OFFICIAL DOCUMENTS THE WORLD BANK IBRD* IDA I WOpLDBANKGROUP July 24, 2018 Hon. Pohiva Tu'ionetoa Minister for Finance & National Planning Ministry of Finance & National Planning P.O. Box 87 Vuna Road, Nuku'alofa Kingdom of Tonga Dear Minister, IDA Grant Number D359-TO Additional Financing for the Pacific Resilience Project under the Pacific Resilience Program) Additional Instructions: Disbursement and Financial Information Letter I refer to the Financing Agreement between Kingdom of Tonga ("Recipient") and the International Development Association ("Association") for the above-referenced Project, dated / 6 ftaf 2018. The General Conditions, as defined in the Financing Agreement, provide that the Association may issue additional instructions regarding the withdrawal of the proceeds of IDA Grant Number D359-TO ("Financing"), and specify certain financial management reporting and audit requirements. This letter ("Disbursement and Financial Information Letter" or "DFIL"), as revised from time to time, constitutes such additional instructions. 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 this Disbursement and Financial Reporting Letter, and the manner in which the provisions in the guidelines apply to the Financing is specified below. I. Disbursement Arrangements, Withdrawal and Reporting of Financing Proceeds (i) Disbursement Arrangements: * General Provisions (Schedule 1). The table in Schedule 1 sets out 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 processing of advances), instructions on supporting documentation, and frequency of reporting on the Designated Account. * Special Provision. Projects in situations of urgent need of assistance or capacity constraints: Disbursements under contracts for goods, works, non-consulting services and consulting services procured or selected through international open or limited competition or Direct Selection, as set out in the procurement plan, must be made only through Direct Payment and/or Special Commitment disbursement methods. However, in case of contracts signed and financed under IDA 5689-TO and IDA D078-TO, this is not applicable. (ii) Electronic Delivery. Refer to section 11.01 (c) of the General Conditions: * The Association may permit the Recipient to electronically deliver applications (with supporting documents) through the Association's web-based portal (https://clientconnection.worldbank.org) 1818 H Street NW - Washington, DC 20433 USA "Client Connection". This option iii., effected if: (a) the Recipient has designated in writing, its officials who are authorized to sign and deliver Applications and to receive Secure Identification Credentials ("SIDC") from the Bank for 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". The designated officials may deliver Applications electronically by completing the Form 2380, which is accessible through "Client Connection". The Recipient may continue to exercise the option of preparing and delivering Applications in paper form. The Association reserves the right and may, in its sole discretion, temporarily or permanently disallow the electronic delivery of Applications by the Recipient. By designating officials to use SIDC and by choosing to deliver the Applications electronically, the Recipient confirms through the authorized signatories 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.ore and "Client Connection"; and (b) to cause such official to abide by those terms and conditions. II. Financial Reports and Audits. (i) Financial Reports. The Recipient shall prepare and furnish to the Association not later than forty- five (45) days after the end of each calendar semester, Interim Unaudited Financial Reports (IUFR) of the Project covering the semester. (ii) Audits. Each audit of the Financial Statements shall 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 shall be furnished to the Association not later than six (6) months after the end of such period. III. Other Important Information For additional information on disbursement arrangements, please refer to the Loan Handbook available on the Association's public website 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 Financing, and retrieve related policy, financial, and procurement information. For more information about the website and registration arrangements, please contact the Association by email at clientconnection(&@worldbank.org. If you have any queries in relation to the above, please contact Mr. Satish Kumar Shivakumar, Finance Officer, at satishkumarl worldbank.or using the above reference. Yours Sincerely, Michel Kerf Country Director Papua New Guinea and Pacific Islands East Asia and Pacific Region Attachments 1. Form of Authorized Signatories Letter 2. Form of Statement of Expenditures Page 2 of 7 Schedule 1: Disbursement Provisions Basic Information Country Kingdom of Tonga Closing Date Section III.B.2 of Schedule 2 to the Recipient Kingdom of Tonga Financing Agreement. Grant IDA D359- Name of the Project Additional Financing for the Disbursement Four months after the closing date. Number TO Pacific Resilience Project Deadline Date under the Pacific Resilience Subsection 3.7 Program ** Disbursement Methods and Supporting Documentation Methods Available Disbursement Methods Supporting Documentation Section 2* Subsections 4.3 and 4.4 Direct Payment Yes Copy of Records Yes for contracts other than contracts referred in Statement of Expenditures (SOE) in the form attached (Attachment 2) Reimbursement Clause I(i) of the DFIL Yes for contracts other than contracts referred in Designated Account Clause I(i) of the DFIL SOE in the form attached (Attachment 2) Copy of Letter of Credit. Special Commitments Yes Proforma Invoice if cited in the Letter of Credit Designated Account (Sections 5 and 6 **) Segregated to be operated by Ministry of Finance and . Fixed Type National Planning Ceihng Financial Institution - Commercial Bank acceptable to the Association Currency USD Name Frequency of Reporting Quarterly Amount USD 1,200,000 Subsection 6.3 (**) I Minimum Value of Applications (subsection 3.5) The minimum value of applications for Reimbursement, Direct Payment and Special Commitment is USD 10,000 equivalent. Page 3 of 7 Authorized Signatures (Subsection 3.1 and 3.2 **) The form for Authorized Signatories Letter is provided in Attachment 1 of this letter Withdrawal and Documentation Applications (Subsection 3.3 and 3.4 **) Authorized Signatories Letter: Withdrawal and Documentation Applications: The World Bank The World Bank Level 19, 14 Martin Place 261 Floor, One Global Place CML Building 51 Avenue corner 25' Street, Bonifacio Global City Sydney NSW 2000, Australia Taguig City, Philippines Attention: Country Director Attention: Senior Regional Team Leader, WFACS Additional Instructions (i) List of contracts selected through international open or limited competition or Direct Selection to be disbursed only using Direct Payment and/or Special Commitment disbursement methods are provided in the procurement plan. *Sections and subsections indicated relate to the Disbursement Guidelines for Investment Project dated Financing 2017. Page 4 of 7 Attachment 1 Form of Authorized Signatories Letter [Letterhead] Minister of Finance [Street address] [City] [Country] [Date] The World Bank Level 19, 14 Martin Place CML Building Sydney NSW 2000, Australia Attention: Country Director IDA Grant Number D359-TO Additional Financing for the Pacific Resilience Project (under the Pacific Resilience Program) I refer to the Financing Agreement ("Agreement") between the International Development Association ("Association") and Kingdom of Tonga ("Recipient"), dated , providing the above Financing. For the purposes of Section 2.03 of the General Conditions as defined in the Agreement, any [one]' of the persons whose authenticated specimen signatures appear below is authorized on behalf of the Recipient to sign applications for withdrawal under this Financing. For the purpose of delivering Applications to the Association, [each]2 of the persons whose authenticated specimen signatures appears below is authorized on behalf of the Recipient, acting [individually] [jointly]4, 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 Means to Process Applications and Supporting Documentation ("Terms and Conditions of Use of SIDC"), the ' 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. 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. Page 5 of 7 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's records with respect to this Agreement. [Name], [Position] Specimen Signature: [Name], [Position] Specimen Signature: [Name], [Position] Specimen Signature: Yours truly, / signed / [Position] Instruction to the Recipient: Add this paragraph if the Recipient wishes to authorize the listed persons to accept Secure Identification Credentials and to deliver Applications by electronic means; if this is not applicable, please delete the paragraph. Please delete this footnote in final letter that is sent to the Association. Page 6 of 7 Attachment 2 - Statement of Expenditures for category Grant # Payment made during the period from to Application # Category # The following expenditures have been incurred during the retroactive financing period (please tick) Yes No Page # The following expenditures have been incurred during before the closing date of the credit (please tick) Yes No In case of DA payments 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Whether the claim relates to Contract # Contract Total international open Amount Service Brief Description Prior currency Invoice Date of amount of or limited paid from provider Review and number payment invoice o competition or Designated Item ppier/ of the ract? ant inveidb Financed Expenditure Amount Amount direct selection Account No Supplier/ expenditure Contract? (Client amount covered by by the Eligible for Financing claimed referred to in clause (which Payee's (YES or (let (original + Application Bn lii of DFIL (Y/N) should be Name NO) Connection # amendme (net of Bank(n(i)to I amd for Prior nt) retention) using DA/ equal to Review reimbursement #11) I _ _ contracts) I methods) TOTAL Supporting documents for this SOE retained at:(insert location) Prepared by: Authorized Representative: *A separate form should be used for each category Page 7 of 7