity, coordination and policy - - - - - 2.2. Destination management 187,809 187,809 187,809 187,809 - Component 3: Investment in tourism- related infrastructure & linkages at destination 3,369,226 3,369,226 3,369,226 3,369,226 3.1 Infrastructure investments 977,444 977,444 977,444 977,444 - 3.2.1 Soft-infrastructure grants 1,319,125 1,319,125 1.319,125 1,319,125 - 3.2.2 Matching grants 1,072,657 1,072,657 1,072,657 1,072,657 - Component 4: Strengthening project management 392,301 1,063,049 392,301 1,063,049 - Front end fee. - - --- Total uses of funds 3,949,336 4,620,084 3,949,336 4,620,084 Balance (415,905) - - -- Bank balances, at beginning of the period 2,887,522 - - Bank balances, at end oJfl per 247i- -- The Project's Fappnrcal Stetements have been Cpprove th1Cabinet on 15July 0 an signed on its behalf by. Dr. Dragi Raskovsk AntoniaIS A Stoja ce OMV Secretary Genetal of the Governent of Project irector Finat cial Management Republic of North Macedonia - Speci lst Cabinet of the Deputy Prime Minister for Economic Affairs and Coordination of Economic Departments 5 "Local and Regional Competitiveness Project" IBRD Grant number TFOA1779 Financial Statements For the period from 1 January 2019 to 31 December 2019 Statement of Uses of Funds by Project Activity (Amounts in EUR) For the period from 1 January 2019 to 31 December 2019 * Actual Planned Variance Current Cumulative Cumulative Cutrent Cumulative period to Date Current period to Date period to Date Component 2: Strengthening destination inanagement & enabling environment 2.1 Central level capacity, coordination & policy 2/1 Training in public private dialogue and tourism development - - - 2/2 Design of software for data gathering - - - - - - 213 Equipment for data gathering system 214 Technical assistance (TA) for Implementation of business licensing reforms - - - - 2/5 TA for implementation of standards improvement - - - - - 2/6 TA for regulatory simplification and design of platform for electronic issuing of licenses and permits in tourism -Payments without contract 2.2 Destination management 2/7 TA on destination Management: Study tours (several) - - - - - 2/7-1 TA on Destination Management: Stakeholder mapping; Design of structured PPD platform and process; Training on Destination Management; Development of toolkits and manuals 127,585 127,585 127,685 127,585 - - 2/7-1.1 Study Tour 53,336 53,336 53,336 53,336 - - 2/8 Design of software to support destinalion management - - - - - - 2/9 Equipment to support destination management (computers, office furniture, others) - - - - - - 2/10 Annual survey of the project's impact on beneficiaries and local economies 6,888 6,888 6,888 6,888 - - Payments without contract Sub-total Component 2 187,809 487,809 187,809 187,809 - - Component 3: investment in tourism-related Infrastructure & linkages at destination 3.1 Infrastructure investments 977,444 977,444 977,444 977,444 - - 3.2.1 Soft-infrastructure grants 1,319,125 1,319,125 1,319,125 1,319,125 - - 3.2.2 Matching grants 1,072,657 1,072,657 1,072,657 1,072,657 - - Payments without contract . - - Sub-total Component3 3,369,226 3,389,226 3,369,226 3,369,226 Cabinet of the Deputy Prime Minister for Economic Affairs and Coordination of Economic Departments 6 "Local and Regional Competitiveness Project" IBRD Grant number TFOAI 779 Financial Statements For the period from 1 January 2019 to 31 December 2019 Statement of Uses of Funds by project activity (continued) (Amounts in EUR) For the period from 1 January 2019 to 31 December 2019 Actual - Planned Variance Current Cumulative Current Cumulative Current Cumulative period to Date period to Date period to Date Component 4: Strengthening' Project Management - 4/1 PlU Director Contract No. LRCP-IC-4/1 29,400 106,457 29,400 106,467 - - 4/2 FM Specialist Contract No. LRCP-IC-4/2 21,599 61,682 21,599 61,682 - 412-2 Financial Assistant Contract No. LRCP- IC-4/2-2 14,400 19,200 14,400 19,200 - - 4/3 Procurement Specialist Contract No. LRCP-IC-413 21,599 66,812 21,599 66,812 - 4/3-2 Procurement Specialist No. LRCP-lC- 4/3-2 21,599 30,599 21,599 30,599 - 415 Civil Engineer Contract No. LRCP-IC-4/4 21,599 72,179 21,599 72,179 - 4/5 Civil Engineer Contract No. LRCP-1C-4/5-1 1,800 1,800 1,800 1,800 - - 416 Architect and Cultural Heritage Specialist 14,400 21,273 14,400 21,273 - 417 Tourism Development Specialist Contract No. LRCP-IC-4/7 21,600 81,965 21,600 81,965 - - 4/8 Regional Development Specialist Contract No. LRCP-IC-4/8 21,600 81,966 21,600 81,956 - 419 Architect Expert 3,470 4,270 3,470 4,270 - - 4/9-1 Architect Expert 3,220 4,100 3,220 4,100 - 4110 Skills Expert 4,400 5,440 4,400 5,440 - - 4/10-1 Skills Expert 3,740 4,820 3,740 4,820 - - 4/11 Civil Engineer Expert 3,173 3,799 3,173 3,799 - 4/11-1 Civil Enigineer Expert 2,090 2,610 2,090 2,610 - 4/11-111 Business Development Expert 4,730 6,970 4,730 6,970 - 4/11-1/2 Business Development Expert 4,020 4,940 4,020 4,940 - 4/11-2/1 Tourism Expert 5,110 6,630 5,110 6,630 - - 4/11-212 Tourism Expert 4,240 6,656 4,240 6,656 - 4/12 M&E and Communication Specialist Contract No. LRCP-IC-4/12 14,400 28,513 14,400 28,513 - 4/13 Environmental Specialist Contract No. LRCP-IC-4/13 14,400 48,120 14,400 48,120 - - 4/13-1 Environmental Assistant Contract No LRCP-IC-4/13-1 8,900 8,900 8,900 8,900 - 4/14 Procurement Officer Contract No. LRCP- IC-4114 - 34,243 - 34,243 - - 4114-1 Procurement Officer Contract No. LRCP-IC-4/14-1 13,199 17,999 13,199 17,999 - 4/15 Administrative I assistant / operative / translator Contract No. LRCP-lC-4/15 10,800 39,717 10,800 39,717 - - 4/16 Financial/accounting Software and support and maintenance for the project duration - 3,353 - 3,353 - - 4/17 Office equipment (computers, furniture) 8,015 40,140 8,015 40,140 - 4118 Project Vehicle - 25,150 - 25,150 - - 4/19 Training for PIU staff - -- - - 4/20 Project audit 5,063 7,595 5,063 7,595 - - 4/21 Visibility and Promotional Campaign 45,183 47,069 45.183 47,069 - 4/22 Operational cost 44,035 167,416 44,035 167,416 - - Petty cash 517 656 517 656 - Payments without contract--- Sub-total Coiponent 4 392,301 1,063,049 392,301 1,06,049 - Front end fee - - - T3,949,336 4,620,084 Cabinet of the Deputy Prime Minister for Economic Affairs and Coordination of Economic Departments 7 "Local and Regional Competitiveness Project" IBRD Grant number TFOA1 779 Financial Statements For the period from 1 January 2019 to 31 December 2019 Balance sheet In EUR 31 December 2019 31 December 2018 Assets Bank balances 2,471,617 2,887,522 Total assets 2,471,617 2,887,522 Funds and liabilities Unspent funds 2,471,617 2,887,522 Total Fund and liabilities 2,471,617 Cabinet of the Deputy Prime Minister for Economic Affairs and Coordination of Economic Departments 8 "Local and Regional Competitiveness Project" IBRD Grant number TFOA1779 Financial Statements For the period from 1 January 2019 to 31 December 2019 Statement of Breakdown of Loans and Grants (Amounts in EUR) Cumulative for the period from 28 July 2016 through 31 December 2019 Contract details Opening Closing Transferleligible Balance at the Balance at Approved payments by Transfer by beginning of the end of Grant Beneficiary Beneficiary LRCP and Beneficiary- the period- the period- /Contract LRCP in cash in kind national cash Actual Beneficiary Beneficiary Grant No. Amount Grant contribution contribution contribution contribution Costs Account Account Component 3: Investment in tourism-related infrastructure & linkages at destinations 3.1 Infrastructure investments Municipaty of Krusevo LRCP-1/1 7-SG/1 496,765 429,715 35,032 32,018 285,201 32,686 309,495 - 8,392 Municipality of Vevcani RCP-1/17-SG/2 985,604 838,089 4,927 142,588 258,820 - 258,820 - - Municipality of Boaliovo LRCP-1/17-SG/3 66,228 58,704 7,524 - 47,959 7,465 65,424-- Municipality of Cair LRCP-117-SG/4 572,199 505,941 66258 - - - - - Municipality of Karbinci LRCP-1118-SG/20 426,953 381,965 16,507 28,481 77,951 6107 77,951- 6,107 Municipality of Centar Zupa LRCP-1118-SG/19 227,574 204,816 22,758 - - - - Municipality of Negqtinn LRCP-1/18-SG/22 256,762 215,531 30,903 10,328 787 27.768 28855555 Municipality of Karpos LRCP-1/18-SG/31 906,718 770,620 119,785 16,313 37,572 - 37,572 - Municipality of Bitola LRCP-1118-SG/30 959,096 853,187 95.909 - 1,345 96,087 1,346- 96,086 Cabinet of the Deputy Prime Minister for Economic Affairs and Coordination of Economic Departments "Local and Regional Competitiveness Project" IBRD Grant number TFOA1779 Financial Statements For the period from 1 January 2019 to 31 December 2019 Statement of Breakdown of Loans and Grants (continued) (Amounts in EUR) Cumulative fcr the period from 28 July 2016 through 31 December 2019 Contract details Opening Closing Transfereligible Balance at the Balance at Approved payments by Transfer by beginning of the end of Grant Beneficiary Beneficiary LRCP and Beneficiary- the period- the period- /Contract LRCP in cash in kind national cash Actual Beneficiary Beneficiary Grant No. Amount Grant contribution contribution contribution contribution Costs Account Account Municipality of Konce LRCP-1/18-SG/23 290,041 256,815 23,203 10,023 200,891 - 200,891 - Municipality of Veles LRCP-1/18-SG/34 1,010,964 905,477 82,366 23,121 1,430 82,469 1,430 82.469 Municipality of Kocani LRCP-1118-SG/33 595,422 528,867 21,491 45,064 - 2,942 - -2,942. Municipality of Do ran LROP-1/118-SG/38 639,669 537,194 82,181 20,294 - -- Municipality of Strurriica LRCP-1/18-SG-50 721,630 606,169 115,461 --- Municipality of Kicevo LRCP-1li8-SG/37 653,763 575,312 63,247 15,204 5.960 -- 5,960- - Museum of city of Skopje LRCP-1/17-SG/43 904,048 752,811 - 151,237 - - --- Sub-totai 3.1 - 9,713,436 8,431,213 787,552 494,671 917,916 255,524 977,444- 1996 3.2.1 Linkages and innovation grants. Soft-infrastructure grants Beneficiary Hotel Arka LRCP-118-SG-10 124.475 62,237 62,238 62,352 62,431 112,94024 11,843 Beneficiary Hotel Pela LRCP-1/18-SG-11 215,233 . 100,444 114789 - 100,632 115,112 215,744 -- Beneficiary Popova Kula Winery LRCP-1/18-SG-13 200,000 100,000 100,000 - 100,186 100,276 200,462 - - Beneficiary Euro Hotel Gradce LRCP-1J18-SG-14 162,103 81,051 81,052 - - - - - - Beneficiary Lazar Winery LRCP-118-SG-15 200,671 100,335 100,336 - 100,474 100,627 201,101 - - Cabinet of the Deputy Prime Minister for Economic Affairs and Coordination of Economic Departments 10 "Local and Regional Competitiveness Project!' IBRD Grant number TFOAI 779 Financial Statements For the period from 1 January 2019 to 31 December 2019 Statement of Breakdown of Loans and Grants (continued) (Amounts in EUR) Cumulative for the period from 28 July 2016 through 31 December 2019 Contract details Opening Closing Transfer/eligible Balance at the Balance at Approved payments by Transfer by beginning of the end of Grant Beneficiary Beneficiary LRCP and Beneficiary- the period- the period- /Contract LRCP in cash in kind national cash Actual Beneficiary Beneficiary Grant No. Amount Grant contribution contribution contribution contribution Costs Account Account Beneficiary Hotel Arena LRCP-118-SG-16 165,560 82,780 82,780 - 82,934 84,995 153,110 - 14,819 Beneficiary Agropolog LRCP-1/18 -SG-25 77,652 38.826 38,826- 38,899 39,082 77.981 -- Beneficiary In Travel LRCP-1118-SG-24 72,765 36,383 36,382.8 36,424 37,163 73587 - Beneficiary Hotel Montenegro LRCP-1/18-SG-26 56,218 28,109 2810909 28,134 28,189 56,319 - 4 Beneficiary Podqorski An LRCP-1/ 18-SG-28 488,548 242,515 246,,03- - 57,989 57,679 - 310 Beneficiary Global DVD LRCP-1/18-SG-32 239,207 92,432 146,775 - 76,231 43.187 33,044 Beneficiary Bashoman L&S LRCP-1118-SG-27 168,026 84,013 84,013 - - - Beneficiary Ski Centar Mavrovo LRCP-1/18-SG-42 519,538 259,769 259,769 - - - Beneficiary Tikvesh LRCP-1/18-SG-35 316,173 148,777 167,396- 167,711 127,015 40,696 Beneficiary Hotel Teatar Bitola LRCP-1/18-SG-36 33.216 16,608 16,608 - - - Beneficiary Stobi LRCP-1118-SG-47 77,516 38,758 38,758 - - - Sub-total 3.2.1 3,1186,901 1,513,037 1603864- 550,035 869,806 1,319,125- 100,716 3.2.2 Matching grants Beneficiary Krste Jon LRCP-1117-SG-4 272,834 245,545 27289- 172,192 27,340 189560- 9,972 Beneficiary Macedonian Adventure Discipline LRCP-11"G-1 55,873 50,163 5,710 50,255 11,392 61.648 - Cabinet of the Deputy Prime Minister for Economic Affairs and Coordination of Economic Departments 11 "Local and Regional Competitiveness Project" IBRD Grant number TFOA1 779 Financial Statements For the period from 1 January 2019 to 31 December 2019 Statement of Breakdown of Loans and Grants (continued) (Amounts in EUR) Cumulative for the period from 28 July 2016 through 31 December 2019 Contract details Opening - Closing Transfereligible Balance at the Balance at Approved payments by Transfer by beginning of the end of Grant Beneficiary Beneficiary LRCP and Beneficiary- - the period- the period- /Contract LRCP in cash in kind national cash Actual Beneficiary - Beneficiary Grant No. Amount Grant contribution contribution contribution contribution Costs Account Account Beneficlary Maesevska Korija LRP-18-G-22 52,248 47,023 5,225 - 47,110 5,238 52,348 -- Beneficiary Polar LROP-1118-SG-3 137,979 115,902 22,077 - 116,118 22,185 138303- Beneficiary Dzeben Vodic LRCP-1118SG-4 44,005 39,274 4,731 - 39,348 4.740 44,088-. Beneficiary Serpa LRCP-1118-SG-5 57,688 48,458 9,230 - 48,537 9,381 57.918 - Beneficiary Youth Forum for Cooperation LRCP-18-SG -6 55,179 49,661 5,518 - 49,755 5,750 55505- - Beneficiary Sojuz na Stopanski Komori LRCP-1/18-SG-7 83,112 74,580 8,532 - 52,285 8,549 16,175 - 44,659 Beneficiary Sojuz na izvidnici na Makedoni a LRCP-1/18-SG-8 49,950 44,955 4,99595 13,512 5,004 15,727 -2,789 Beneficiary NAITAM LRCP-1/18-G- 65507 47 49.884 15,163- 49,973 15,271 65,244 -- Beneficiary Aero Kiub Skopie LRCP-1118-SG-12 42,019 37,817 4,202- 37,888 4.373 422616--- Beneficiary ALBlZ LRCP-1/18-SG-17 68,355 61,519 6,836- 61,629 6,889 68,518 Beneficary ALKA LRCP-1/18-SG-18 93,197 83,868 9.329- 84,002 9,346 71,154- 22.194 Beneficiary Mustseedonia LRC III8-SG -21 135.545 121.990 13555- 85,555 14,039 99,580 15 Beneficiary Finance think . LRCP-1/18-SG-29 99,975 89,977 9,99899 86,855 10,016 94628 -2,243 Sub-total 3.2.2- 1,313,006 1,160,616 152,3902, 995,016 159,513 1,072,657 . 81,872 Sub-total 3.2- 4,429,907 2,673,653 1,756,2547- 1,545,051 1,029,319 2,391,782- 182,588 Total - 14,143,343 11,104,866 2,543,806 494,671 2,462,967 1,284,843 3,369.,2266- 378,584 Cabinet of the Deputy Prime Minister for Economic Affairs and Coordination of Economic Departments 12 "Local and Regional Competitiveness Project" IBRD Grant number TFOAI779 Statement of Withdrawals - Designated Account (Amounts In EUR) For the period from 1 January 2019 to 31 December 2019 Application # and date Total Total Requested Disbursed Difference IBRD Grant TF0A1779 #5 Application /20.06.2019 691,217 691,217 #6 Application /14.10.2019 1,054,128 1,054,128 1,745,345 1,745,345 (Amounts in EUR) For the period from 1 January 2018 to 31 December 2018 Application # and date Total Total Requested Disbursed Difference IBRD Grant TF0A1 779 #4 Application 107.09.2018 340,357 340,357 340,357 340,357 Cabinet of the Deputy Prime Minister for Economic Affairs and Coordination of Economic Departments 13 "Local and Regional Competitiveness Project" IBRD Grant number TFOA1 779 Statement of Designated Account - EUR Account number 00 701 0001585.2 Depository Bank National Bank of the Republic of North Macedonia Address Complex of Banks, 1000 Skopje, Republic of North Macedonia Grant Number TF0A1779 Currency EUR (Amounts in EUR) For the period from 1 January 2019 to 31 December 2019 At 1 January 2019 2,887,281 Add: inflows Replenishment during the period 1,745,345 Interest received - 1,745,345 Deduct: Outflows Transfer to treasury account (Mirror designated account) - MKD (2,539,172) Transfer to treasury account (Mirror designated account) - MKD for Petty cash in EUR (2,230) At 31 December 2019 2,091,224 (Amounts in EUR) For the period from 1 January 2018 to 31 December 2018 At 1 January 2018 2,861,848 Add: Inflows Replenishment during the period 340,357 Interest received 340,357 Deduct: Outflows Transfer to Ireasury account (Mirror designated account) - MKD (314,724) A314,724) Cabinet of the Deputy Prime Minister for Economic Affairs and Coordination of Economic Departments 14 "Local and Regional Competitiveness Project" IBRD Grant number TFOAI779 Statement of Treasury Account (Mirror Designated Account) - MKD Account number 100000000063095 Depository Bank National Bank of the Republic of North Macedonia Address Complex of Banks, 1000 Skopje, Republic of North Macedonia Grant Number TF0AI779 Currency Macedonian Denars ('MKD") (Amounts in EUR) For the period from 1 January 2019 to 31 December 2019 At 1 January 2019 60 Add: Inflows Transfer from designated account- EUR 2,539,172 Transfer from designated account- EUR for Petty cash in EUR 2,230 2,541,402 Deduct: Outflows Amount of eligible expenses paid during the period (577,364) Transfers to Beneficiaries special accounts (1,959,724) Transfer to Petty Cash in EUR (2,230) Transfer to Petty Cash In MKO (490) (2,539,808) At 31 December 2019 1,654 (Amounts in EUR) For the period from 1 January 2018 to 31 December 2018 At I January 2018 896 Add: Inflows Transfer from designated account - EUR 314,724 314,724 Deduct: Outflows Amount of eligible expenses paid during the period (314,905) Transfer to Petty Cash in MKD (654) (31c560) At 31 December 2018 60 Cablnet of the Deputy Prime Minister for Economic Affairs and Coordination of Economic Departments 15 "Local and Regional Competitiveness Project" IBRD Grant number TFOA1 779 Statement of Petty Cash in EUR (Amounts in EUR) For the period from I January 2019 Io 31 December 2019 At 1 January 2019 Add: Inflows Transfer from Mirror Desinnated Account - MKO 2,230 2,230 Deduct; Outflows Amount of elinihle expnsnes naidi rilring the period (2.230) (2,230) At 31 December 2019 There were no activities on Petty Cash in EUR Account for the Project during 2018. Cabinet of the Deputy Prime Minister for Economic Affairs and Coordination of Economic Departments 16 "Local and Regional Competitiveness Project" IBRD Grant number TFOA1779 Statement of Petty Cash in MKD Grant Number TF0A1779 Currency Macedonian Denars (MKD) (Amounts in EUR) For the period from 1 January 2019 to 31 December 2019 At I January 2019 181 Add: Inflows Transfer from Mirror Designated Account- MKD 490 490 Deduct: Outflows Amount of eligible expenses paid during the period (516) (516) At 31 December 2019 155 (Amounts in EUR) For the period from 1 January 2018 to 31 December 2018 At i Januar 2018 Add: Inflows Transfer from Mirror Designated Account - MKD 654 654 Deduct: Outflows Amount of eligible expenses paid during the period (473) (473) At 31 December 2018 181 Cabinet of the Deputy Prime Minister for Economic Affairs and Coordination of Economic Departments 17 "Local and Regional Competitiveness Project" IBRD Grant number TFOAI779 Statement of Special Accounts of Beneficiaries - MlD Grant Number TF0A1779 Currency Macodonian D enars (MKD") (Amounts in EUR) For the period from I January 2019 to 31 December 2019 At 1 January 2019 Add: Inflows Transfers by LRCP 1,959,724 Transfers by national contribution 503,243 Transfers by Beneficiaries-cash contribution 1,284,843 3,747,810 Deduct: Outflows Amount of eligible expenses paid during the period (Aclual costs) (3,369,2 (3, 36 9, 22 6) At 31 December 2019 378,684 There were no activities on Special Accounts of Beneficiaries for the Project during 2018. Cabinet of the Deputy Prime Minister for Economic Affairs and Coordination of Economic Departments 18 "Local and Regional Competitiveness Project" IBRD Grant number TF0A1779 Notes to Project's financial statements 1 General On 14 January 2016, the Cabinet of the Deputy Minister of Economic Affairs and Coordination of Economic Departments ("the Cabinet" or "the Recipient"), entered into the Giant Agreement numbered TF0A1779 with the International Bank for Reconstruction and Development ("IBRD") for financing the "Local and Regional Competitiveness Project" (further referred to as "the Project") in the amount of EUR 21,664,925. The objectives of the Project are to: (i) to enhance the contribution of tourism to local economic development; and (ii) improve the capacity of the Recipient's government and public entities to foster tourism growth and facilitate destination management. The Borrower has established the Project Implementation Unit ("PIU"), responsible for the day- to- day activities and for procurement, financial management, disbursement and monitoring and reporting for the entire Project. The following table underlines the categories of Eligible Expenditures that may be financed out of the proceeds of the Grant ("Category"), the allocation of the amounts of the Grant to each Category, and the percentage of expenditures to be financed for the Eligible Expenditures in each Category: Percentage of the Amount of the Expenditures to be Grant Allocated Financed (exclusive of (expressed in National Beneficiaries' Taxes, other than Category Euro) Contribution Contribution personal income taxes) I.Goods, operating costs, training, non-consulting services, and consultants' services under Component 2 and 4 of the Project 2,500,000 - - 100% 2.Subprojects under Component 3 of the Project 13,260,000 3,176,471 2,728,454 100% Total 16,760,000 3,176,471 2,728,454 The Closing Date of the Project was 31 December 2019. At 31 October 2019 the IBRD sent to the Ministry of Finance of the Republic of North Macedonia the extension letter for extending the Closing date of the Project until 31 December 2020. Cabinet of the Deputy Prime Minister for Economic Affairs and Coordination of Economic Departments 19 "Local and Regional Competitiveness Project" IBRD Grant number TFOA1 779 2 Project Objectives, Activities and Institutional Arrangements Project Objectives and Activities The Project consists of four components: Component 1: Technical assistance for tourism development (Bank-executed) Provision of technical assistance to (i) improve the capacity of public and private stakeholders in supporting tourism development at the national level in a number of areas, including, inter alia, 'institutional coordination, data usage, and business environment; land (ii) support the Recipient- executed activities under Components 2, 3 and 4 of the Project. Component 2: Strengthening destination inanagement and enabling environment 2.1: Strengthening the Recipient's institutional capacity and cooidination at the central governmental level through, inter alia: (i) carrying out of training in public-private dialogue and tourism development; (ii) supplying software systems and equipment to implement improvements in data-and information-gathering; and (iii) provision of technical assistance. 2.2: Developing destination management capacity of key stakeholders (including, inter alia, tour operators, municipalities, centers for regional development, NGOs, skills development institutions, national parks authorities) in selected locations within the Recipient's territory, through the provision of technical assistance, training, equipment and software systems, all in accordance with the relevant criteria set forth in the Project Operations Manual. Component 3: Investment in tourism-related infrastructure and linkages at destinations 3.1: Provision of technical assistance and financing to selected infrastructure Subprojects that are aied to improve the physical condition, access and marketing of touristic local attractions, cultural and natural heritage sites. 3.2: Provision of financing to selected non-infrastructure Subprojects (relating to, inter alia, promotional activities, capacity building and technological innovation in connection with tourism products and services) aimed to enhance tourism service-delivery and benefit local economies. Component 4: Strengthening project nagement Inproving the institutional capacity of the PIU through the provision of consultant services, training, goods, and operating costs associated with the implementation, monitoring and evaluation of the Recipient-executed activities under Component 2, 3 and 4 of the Project. Institutional Arrangements Throughout the duration of the Project,-the Recipient shall maintain the PIU with a composition, adequate staff and resources, functions and responsibilities (including the responsibility to manage, coordinate, monitor and evaluate the implementation of the Project) satisfactory to the World Bank. The Recipient shall carry out the Project in accordance with the Project Operational Manual and shall not amend, suspend, abrogate, repeal or waive any provision of said Manual without the prior approval of the Bank. Cabinet of the Deputy Prime Minister for Economic Affairs and Coordination of Economic Departments 20 "Local and Regional Competitiveness Project" IBRD Grant number TFOA1779 3 Accounting policies Following are the principle accounting policies adopted in preparation of these financial statements, These accounting policies are consistently applied to all financial periods presented. Basis of preparation The,accompanying financial statements have been prepared for the puyposes of reporting to IBRD, on the activities of the Project related to the grant received for the completion of the Project's objectives, in accordance (vith the respective provisions set out in the Grant Agreement nunibered TF0A1779 signed between the IBRD and the Cabinet of the Deputy Prime Minister for Econonmic Affairs and Coordination of Economic Departments. These financial statements are prepared on the cash receipts and disbursement basis and include all Project' related expenditures incurred, which are financed under the provisions set out in Grant Agreement numbered TFOA1779 dated 14 January 2016. These instructions closely follow the World Bank's Disbursement Guidelines for Projects. The financial statements have been prepared for the period from 1 January 2019 through 31 December 2019. Currency translation Project's financial statements are kept in Euro as this is the reporting currency of the Project. Transactions denominated in currencies other than Euro are translated using the buying foreign exchange rates of the National Bank of the Republic of North Macedonia for international payment operations of the government bodies of Republic of North Macedonia by which each instalment of EUR is transferred to Denar account in bank, until that Denar amount is spent,