29-Dec-2021 Date: ______________________ Honourable Felix Mlusu Minister of Finance Ministry of Finance P.O. Box 30049 Capital City Lilongwe 3 Malawi Re: Republic of Malawi ASWAP SP MDTF GRANT NUMBER TF0B7533 PARALLEL ASWAP SP MDTF GRANT NUMBER TF0B7497 (Additional Financing to the Second Agriculture Sector Wide Approach Support Project) Additional Instructions: Disbursement and Financial Information Letter Honourable Minister: I refer to the Grant Agreement (“Agreement”) between the Republic of Malawi (the “Recipient”) and International Bank for Reconstruction and Development and International Development Association, both, acting as administrator of the Agriculture Sector Wide Approach Support Project Multi-Donor Trust Fund (collectively, the “Bank”) for the purpose of providing additional financing for activities related to the Original Project. The Standard Conditions, as defined in the Grant Agreement, provide that the World Bank may issue additional instructions regarding the withdrawal of the proceeds of Grant TF0B7533 and TF0B7497 (“Grants”), and may set out Project specific financial reporting requirements. This letter (“Disbursement and Financial Information Letter”), as revised from time to time, constitutes such additional instructions. I. Disbursement Arrangements and Withdrawal of Grant Funds The World Bank Disbursement Guidelines for Projects, dated February 1, 2017, (“Disbursement Guidelines”) are available in the World Bank's public website at https://www.worldbank.org, and are an integral part of the Disbursement and Financial Information Letter. The manner in which the provisions in the Disbursement Guidelines apply to the Grant is specified below. Sections and subsections in parentheses below refer to the relevant sections and subsections in the Disbursement Guidelines and, unless otherwise defined in this letter, the capitalized terms used have the meanings ascribed to them in the Disbursement Guidelines. (i) Disbursement Arrangements The table in Schedule 1 provides the disbursement methods which may be used by the Recipient, information on registration of authorized signatures, processing of withdrawal applications (including minimum value of applications and advances), instructions on supporting documentation, and frequency of reporting on the Designated Account. (ii) Withdrawal of Grant Funds (Electronic Delivery) Section 7.01 (c) of the Standard Conditions. The Recipient will deliver Withdrawal Applications (with supporting documents) electronically through the Bank’s web-based portal “Client Connection” at https://clientconnection.worldbank.org. This -2- 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 Applications and supporting documents to the Bank by electronic means. The Recipient may exercise the option of preparing and delivering Withdrawal Applications in paper form on exceptional cases (including those where the Recipient encounters legal limitations), and which were previously agreed with the Bank. 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 World Bank'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 2.07 (a) and (b) of the Standard Conditions). (i) Financial Reports. The Recipient must prepare and furnish to the Bank not later than forty-five (45) days after the end of each calendar quarter, interim unaudited financial reports (“IFR”) for the Project covering the quarter. Where a UN agency is contracted by the Recipient, the Recipient is responsible to ensure that the financial reporting requirements applicable to the UN Agency are stipulated in the agreement between the Recipient and the UN agency and met in a timely manner. (ii) Audits. Each audit of the Financial Statements must cover the period of one fiscal year of the Recipient, commencing with the fiscal year in which the first withdrawal was made. The audited Financial Statements for each such period must be furnished to the Bank not later than six (6) months after the end of such period. Where a UN agency is contracted by the Recipient, the Recipient is responsible to ensure that the documentation requirements applicable to the UN agency, for project audit purposes, are stipulated in the agreement between the Recipient and the UN agency. III. Other Important Information For additional information on disbursement arrangements, please refer to the Loan Handbook available on the World Bank’s website (http://www.worldbank.org) and “Client Connection”. The World Bank 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 Grant, 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 World Bank by email at AskLoans@WorldBank.org using the above reference. Yours sincerely, _______________________ Hugh Riddell Country Manager for Malawi East and Southern Africa Region -3- Attachments 1. Interim unaudited Financial Report (IFR) -4- Schedule 1 - Disbursement Provisions Basic Information Country Republic of Malawi Closing Date Section III-B2 of Schedule 2 to Recipient Republic of Malawi the Grant Agreement Grant TF0B7533 Number TF0B7497 Name of the Additional Financing to the Second Disbursement Four (4) months after the closing Project Agriculture Sector Wide Approach Support Deadline Date date Project Subsection 3.7 ** Disbursement Methods, and Supporting Documentation Disbursement Methods Methods Supporting Documentation Section 2 (**) Available Subsections 4.3 and 4.4 (**) Direct Payment Yes Copy of records Reimbursement Yes Interim unaudited Financial Report (IFR) in the format provided in Attachment 1 of this DFIL Designated Account (DA) Yes Interim unaudited Financial Report (IFR) in the format provided in Attachment 1 of this DFIL Special Commitments Yes Copy of Letter of Credit Designated Account (Section 5 and 6 **) Same as segregated Designated Accounts under the original grants Type Ceiling Variable  DA-A managed by MOA-PFT for Categories 1 and 3  DA-B managed by RFA for Category 2 Financial Institution – Name Reserve Bank of Malawi Currency USD Forecast for 2 quarters as provided in the Frequency of Reporting, Same as IFRs Amount quarterly Interim Financial Report approved Subsection 6.3 (**) by the Task Team Leader Minimum Value of Applications (subsection 3.5) The minimum value of applications for Reimbursement, Direct Payment and Special Commitment is USD 100,000 equivalent. Authorized Signatures (Subsection 3.1 and 3.2 **) Withdrawal and Documentation Applications (Subsection 3.3 and 3.4 **) Authorized Signatures (subsection 3.1). Applications for this Financing will Applications (subsections 3.2 - 3.3). All Withdrawal Applications and their be signed by the official(s) designated in the Standing Authorization Letter supporting documentation shall be electronically submitted via the Bank’s and authorized to sign Withdrawal Applications, including by electronic web-based Portal “Client Connection”. means, for all projects of the Republic of Malawi. Additional Instructions 1- For disbursement under Category 3 (PBCs): a. Disbursements will be made through Advance and Reimbursement method only. -5- b. For each withdrawal request, the amount payable shall be the lesser between (i) the amount allocated for the achievement of one or more PBCs and (ii) the amount of eligible expenditures incurred by the achievement date of such PBCs. c. Supporting documentation for documentation of eligible expenditures under the PBCs are: (i) Bank notification confirming that one or more PBCs (as referred to under Schedule 2 of the Grant Agreement) have been achieved and indicating the amounts payable for such PBCs and (ii) PBC Payment Reconciliation Statement in the format provided in Attachment 2 of DFIL. 2- Funds under Categories 1 and 2 of this Additional Financing will be disbursed after funds under the corresponding Categories of the Original Grants are fully disbursed or committed. 3- Funds from the Designated Account may be transferred to a local currency account also open at the Reserve Bank of Malawi for further transfer to Transaction Accounts (TA), open in Banks acceptable to IDA, for the payment of eligible expenditures as and when required. Transfers should be made as and when required to avoid exchange rate losses. 4- DA A and DA B are to be shared between the original TF and the additional TF, including the Bank account opened at the Reserve Bank of Malawi. Other Instructions Payments to UN Agencies (if any) may be made through UN Advances (with or without a UN Commitment) disbursement mechanism. In case of a contract with a UN Agency requiring a UN Commitment, an application for issuance of UN Commitment is to be submitted by the Recipient. Subsequent payments and documentation of expenditures under the contract must be made in accordance with the Commitment letter to be issued by the Association and the contract between the Recipient and the UN agency. In case of a UN Advance (without UN Commitment), documentation of expenditure should be made once the final invoice is issued and based on the UN Financial Report. -6- Attachment 1: Interim unaudited Financial Report (IFR) Government of Malawi: Additional Finance to the Second Agricultural Sector Wide Aproach Project Designated Account Activity Statement - IDA For the Period Ending : …………………… ```````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````` IDA Credit No. Deposit Bank …………………… Currency of Designated Account Account No. …………… Part I 1. Cumulative advances to end of current reporting period 2. Cumulative expenditures to end of last reporting period 3. Outstanding advance to be accounted for (line 1 minus line 2) Part II 4. Opening DA Balance at beginning of reporting period (as of beginning of quarter) 5. Add/ Subtract : Cumulative Adjustments (if any) 6. Advances from World Bank during period 7. lines 5 and 6 8. Outstanding balances to be accounted for (add lines 4 and 7) 9. Closing DA balance at end of current reporting period (as of quarter) 10. Add / Subtract : Cumulative adjustments 11. Expenditures for current reporting period 12. Add lines 10 and 11 13. Add lines 9 and 12 14. Difference (if any) (line 8 less line 13) Part III 15. Total forecasted amount to be paid by World Bank 16. Less : Closing DA balance after adjustments 17. Direct Payments / Special Commitments 18. Add lines 16 and 17 19 Cash requirement from World Bank for next two reporting period (line 15 less line 18) -7- Government Of Malawi Additional Finance to the Second Agricutural Sector Wide Approach Project IDA CREDIT No: Sources and Uses of Funds and Cash Forecast - for the Quarter Ending ………… (USD) Quarter Cumulative Planned Forecast Next 6 months Actual Planned Variance Actual Planned Variance Original Planned Revised Planned Opening Balance IDA- Designated Account Project Operating Account Total Add: Source of Funds (received during period) IDA- Designated Account 0 Total Cash Available 0 0 0 0 0 0 0 0 Less: Uses of Funds, BY Disbursement Category Goods, non-consulting services, consulting services, Operating Costs and Training under Parts 1(c) and 4 of the Project 0 0 Goods, works, non-consulting services, consulting services, Operating Costs and Training under Part 2 of the Project Works for part 1.1 (a) of the project Eligible Expenditures under Parts 1(a), 1(b), 3(b) and 3(c) Total Expenditure 0 0 0 0 0 0 0 0 Cash Available less Expenditure 0 0 0 0 0 0 0 0 Closing Balance IDA- Designated Account Project Operating Account Total Closing Balance 0 0 0 0 0 0 0 0 NOTES The Following rates were used for conversion: a) Opening Balance of Designated Account in Quarter ………….. US$ = MK ……………………….. b) Funds received and expended converted at the rate of exchange ruling on the date of the transaction ……………………….. c) Closing balance of the Designated Account in Quarter ……………….. US$ = MK ……………………….. -8- Additional Finance to the Second Agricutural Sector Wide Approach Project IDA CREDIT no. Quarter Cumulative Cumulative Planned Actual Variance Planned Actual Variance Planned Actual Variance Expenditure by Component 1. Sustainable Agricultural Productivity and Diversification 1.1. support for the promotion of diversified integrated crop production and management systems 1.2 support for the promotion of integrated soil fertility management 1.3 Support for livestock production and productivity Subtotal 2. Improvement of Roads Infrastructure for Market Access 2.1 improvement and rehabilitation works on unpaved rural roads. 2.2 implementation support to the entities- road improvement and rehabilitation Subtotal 3.Institutional Capacity Building for the Implementation of the National Agricultural Investment Plan (NAIP) 3.1 Project management and coordination 3.2 monitoring and evaluation 3.3 agricultural statistics 3.4 technical systems 3.5 agricultural skills development through the provision of academic training to selected agricultural officers Subtotal 4. Project Coordination and Management 4.1 Fiduciary 4.2 TA -PFT 4.2 Monitoring and evaluation 4.4 Citizen engagement and social accountability Subtotal Total PROJECT COSTS Notes -9- Additional Finance to the Second Agricutural Sector Wide Approach Project Payments Made during Reporting Period Against Contracts Subject to the Bank’s Prior Review Contract Contract Contract Date of WB’s Non Amount Paid to WB’s Share of Amt Number Supplier Date Amount Objection to Supplier during Paid to Supplier -10- Additional Finance to the Second Agricutural Sector Wide Approach Project Payments Made during the Reporting Period on expenditure Other than those under Contracts subject to the Bank's Prior Review Brief Description of Goods, Works or Amount Paid to IDA Share of Amt Category Services Contract Contract Supplier during Paid to Supplier Number Supplier Date Amount Period %IDA during Period