“Agricultural Commercialization Project” Grant No. H964-TJ, Grant No. D259-TJ, Credit No. 6167-TJ The project financial statements for the year ended December 31, 2019 and independent auditors’ report “AGRICULTURAL COMMERCIALIZATION PROJECT” GRANT NO. H964-TJ, GRANT NO. D259-TJ, CREDIT NO. 6167-TJ TABLE OF CONTENTS Page STATEMENT OF MANAGEMENT’S RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE PROJECT FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 2 INDEPENDENT AUDITORS’ REPORT 3-5 PROJECT FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 Summary of funds received and expenditures paid 6 Summary of expenditures paid by project components 7 Notes to the project financial statements 8-20 "AGRICULTURAL GoMMERclALlzATloN PRoJECT,, GRANT No. H964_TJ, GRANT No. D259_TJ, GREDIT No.6167-TJ STATEMENT ОF MANAGEMENT,S RESPONSIBILITIES FОR ТНЕ PREPARATION AND APPROVAL ОF ТНЕ PROJECT FINANCIAL STATEMENTS FОR ТНЕ YEAR ENDED DECEMBER 31, 2019 The following statement, which should Ье read in conjunction with the independent auditors' rерогt is made with а view to distinguish the respective responsibilities of management and those of the independent ачditоrs iп rеlаtiоп to the pюject financial statements of the Рrоjесt "Аgriсulturаl Commercialization Project", Grant No. H964-TJ, Grапt No. D259-TJ, Credit No. 6167-TJ (the "Project"). Management is responsible fог the рrераrаtiоп of the project fiпапсiаl statements that рrеsепt fairly, iп alI mаtеriаl respects, the summary of funds received and expenditures paid and the summary of expenditures paid Ьу project components of the Project fоr the уеаr ended DесеmЬеr 3,1, 2019 iп ассоrdапсе with lпtеrпаtiопаl Public Sесtог Accounting Stапdаrd "Financial Rерогtiпg Uпdег the Cash Basis of Accounting" (the"lPSAS") issued bythe lnternational PublicAccounting Stапdаrds Воаrd of the lnternational Fеdеrаtiоп of Ассочпtапts and the World Bank's Fiпапсiаl Management Sесtоr Board's "Guidelines: Аппчаl Financial Rерогtiпg апd Auditing fоr World Bank Fiпапсеd Activities" (the "WB Guidelines"). lп рrераriпg the ргоjесt financial statements, management is rеsропsiЬlе fоr: . selecting suitable accounting policies and applying them consistently; . mаkiпg judgments and estimates that аrе rеаsопаьlе and рrчdепt; . stating whеthег lpsAs and wB Guidelines have Ьееп followed, subject to апу mаtеriаl dерагtчrеs disc|osed and explained in the рrоjесt financial statements; and . рrераriпg the project financial statements оп а going сопсеrп basis, unless it is iпаррrорriаtе to рrеsчmе that the Project will Ье implemented iп ассоrdапсе with the established реriоd. Management is also rеsропsiЬlе fоr: . designing, implementing and цаiпtаiпiпg effective and sound system of iпtеrпаl сопtгоl and fоr гечеаliпg risks iп system of iпtеrпаl сопtrоl; . maintaining ргореr accounting rесоrds that disclose, with геаsопаь|е ассчrасу at апу time, the financial position of the Pюject, and which enable them to епsчrе that the project financial statements of the Project comply with lPSAS and WB Guidelines; . compliance with laws and regulations of the Republic of Tajikistan, accounting system of the project апd the rеqчirеmепts of the Wоr|d Вапk; . taking such steps as аге rеаsопаьlу available to them to safeguard the assets of the project; and о detecting and preventing fraud and other irregularities. The project financial statements fоr the уеаr ended DесеmЬеr 3,1, 2019 wеrе аррrочеd and authorized fоr issue оп August 14,2020 Ьу the management of the Project. Оп behalf of the Management: sadullozo Nozimov l. Director of chief Accountant of Acting AED PMU AED PMU моF PMU August 14,2020 Dushanbe, the Republic of Tajikistan WTIфP/ 65 Stefan cel Mare şi Sfânt Blvd 7th Floor, Office 715 Chisinau, MD-2001 Moldova T: +373 22 233003 F: +373 22 234044 info@bakertilly.md www.bakertilly.md INDEPENDENT AUDITORS’ REPORT To the management of the Project “Agricultural Commercialization Project” under the Ministry of Finance of the Republic of Tajikistan and Ministry of Agriculture of the Republic of Tajikistan and the State Committee on Investments and Government Property Management of the Republic of Tajikistan: Report on the project financial statements Qualified opinion [1] We have audited the project financial statements of the Project “Agricultural Commercialization Project” (the “Project”) which comprise the summary of funds received and expenditures paid and the summary of expenditures paid by project components for the year ended December 31, 2019 and a summary of significant accounting policies and other explanatory information (the “project financial statements”). [2] In our opinion, except for the effects of the matter described in paragraph [3], the accompanying project financial statements present fairly, in all material respects, the summary of funds received and expenditures paid and the summary of expenditures paid by project components of the Project for the year ended December 31, 2019 in accordance with International Public Sector Accounting Standard “Financial Reporting Under the Cash Basis of Accounting” (the “IPSAS”) issued by the International Public Sector Accounting Standards Board of the International Federation of Accountants, and the World Bank’s Financial Management Sector Board’s “Guidelines: Annual Financial Reporting and Auditing for World Bank Financed Activities” (the “WB Guidelines”). Basis for qualified opinion [3] We were unable to obtain sufficient and appropriate audit evidence to identify correctness of cash balances in CJSC TJSC IBRR “Tajprombank” in the amount of 207,361 US dollars as at December 31, 2019 due to inability of the CJSC TJSC IBRR “Tajprombank” to provide us confirmation letter. It was not practicable to perform alternative audit procedures sufficient to satisfy ourselves as to correctness of balances in the summary of funds received and expenditures paid. As a result, we have not identified what adjustments should have been made in respect of recorded or unrecorded elements making up the project financial statements. [4] We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the project financial statements section of our report. We are independent of the Project in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the project financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion. ADVISORY  ASSURANCE  TAX ICS Baker Tilly Klitou & Partners SRL trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. 3 Emphasis of matter [5] Without further qualifying our opinion, we draw attention to the following matters: a. We draw attention to the Note 4 “Cash and cash equivalents”, in which present cash balances in CJSC TJSC IBRR “Tajprombank” (the “Bank”) in the amount of 2,008,746 Tajik somoni (207,361 US dollars) as at December 31, 2019. The National Bank of Tajikistan revoked license of this Bank on February 24, 2017. The Bank is in the process of liquidation. Therefore, the Project has no access to its bank accounts in CJSC TJSC IBRR “Tajprombank” as at date of issuing this project financial statements. b. We draw attention to Note 2 to the project financial statements, which describes the basis of accounting. These project financial statements were prepared for complying with the appropriate World Bank Guidelines and Financing agreements requirements. c. We draw attention to Note 13 to the financial statements of the project, which describes the situation with the COVID-19 pandemic. Other matter [6] The project financial statements are prepared to assist the Project to comply with the requirements of the World Bank. As a result, the project financial statements may not be suitable for another purpose. Responsibilities of management and those charged with governance for the project financial statements [7] Management is responsible for the preparation and fair presentation of the project financial statements in accordance with International Public Sector Accounting Standard “Financial Reporting Under the Cash Basis of Accounting” (the “IPSAS”) issued by the International Public Accounting Standards Board of the International Federation of Accountants, and the World Bank’s Financial Management Sector Board’s “Guidelines: Annual Financial Reporting and Auditing for World Bank Financed Activities” (the “WB Guidelines”), and for such internal control as management determines is necessary to enable the preparation of the project financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s responsibilities for the audit of the project financial statements [8] Our objectives are to obtain reasonable assurance about whether the project financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the project financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the project financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit 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. 4 l ýl*|ýЁýЧqlЧ г-r Ф tФ Фг- Ес) \F_ д -|l-| Е_ (с) Е Ф Фl lcol NN о 9l Nl tO гtО | n-l tl .l (ol -| -l о) г п* -l с' tl o)l *l n-l Фl o,I оril 1О_ --| с)о toO El ЕЁ s - ч]чýэчч11 '1 о Nl _l G c)l Е э д о E-l г*о n-l о) , n-l г .l -l n*l Фl O)l Ol о о э с)о | Фl I (frl tl o,I Ё= *о -l F_ О_ Ёl Фо ýl чýlч,|u[ т' lд t| - Ёg о)_ l "I Фl ь| б Ф Е= gl Oll o1.1.1 г| г| Nl l с) ь o1-1o,1ol orl (ol Фl o)l с. лЕ al о) Ф ч-|чэчч1*l (о_ lлl N |л о о) б cL I о Е о ol о со ol .l ol о .9 -l (y)- ,lol о -ll о Ё 1 J ^|"| cDl со l сгrl Ol Ф Ф {l гl }*l ýlll о - l()- l(ol гt_| о)_ г-_ Ф_| Ф_| lo_| ф_|| Ф о_ Ф о О5 (ог* lФl фl Ф }- (ol col юl юll (ol ъ зЕ Фо lo)I o)l ффо)l ltll ýl юю lOl ol оrгюl Nl loll Е,rц €fi ФФ с Ё Ф Ёz ;Е о z ý б о. 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GENERAL INFORMATION According to the Agreement between the Republic of Tajikistan and International Development Association (the “IDA”, “World Bank”) signed on July 30, 2014, the IDA provided a Grant No. H964-TJ in amount of 14,300,000 Special Drawing Rights to the Republic of Tajikistan. The period of duration of the Grant is from July 30, 2014 to June 30, 2021. The Grants were provided for the Project “Agricultural Commercialization Project” (the “Project”). On January 18, 2018 was signed the Financing Agreement for additional financing for the Project “Agriculture Commercialization Project” between the Republic of Tajikistan and IDA. IDA provided the Grant No. D259-TJ in amount of 5,400,000 Special Drawing Rights and the Credit No. 6167-TJ in amount of 7,500,000 US dollars. According to Financing Agreement there were changes in the objective of the Project, in the component II and III of the Project and were added new Component IV. The name of Component II was amended to “Component II: Access to finance” and were added new sub- component II.D. In Component III there were amendment in sub-component III.E and sub-component III.F is hereby replaced in its entirety. The period of duration of the Grant and Credit is from January 18, 2018 to June 30, 2022. Project purpose The objectives of the Project are to increase the commercialization of farm and agribusiness products and support micro, small and medium enterprise development in Project areas by providing better access to finance and strengthened capacity of Project beneficiaries. The Project comprises the following components: Component I: Improvement of technical knowledge and skills in support of commercialization; Component II: Access to finance for agribusiness enterprises and small-scale commercial farms; Component III: Institutional capacity building and project management. Component IV: Entrepreneurship training and business development services to micro, small and medium size enterprises Component I: Improvement of technical knowledge and skills in support of commercialization Improving of technical knowledge and skills of participants in key agricultural value chains and productive partnerships by: a. Supporting building value chains and productive partnerships under the project, by providing research and improvement of technical knowledge and skills of project beneficiaries on a variety of agriculture- related subjects, and assistance in identifying and pursuing market opportunities. Provision of advisory services and training by a reputable consulting firm with relevant expertise acceptable to the Association, to assist with value chain development activities under Component I, II.B and III of the Project. b. Providing training and advisory services at the producer level. Establishing a network of demonstration plots, to conduct comparisons and testing between various agricultural production practices and supporting participation of farmer groups in trade fairs and other events. c. Providing training and advisory services for agro processors and agribusiness enterprises on a variety of subjects related to their business operations. Providing training on issues relating to child and forced labor. Supporting attendance at trade fairs and providing mentoring services. Component II: Access to finance for agribusiness enterprises and small-scale commercial farms Enhancing access to medium and long-term finance for agribusiness enterprises and small-scale commercial farms by: 8 a. Establishing and operating of a credit line facility through PFIs to support: (a) medium-term loans and leases for investment for financing modern technological plant and equipment; and (b) value chain financing products and value chain and productive linkage support, and (c) investment and working capital needs for a broad range of micro, small and medium enterprises in Project areas. b. Providing Commercialization Grants to support investment and input needs by smaller farmers in producer groups or productive partnerships unable to qualify for a commercial loan. c. Supporting the value chain development by providing capacity building of the PFIs related to new financial products in lending for value chain and productive partnership development activities, accessing suitability and effectiveness of new financial products, and on mitigation of the related risks. Providing training to the PFIs on environmental and social safeguard issues. d. Providing Matching Grants to Sub-borrowers on terms and conditions set forth in the Matching Grant Program Manual to complement Sub-loans under Part A of this Component II. Component III: Institutional capacity building and project management. Strengthening the critical elements of the institutional framework and agricultural sector’s academic knowledge base required to support commercial activity by: a. Supporting curriculum modernization of the Tajikistan Agrarian University. b. Supporting expansion of the farmer training programs at the agricultural colleges through updating of curricula and teaching materials, in conjunction with curriculum modernization under Component III. (a) above; upgrading equipment and upgrading of facilities of the Agricultural Colleges. c. Improving market information systems for farmers and agribusinesses by: (i) supporting the establishment of a public-private partnership between the Tajikistan National Statistics Agency, other relevant state agencies and private service providers on facilitating delivery of commercial market information; and (ii) providing related technical assistance to the Tajikistan National Statistics Agency, other relevant state agencies and private service providers. d. Strengthening the MOA’s capacity for policy and regulatory reform in the field of agriculture by funding selected studies on critical issues concerning agricultural commercialization. e. Supporting the Agricultural Entrepreneurship Development Project Management Unit (“AED PMU”) and Ministry of Finance Project Management Unit (“MOF PMU”) for the effective implementation of the Project, through provision of goods, works, consultants’ services, audit, training and operating costs, for purposes of Project management and implementation, including monitoring and evaluation. (ii) establishing and maintaining for the duration of the Project, the Grievance Redress Mechanism f. Building capacity of financial intermediaries acting in rural areas of the Recipient, including: (i) provision of trailing to PFI’s on start-up business financing modalities, including risk identification and appraisal, and structuring of financing repayment, as well as on key environmental aspects associated with rural business financing; and (ii) provision of technical assistance to selected smaller microfinance institutions with good potential to grow and expand the opportunities for access to finance for small rural and agricultural businesses. Component IV: Entrepreneurship training and business development services to micro, small and medium size enterprises a. Provision of entrepreneurship training and business development services to start-ups with more intensive support to youth led, women-led enterprises and enterprises led by, and/or employing, persons with disabilities. b. Carrying out innovative approaches to promote start-up growth and job creation, including opening an entrepreneurship hub in a selected location and development and implementation of business mentoring and training programs. Project management The Project is implemented by the Agricultural Entrepreneurship Development Project Management Unit (the “AED PMU”) and Ministry of Finance Project Management Unit (the “MOF PMU”) within the scope of the Ministry of Agriculture and Ministry of Finance of the Republic of Tajikistan, respectively. Duration of the Project is July 30, 2014 to June 30, 2022. 9 2. PRESENTATION OF THE PROJECT FINANCIAL STATEMENTS Basis of preparation These project financial statements have been prepared in accordance with the International Public Sector Accounting Standard (the “IPSAS”) “Financial Reporting under the Cash Basis of Accounting” issued by the Public Sector Committee of the International Federation of Accountants, and incorporate the following principal accounting policies, which have been consistently followed in all material respects and comply with the World Bank’s Financial Management Sector Board’s “Guidelines: Annual Financial Reporting and Auditing for World Bank Financed Activities” (the “WB Guidelines”). Under the cash basis system income (or expenditure) is recognized when cash is received (or paid) irrespective of when goods or services are received or provided. The Project’s approved budget disclosed by categories of expenses is not publicly available and as such comparison of budget and actual amounts is not presented. These project financial statements consist of: • Summary of funds received and expenditures paid; • Summary of expenditures paid by project components; • Notes to the project financial statements, including short description of main statements of accounting policy and other descriptive notes. The reporting currency of these project financial statements is US dollars (the “USD”). 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash basis of accounting The project financial statements are prepared on a cash basis of accounting. The cash basis of accounting recognizes transactions and events only when cash (including cash equivalents) is received or paid by the Project. The project financial statements prepared under the cash basis provide readers with information about the sources of cash raised during the period, the purposes for which cash was used and the cash balances at the reporting date. The measurement focus in the project financial statements is balances of cash and changes therein. Foreign currency Operations in foreign currency initially are counted in functional currency by the official currency exchange rate settled by the National Bank of Tajikistan (the “NBT”) on a date of operation. Funds received are translated into USD at official exchange rate of Special Drawing Rights (the “SDR”) at the date of funds receipt. All payments made in local currency are translated into USD at the official exchange rate defined by NBT, at the date of transaction. Monetary assets and liabilities expressed in foreign currency are converted to functional currency at official exchange rate on a date settled by the NBT. All foreign exchange differences resulted from maturity or recounting are included in the summary of funds received and expenditures paid. Non-monetary items are valued according to their historic cost in foreign currency, which are recalculated on rates of the initial operation date. Cash and cash equivalents Cash and cash equivalents include cash on hand and due from banks, which can be converted to the corresponding amount of cash in the short term. Balances of advances paid to employees at the end of the period are also part of closing cash position. 10 Taxes Calculation and payment of personal income tax and social security contributions from income of local staff and consultants is made in accordance with the requirements and rates of the Tax Code of the Republic of Tajikistan and relevant legislation of the Republic of Tajikistan. Project expenses The expenses are recorded in the period when they were actually paid. Sources of funds The funds were provided by the World Bank to the Project by advance, reimbursement or through direct payment to the end supplier of goods and/or services. 4. CASH AND CASH EQUIVALENTS Cash and cash equivalents as at December 31, 2019 comprise: Grant Currency December 31, 2019 AED PMU MOF PMU Total Designated account H964-TJ USD 225,463 298,189 523,652 Designated account D259-TJ USD - 285,918 285,918 Transit account H964-TJ TJS 207,362 1 207,363 Transit account D259-TJ TJS - 28,888 28,888 432,825 612,996 1,045,821 Cash and cash equivalents as at December 31, 2018 comprise: Grant Currency December 31, 2018 AED PMU MOF PMU Total Designated account H964-TJ USD 283,613 129,722 413,335 Designated account D259-TJ USD - 99,965 99,965 Transit account H964-TJ TJS 212,877 16 212,893 Cash on hand H964-TJ TJS - 106 106 496,490 229,809 726,299 5. FUNDS RECEIVED The funds received are presented by the following financing methods: For the year ended December 31, 2019 AED PMU MOF PMU Total Grant No. H964-TJ Reimbursement of expenses 2,774,443 1,328,122 4,102,565 Direct payments 483,948 - 483,948 3,258,391 1,328,122 4,586,513 Grant No. D259-TJ Reimbursement of expenses - 507,181 507,181 - 507,181 507,181 11 For the year ended December 31, 2018 AED PMU MOF PMU Total Grant No. H964-TJ Reimbursement of expenses 2,189,748 1,964,137 4,153,885 Direct payments 499,262 - 499,262 2,689,010 1,964,137 4,653,147 Grant No. D259-TJ Advances - 100,000 100,000 - 100,000 100,000 Cumulative AED PMU MOF PMU Total Grant No. H964-TJ Advances 600,000 400,000 1,000,000 Direct payments 1,241,192 - 1,241,192 Reimbursement of expenses 7,666,590 8,210,965 15,877,555 9,507,782 8,610,965 18,118,747 Grant No. D259-TJ Advances - 100,000 100,000 Reimbursement of expenses - 507,181 507,181 - 607,181 607,181 12 6. PROJECT EXPENSES The Project expenses by components are presented in the summary of expenditures paid by project components. The Project expenses on major categories are presented in the summary of funds received and expenditures paid. Breakdown of project expenses by categories and natures is presented as follows: Sub-loans under Component II. A For the year ended December 31, 2019 For the year ended December 31, 2018 Cumulative AED PMU MOF PMU Total AED PMU MOF PMU Total AED PMU MOF PMU Total Grant No. H964-TJ CJSC MDO "Imon International" - 200,670 200,670 - 357,952 357,952 - 2,549,171 2,549,171 LLC MDO "Arvand" - 252,320 252,320 - 1,305,031 1,305,031 - 2,221,029 2,221,029 LLC MDO "Humo" - 530,990 530,990 - 351,836 351,836 - 2,025,127 2,025,127 LLC MDO "Dastras" - - - - - - - 319,934 319,934 OJSC "Bank Eskhata" - - - - - - - 87,615 87,615 LLC MDO "Muzaffariyat" - - - - - - - 70,885 70,885 CJSC "AccessBank Tajikistan" - - - - - - - 16,330 16,330 - 983,980 983,980 - 2,014,819 2,014,819 - 7,290,091 7,290,091 Commercialization Grants under Component II.B For the year ended December 31, 2019 For the year ended December 31, 2018 Cumulative AED PMU MOF PMU Total AED PMU MOF PMU Total AED PMU MOF PMU Total Grant No. H964-TJ Grants 1,187,788 - 1,187,788 418,037 - 418,037 2,586,845 - 2,586,845 1,187,788 - 1,187,788 418,037 - 418,037 2,586,845 - 2,586,845 13 Goods, works, operating costs, training, non-consulting services, and consultants’ services For the year ended December 31, 2019 For the year ended December 31, 2018 Cumulative AED PMU MOF PMU Total AED PMU MOF PMU Total AED PMU MOF PMU Total Grant No. H964-TJ Trainings 1,073,898 - 1,073,898 741,005 - 741,005 2,177,921 29,290 2,207,211 Payroll and related taxes 317,260 124,903 442,163 303,895 113,764 417,659 1,299,546 507,177 1,806,723 Consulting services 491,724 - 491,724 594,445 14,533 608,978 1,537,587 14,533 1,552,120 Goods 392 - 392 - - - 304,868 45,885 350,753 Consultants' services 84,276 - 84,276 139,872 - 139,872 293,026 37,226 330,252 Trainings for PMU - - - - 84,690 84,690 14,265 295,922 310,187 Business demos 89,638 - 89,638 42,049 - 42,049 149,496 - 149,496 Stationery 6,794 2,500 9,294 11,548 1,310 12,858 105,273 10,644 115,917 Business trips 8,305 1,875 10,180 40,329 1,602 41,931 74,334 7,585 81,919 Agribusiness forum - - - 37,842 - 37,842 73,866 - 73,866 Translation services 1,601 - 1,601 40,257 - 40,257 58,650 - 58,650 Fuel expenses - 4,853 4,853 14,082 5,202 19,284 33,103 15,370 48,473 Office renovation - - - 1,048 - 1,048 44,017 - 44,017 Vehicle maintenance 25,229 1,631 26,860 5,412 2,563 7,975 38,807 5,143 43,950 Communication 6,840 1,803 8,643 7,002 1,866 8,868 34,179 8,935 43,114 Audit costs 9,859 - 9,859 8,236 - 8,236 38,760 - 38,760 Transportation - - - - - - 22,444 9,850 32,294 Printing handouts - 32,025 32,025 - - - - 32,025 32,025 Purchase of vehicle - - - 21,967 - 21,967 21,967 - 21,967 Bank services 2,480 748 3,228 2,871 713 3,584 9,855 3,257 13,112 Utility - - - 6,170 - 6,170 13,077 - 13,077 Non-consulting services - - - - - - 12,333 - 12,333 Advertising expenses - - - - - - 3,294 453 3,747 Other 10,418 5,434 15,852 22,364 2,204 24,568 88,311 17,142 105,453 2,128,714 175,772 2,304,486 2,040,394 228,447 2,268,841 6,448,979 1,040,437 7,489,416 14 Goods, works, operating costs, training, non-consulting services, and consultants’ services (continue) For the year ended December 31, 2019 For the year ended December 31, 2018 Cumulative AED PMU MOF PMU Total AED PMU MOF PMU Total AED PMU MOF PMU Total Grant No. D259-TJ Trainings - 111,480 111,480 - - - - 111,480 111,480 Consulting services - 106,566 106,566 - - - - 106,566 106,566 Payroll and related taxes - 56,919 56,919 - - - - 56,919 56,919 Technical support - 8,800 8,800 - - - - 8,800 8,800 Goods - 6,875 6,875 - - - - 6,875 6,875 Bank services - 431 431 - - - - 431 431 Business trips - 323 323 - - - - 323 323 Stationery - 260 260 - - - - 260 260 Communication - 106 106 - - - - 106 106 Other - 598 598 - - - - 598 598 - 292,358 292,358 - - - - 292,358 292,358 2,128,714 468,130 2,596,844 2,040,394 228,447 2,268,841 6,448,979 1,332,795 7,781,774 15 7. FINANCIAL POSITION Financial position as at December 31, 2019 comprise of: December 31, 2019 AED PMU MOF PMU Total ASSETS AND EXPENSES Cash and cash equivalents 432,825 612,996 1,045,821 Cumulative expenses 9,035,824 8,622,886 17,658,710 Foreign exchange losses/(gains) 45,387 (17,736) 27,651 TOTAL ASSETS AND EXPENSES 9,514,036 9,218,146 18,732,182 FINANCING Funds received 9,507,782 9,218,146 18,725,928 Other income 6,254 - 6,254 TOTAL FINANCING 9,514,036 9,218,146 18,732,182 Financial position as at December 31, 2018 comprise of: December 31, 2018 AED PMU MOF PMU Total ASSETS AND EXPENSES Cash and cash equivalents 496,490 229,809 726,299 Cumulative expenses 5,719,322 7,170,776 12,890,098 Foreign exchange losses/(gains) 39,823 (17,742) 22,081 TOTAL ASSETS AND EXPENSES 6,255,635 7,382,843 13,638,478 FINANCING Funds received 6,249,391 7,382,843 13,632,234 Other income 6,244 - 6,244 TOTAL FINANCING 6,255,635 7,382,843 13,638,478 16 8. WITHDRAWAL APPLICATIONS Withdrawal applications for the year ended December 31, 2019 comprise: Implementation unit Sources of Application Value date Direct Goods, works, Total financing payments operating costs, training, non- consulting services and consultants’ services MOF H964-TJ 33 January 14, 2019 - 287,898 287,898 34 February 12, 2019 - 181,895 181,895 35 April 11, 2019 - 372,476 372,476 36 May 8, 2019 - 269,325 269,325 37 June 12, 2019 - 216,528 216,528 - 1,328,122 1,328,122 MOF D259-TJ 2 August 19, 2019 - 300,000 300,000 3 December 5, 2019 - 207,181 207,181 - 507,181 507,181 AED H964-TJ 33 February 14, 2019 - 159,811 159,811 34 March 20, 2019 - 228,945 228,945 35 April 4, 2019 60,360 - 60,360 36 April 29, 2019 219,097 - 219,097 37 April 29, 2019 - 133,881 133,881 38 May 28, 2019 - 179,552 179,552 39 June 10, 2019 - 321,094 321,094 40 June 26, 2019 - 210,104 210,104 42 July 26, 2019 204,491 - 204,491 41 July 29, 2019 - 307,705 307,705 43 August 26, 2019 - 318,862 318,862 44 September 24, 2019 - 321,364 321,364 45 October 24, 2019 - 330,767 330,767 46 December 2, 2019 - 262,358 262,358 483,948 2,774,443 3,258,391 483,948 4,609,746 5,093,694 17 Deleted withdrawal applications for the year ended December 31, 2019 comprise: Implementation unit Sources of Application Value date Direct Goods, works, Total financing payments operating costs, training, non- consulting services and consultants’ services AED H964-TJ 36 April 11, 2019 219,098 - 219,098 219,098 - 219,098 9. STATEMENT OF DESIGNATED ACCOUNT Statement of designated account for the year ended December 31, 2019 comprises: Designated accounts Grant No. H964-TJ Grant No. H964-TJ Grant No. D259-TJ Total Implementation agency AED PMU MOF PMU MOF PMU Bank CJSC “The First Micro Finance CJSC “Spitamen Bank” OJSC “Eskhata Bank” Bank” Currency US Dollars US Dollars US Dollars Bank account 20206840818210031476 20206840880800000257 20206840400020100469 Bank’s location 113 Shevchenko str., Dushanbe, 4, Shamsi str, Dushanbe, the 16 N. Karaboev str, Dushanbe, the Republic of Tajikistan Republic of Tajikistan the Republic of Tajikistan Balance as at January 1, 2019 283,613 129,722 99,965 513,300 Reimbursement of expenses 2,774,443 1,328,122 507,181 4,609,746 Transfer from cash on hand 14,199 480 10 14,689 Total funds received 2,788,642 1,328,602 507,191 4,624,435 Expenses paid 60,629 62,215 6,736 129,580 Transferred to transit account 2,735,624 1,097,000 303,502 4,136,126 Transferred to cash on hand 50,539 920 11,000 62,459 Balance as at December 31, 2019 225,463 298,189 285,918 809,570 18 10. UNDRAWN FUNDS For the year ended December 31, 2019 undrawn funds are presented as followsr: Grant Grant Credit No. H964-TJ No. D259-TJ No.6167-TJ in SDR in SDR In USD Approved financing amount 14,300,000 5,400,000 7,500,000 Disbursed during the period from July 30, 2014 6,805,389 to December 31, 2019 (AED PMU) - - Disbursed during the period from July 30, 2014 6,184,291 to December 31, 2019 (MOF PMU) 441,219 - Undrawn financing amount 1,310,320 4,958,781 7,500,000 Financing received as at January 1, 2019 9,671,469 72,248 - Disbursed in 2019 (AED PMU) 2,362,410 - - Disbursed in 2019 (MOF PMU) 955,802 368,972 - Financing received as at December 31, 2019 12,989,680 441,219 - 11. COMMITMENTS In the normal course of activities, the Project concludes agreements with suppliers of goods and services in accordance with the established budget and procurement plan. Contract value of obligations valid as at December 31, 2019 was as follows: Counterparty Contract No. Contract Paid up to Remaining value December 31, amount 2019 to be paid MOF PMU LLC “Shohroh sokhtmon” ACPAF/MOFPIU/SH-W-01 169,238 100,365 68,873 LLC “Agro-service Consulting” ACPAF/MOFPIU/CQS-03 149,818 89,891 59,927 Michael J. Wills ACPAF/MOFPIU/IC-6 30,200 8,800 21,400 AED PMU International Company “Niras” (Sweden) AED/PMU/QCBS/2015-01 1,679,748 1,296,163 383,584 Gent University (Belgium) AED/PMU/CQS/2016-04 277,654 102,441 175,213 “Sarchashmai hayot” LLC AED/PMU/SSS/2019-01 237,568 94,257 143,311 Association “Rushdi kishovarzii Vakhsh” AED/PMU/ CQS/2018-02-1 152,129 60,200 91,929 “Latif” LLC AED/PMU/ CQS/2018-04 194,142 114,414 79,728 “Agro-service Consulting” LLC AED/PMU/ CQS/2018-02-2 126,243 72,624 53,618 “Zarzamin” LLC AED/PMU/ CQS/2018-03 142,508 107,356 35,152 “AL Mar Consulting” LLC AED/PMU/CQS/2017-03 267,601 239,190 28,411 “Latif” LLC AED/PMU/CQS/2018-06-3 66,456 59,810 6,646 “Bonuvoni Khatlon” LLC AED/PMU/CQS/2018-06-1 64,855 58,370 6,486 “Zarzamin” LLC AED/PMU/CQS/2018-06-2 64,121 63,911 210 “Zerkalo” LLC AED/PMU/CQS/2016-03 101,289 101,259 30 “Zarzamin” LLC AED/PMU/CQS/2017-04 90,000 89,973 27 12. LEGAL CASES There were no legal claims related to the Project. 19 13. EVENTS AFTER THE REPORTING DATE Project Financing During 2020 until the date of issue of these project financial statements the World Bank provided financing to the Project as follows: Financing source Application Implementation Financing method Date Total unit Grant No. H964-TJ 47 AED Direct payment January 22, 2020 36,216 48 AED Direct payment January 22, 2020 36,216 49 AED Reimbursement of expenses February 10, 2020 218,271 50 AED Reimbursement of expenses March 13, 2020 190,065 51 AED Reimbursement of expenses April 27, 2020 172,045 52 AED Direct payment April 28, 2020 146,065 53 AED Reimbursement of expenses June 19, 2020 304,365 Grant No. D259-TJ 4 MOF Reimbursement of expenses February 10, 2020 378,483 5 MOF Reimbursement of expenses March 6, 2020 255,357 6 MOF Reimbursement of expenses April 1, 2020 300,000 7 MOF Reimbursement of expenses April 6, 2020 289,153 8 MOF Reimbursement of expenses May 1, 2020 305,886 9 MOF Reimbursement of expenses May 6, 2020 302,556 10 MOF Reimbursement of expenses May 26, 2020 303,674 11A MOF Reimbursement of expenses June 16, 2020 174,194 12 MOF Reimbursement of expenses June 24, 2020 50,000 Funds in CJSC TJSC IBRR “Tajprombank” According to the court decision of economic court of Dushanbe from June 19, 2020, the CJSC “Tajprombank” must return the funds to Project in amount 2,021,290 Tajik somoni. Pandemic COVID-19. In early 2020, an outbreak of COVID-19 has been found in a number of countries. April 29, 2020 In Tajikistan, the first cases of infection with the coronavirus COVID-19 were officially confirmed. This is a desk ISR since the team is unable to undertake a full-fledged implementation support mission due to the COVID-19 crisis. The team has been in constant interaction with the client through virtual meetings, emails and phone calls. The team is filing this ISR to report on implementation progress based on the best information available at this time, including outcome of the technical mission that was held in February 2020, the 2019 annual progress report as well as the first quarter progress report of 2020. Ratings have largely remained the same (unchanged) except for Component IV, which is upgraded (from MS to S) based on the findings of the technical mission and information contained in the annual and quarter progress reports. The team will carry out a full-fledged implementation support mission and update overall implementation progress, including procurement, FM, and safeguards implementation as soon as the situation normalizes. As at the date of issue of the project financial statements no other significant events or transactions occurred, except for the events or transactions described above. 20