eloitte ROAD REHABILITATION AND SAFETY PROJECT IBRD Project ID: P127876 IBRD Loan No. 8255-YF EIB Loan No. 82.640 EBRD Loan No.44750 Statement of Sources and Uses of Funds, Statement of Expenditures and Statements of Designated Accounts For the Year Ended December 31, 2018 and Independent Auditors' Report 22 ROAD REHABILITATION AND SAFETY PROJECT IBRD Project ID: P127876 IBRD Loan No. 8255-YF EIB Loan No. 82.640 EBRD Loan No.44750 Statement of Sources and Uses of Funds, Statement of Expenditures and Statements of Designated Accounts For the Year Ended December 31, 2018 and Independent Auditors' Report ROAD REHABILITATION AND SAFETY PROJECT IBRD Project ID: P127876 IBRD Loan No. 8255-YF EIB Loan No. 82.640 EBRD Loan No.44750 CONTENTS Page inlependent Auditors' Report 1 -2 c.ritement of Sources and Uses of Funds 3 Si.tement of Expenditures 4-7 Si atement of Designated Accounts 8-11 I Jotes to the Statements 12 - 19 Deloitte d.o.0, Beograd Terazije110 Begrd Deloitte 10 grade Republic of Serbia Tax Identification Number: 100048772 Registration Number: 07770413 Tel: +381 (0)11 3812 100 Fax: +381 (0)11 3812 112 www.deloitte.com/rs INDEPENDENT AUDITORS' REPORT To the Management of the Project Implementation Team within the Public Enterprise "Roads of Serbia" Opinion %'. hi we audited the accompanying Statement of Sources and Uses of Funds, Statement of Expenditures and the 5.ileinent of Designated Accounts of the Project entitled "Road Rehabilitation and Safety Project" (the "Project" or RPSP"), financed under International Bank for Reconstruction and Development ("IBRD") Loan No. 8255 - YF, . Eu''pean Bank for Reconstruction and Development ("EBRD") Loan No.44750, European Investment Bank ("EIB") L'I Jo.82.640 and funds contributed by the Republic of Serbia ("RoS") for the year ended December 31, 2018. The >atement of Sources and Uses of Funds, Statement of Expenditures and Statement of Designated Accounts re Statements") have been prepared by the Project Implementation Team ("PIT") of the Public Enterprise "Roads r rua" ("PERS") on the cash receipt and disbursement basis. ii. .ur opinion, the Statement of Sources and Uses of Funds, the Statement of Expenditures and the Statement of i- isynated Accounts referred to above, present fairly, in all material respects, the sources and application of funds -ai ependiture details, as well as the movements on the Designated Accounts of the Project, financed under li Loan No. 8255 - YF, EBRD Loan No.44750, EIB Loan No.82.640 and funds contributed by RoS as of .-- rnber 31, 2018, and for the year then ended, in accordance with the cash receipt and disbursement basis as zcrilied in Note 3. Basis for Opinion ..-nducted our audit in accordance with the International Standards on Auditing (ISAs). Our responsibilities unIr-i hose standards are further described in the Auditor's Responsibilities for the Audit of the Statements section fi ..'ur report. We are independent of PIT in accordance with the ethical requirements and we have fulfilled our .ilh.-r .:thical responsibilities in accordance with these requirements. We believe that the audit evidence we have ol_rined is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter and Basis of Accounting and Restriction on Distribution 'Jdr,w attention to the following matters: a) As disclosed in Note 1 to the Statements, Operation Manual for the implementation of the Project defines components and subcomponents of the Project as well as agreed contribution by each co-financing source of the sub-projects, but without detailed split per components. In addition, detailed categories of expenditures defined in loan agreements with EBRD and IBRD (as disclosed in Note 2 to the Statements), have not been aligned with the components of the subprojects, as defined by the Operation Manual. Based on the information received from the Management of PIT, there were no requests from any of the co-financing parties (IBRD, EBRD, EIB and RoS) for such alignment during this phase of the Project, and up to the date of our report such a request has not been received. The Management of PIT believes that the aforesaid inconsistency between the Operation Manual and categories of expenditures in loan agreements does not pose any risks to the sources of financing and that it will not have any impact to the Project implementation. b) As disclosed in Note 2.5 to the Statements, the total funds of the Project (loan and RRSP financing) amounts to EUR 371.6 million whereas the total disbursed expenditures up to December 31, 2018 totals EUR 81.86 million. Pursuant to representation of Management of PIT there is no split of the total Project's funds per sub- projects as presented in the Statement of Expenditures. Accordingly, the Management of PIT presented the cumulative budgeted disbursements in the Statement of Expenditures representing the total procurement budgeted amounts for EIB, IBRD and RoS financing and budgeted cash-flows for EBRD contracts up to the December 31, 2018. Our opinion is not modified in respect of these matters. (Continued) Delocitte refers to one or more of De[oitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and Its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/rs/about for a detailed description of the legal structure of Deloitte Touche Tohmatsn Limited and its member firms. C 2016 Delitte d o,, Beograd INDEPENDENT AUDITORS' REPORT To the Management of the Project Implementation Team within the Public Enterprise "Roads of Serbia" continued) .-,. : .ing and Restriction on Distribution n,II mr--Ji.ing our opinion, we draw attention to Note 3.2 to the Statements, which describes the basis of iLl..funlingI Th,t Statements have been prepared for the information and use of PIT, IBRD, EIB, EBRD and RoS t nd ni, n: c suitable for another purpose. Our report will not be disclosed to any third parties other than those rn,-nr.on.: ii. v and we accept no responsibility for any such action. Responsibilities of Management for the Statements Ti': 1.iii..errnet of PIT is responsible for the preparation of these Statements in accordance with the cash receipt Intd :Ii.1-r:li':-I-t basis, and for such internal control as Management determines is necessary to enable the prera,:**n If 'I.itements that are free from material misstatement, whether due to fraud or error. in .r-Fp:Iung ih,: Statements, Management of PIT is responsible for assessing the ability to continue the Project c.p.;rati'n as a -going concern, disclosing, as applicable, matters relating to going concern and using the going .:.n,:.-rn cais oi accounting unless Management either intends to discontinue the Project operations, or has no r hii." .alir n.ari 'e but to do so. Auditor s Responsibilities for the Audit of the Statements ur .re:Ni'..c are to obtain reasonable assurance about whether the Statements as a whole are free from material nsrai-.nw,, :.Inether due to fraud or error, and to issue an auditor's report that includes our opinion, Reasonable rssr.rrian.:e ra a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Ini-rn.-lii..-n ii crdards on Auditing (ISAs) will always detect a material misstatement when it exists. Misstatements can . i.,im fraud or error and are considered material if, individually or in the aggregate, they could reasonably a. i-'e.:II-J 1.. "fluence the economic decisions of users taken on the basis of these Statements. - 1art of an audit in accordance with ISAs, we exercise professional judgment and maintain professional Z.1 -7icnn Ir.WLIhout the audit. We also: * i':iratf, 3nd assess the risks of material misstatement of the Statements, whether due to fraud or error, ''.dm.-.r- ind perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient .-il- appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement re-urii'... from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, ini.- n.-.ral omissions, misrepresentations, or the override of internal control. * .t;i :in understanding of internal control relevant to the audit in order to design audit procedures that -a'opriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness f i internal control. * Conclude on the appropriateness of Management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability to continue the Project operations as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Project operations to cease as a going concern. * Evaluate the appropriateness of cash basis of accounting policies used and related disclosures made by PIT Management. We communicate with PIT Management regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in the internal control that we identify during our audit. ~I 7I March 7, 2019 Deloitte d.o.o. Belgrade 2 ROAD REHABILITATION AND SAFETY PROJECT IBRD Project ID: P127876 IBRD Loan No. 8255-YF EIB Loan No. 82.640 EBRD Loan No.44750 STATEMENT OF SOURCES AND USES OF FUNDS For the Year Ended December 31, 2018 in EUR) Year Ended December 31, December 31, 2018 2017 PROJECT FINANCING 'pening balance on designated accounts at beginning of the period 8,962,611 10,190,075 i-roceeds from RoS: i,.insfer into the Designated Account 4,226,921 4,168,519 4,226,921 4,168,519 Proceeds from IBRD Tt,insfer into the Designated Account - - Proceeds from ElB Trnsfer into the Designated Account - 4,999,900 4,999,900 Proceeds from EBRD D,rect payments 6,891,625 6,908,281 6,891,625 6,908,281 TOTAL PROJECT FINANCING 20,081,157 26,266,775 PROJECT EXPENDITURES Firianced by RoS: C:mponent 1 - Road Rehabilitation and Safety-regular works 837,810 2,222,240 ! Component 3 - Project Detailed Design, Supervision, r lanagement and Monitoring-Regular works 98,073 457,993 935,883 2,680,233 F ianced by IBRD: Component 1 - Road Rehabilitation and Safety-Emergency works 512,716 3,120,714 ' :mponent 2 - Institutional Strengthening 249,452 - Component 3 - Project Detailed Design, Supervision, rAanagement and Monitoring 945,202 1,890,120 1,707,370 5,010,834 F-ranced by EIB: Component 1 - Road Rehabilitation and Safety-Emergency works 2,837,375 1,861,346 Component 3 - Project Detailed Design, Supervision, rAanagement and Monitoring 1,539,085 843,470 4,376,460 2,704,816 Financed by EBRD: Component 1 - Road Rehabilitation and Safety-Emergency works 1,623,217 4,787,949 Component 1 - Road Rehabilitation and Safety-regular works 5,268,407 2,120,332 6,891,625 6,908,281 TOTAL PROJECT EXPENDITURES 13,911,338 17,304,164 Cash balance at the end of the period 6,169,819 8,962,611 Approved by Gordana Suboti ki DofdeviI Project Coordinator MArch 7, 2019 3 IBRD Loan No B255-YF EIB Loan No. B2.640 EBRD Loan No. 44750 STATEMENT OF EXPENDITURES For the Year Ended December 31, 2018 (In EUR) Cumulative Budgeted Disbursements Cumulative Disbursements Budgeted but Undisbursed (in total) RoS IBRD* E(B EBRD Total RoS IBRD EI EBRD Total RoS IBRD ElB EBRD Total Sub- Protect 1: Component 1 - Road Rehabilitation and Safet 8,671,118 42,498,721 42,498,721 - 93,668,560 3,060,050 19,657,207 22,734,153 - 45,451,410 5,611,069 22,841,514 19,764,568 - 48,217,150 Component 2 - Institutiona Strengthenng- Services - 2.253,940 335,208 - 2,589,148 - 249,452 - - 249,452 - 2,004,488 335,208 - 2,339,696 Component 3 - Project Detailed DesTn, Supervision, Trainin staff, Management and Monitorin - Technical Control of Designs and Supervis[on of Road Emergency works and Environmental Monitoring 3,069,798 11,066,647 7,084,633 - 21,221,078 794,445 4,710,822 3,030,095 - 8,535,370 2,275,353 6,355,825 4,054,538 - 12,685,716 Total: Sub- Proiectr: 11,740,916 55,819,308 49,918,562 -117,478,786 3,854,495 24,617489 25,764,249 - 54236,232 7,886,422 31,201,827 24,154,313 - 63,242,562 Sub- Project 2: Comp,onent I - Road Rehabitttion andSet -Emergencyworks - - - 24,841,771 24,841,771 - - 20,236,647 20,236,647 - - 4,605,124 4,605,124 Component 1 - Reed Reoabilttation andSafet- Regular works - - - 21,635,578 21,635,578 _ - - 7,388,739 7,388,739 - - 14,246,838 14,246,838 Total: Sub- Project 2: - - - 46,477,349 46,477,349 - - - 27,625,386 27,625,386 - - 18,851,962 18,851 .962 Total Projects Expenditures: 11,740,916 55,819,305 49,918,562 46,477,349 163,956,135 3,854,495 24,617,489 25,764,249 27,625,386 81,861,619 7,886,421 31,201,827 24,154,313 18,851,962 82,094,524 Disbursements for the Period Cumulative Disbursements 2015, 2016, 2017 Ended December 31, 2018 Cumulative Disbursements 2015 until 2018 RoS IBRD* EB EBRD'* Total RoS IBRD EIB EBRD Total RoS IBRD EIB EBRD Total Sub- Project 1: Component I - Road Rehabitation end Safte 2,222,240 19,144,491 19,896,778 - 41,263,510 837,809 512,716 2,837,375 - 4,157,900 3,060,050 19,657,207 22,734,153 - 45,451,410 Component 2 - Ilnstitutonal 249,452 Strengthening - Services - - - - - - 249,452 - 249,452 - - 249,452 Component 3 - Project Detailed Design, Supervision, Training staff, ManagemLet and Monitoring - Technical Control of Designs and Supervision of Road Emergency works and Environmental Monitoring 696,371 3,765,628 1,491,011 - 5,953,010 98,074 945,202 1.539,085 - 2,582,361 794,445 4,710,830 3,030,095 - 8,535,371 Total: Sub- Project 1: 2,918,611 22,910,119 21,387,789 - 47,216,520 935,883 1,707,370 4,376,460 - 7,019,713 3,854.495 24,617,489 25,764,248 - 54,236,233 Sub- Protect 2: Component 1 - Road Rehabilitation and Safet - - - 20,733,762 20,733,762- - - 6,891,625 6,891,625 - - 27,825,386 27,625,386 Total: Sub- Project 2: - - - 20,733,762 20,733,762 - - 6,891,625 6,891,625 - - - 27,625,386 27625,386 Total Projects Expenditures: 2,918,611 22,910,119 21,387,789 20,733,702 67,950,282 935,883 1,707,370 4,376,460 6,891,625 13,911,338 3,854,495 24,617,489 25,764,248 27,625,386 81,861,619 4 IEBRD Project %tU P127B7fl IBRD Loan No 8255-YF EIB Loan No. 82.640 EBRD Loan No. 44750 STATEMENT OF EXPENDITURES (Continued) For the Year Ended December 31, 2017 (In EUR) Cumulative Budgeted Disbursements Cumulative Disbursements Budgeted but Undisbursed (in total) RoS IBRD* ElB EBRD- Total RoS IBRD ElB EBRD Total RoS IBRD EIB EBRD Total Sub- Prolect 1. Comonent I - Road Rehabilitation and Safety 8,671,118 22,973,000 22,973,000 - 54,617,118 2,222,240 19,144,491 19,896,778 - 41,263,509 6,448,878 3,828,509 3,076,222 13,353,609 Component 2 - Institutional Strenothening - Training and workshops 59,797 339,695 - - 399,492 - 20,399 - - 20,399 59,797 319,296 - 379,093 Component 3 - Project Detailed Design, Sucervision. Management and Monitoring - Technical Control of Designs and Supervision of Road Emergency works and Environmental Monitoring 2,298,297 4,318,065 3,181,550 9,797,912 696,380 3,745,221 1,491,011 - 5,932,619 1,601,917 572,844 1,690,539 - 3,565,302 Total: Sub- Prolect 1: 11,029,212 27,630,760 26,154,550 - 64,814,522 2,918,620 22,910,109 21,387,789 - 47,216,518 8,110,592 4,720,651 4,766,761 - 17,595,004 Sub- Project 2: Component 1 - Hoed Rehabiitation andSafety-Emergencyworks-- 25,470,357 25,470,357- - -18,613,430 18,613,430-- - 6,856,927 6,856,927 Component 1 - Road PRehabilitation and Safety - Regular works - - - 5,134,548 5,134,548 - - 2,120,332 2,120,332 3,014 216 3,014,216 Total: Sub- Project 2: - - - 30,804,905 30,604,905 - - - 20,733,762 20,733,762 - - - 9,871,143 9,871,143 Total Projects Expenditures: 11,029,212 27,630,760 26,154,550 30,604,905 95,419,427 2,918,620 22,910,109 21,387,789 20,733,762 67,950,280 8,110,592 4,720,651 4,766,761 9,871,143 27,469,147 Disbursements for the Period Cumulative Disbursements 2015, 2016 Ended December 31, 2017 Cumulative Disbursements 2015,2016,2017 RoS IBRD* ElB EBRD** Total RoS IBRD ElB EBRD Total RoS IBRD EB EBRD Total SubProect 1: Component I - Road Rehabilitation and Safet - 16,024,418 18,034,791 - 34,059,209 2,222,240 3,120,714 1,561,346 - 7,204,300 2,222,240 19,144,491. 19,896,778 - 41,263,509 Component 2 - Institutional Strenathening- Training and workshops 20,399 - - 20,399 - - - - - - 20,399 - - 20,399 Component 3 - Project Detailed Design. Supervision, Management and Monitorinq - Technical Control of Designs and Supervision of Road Emergency works and Environmental Mon[toring 238,387 1,854,458 648,182 - 2,741,027 457,993 1,890,120 843,470 - 3,191,583 696,380 3,745,221 1,491,011 - 5,932,610 Total. Sub- ProEjct 1: 238,387 17,899,275 18,682,973 - 36,820,635 2,680,233 5,D10,834 2,704,816 - 10,395,883 2,918,620 22,910,109 21,387,789 - 47,216,518 Sub- Project 2: Component 1 - Road Rehabilitation and - - - 13,825,481 13825,481 - - 6,908,281 6,908,281 - - - 20,733,762 20,733,762 Total:Sub-roject2: - - - 13,825,481 13,825,481 - - 6,908,281 6,908,281 - - - 20,733,762 20,733,762 Total Projects Expenditures: 238,387 17,899 275 18,682,973 13,825,481 50,646,116 2,680,233 5,010,834 2,704,818 6,908,281 17,304,164 2,918,520 22,910,109 21,387,789 20,733,782 67,950,280 5 1BRD Loan No B255-NFy- EIS Loan No. B2.fBA EBRD Loan No. 44750 STATEMENT OF EXPENDITURES (Continued) For the Year Ended December 31, 2016 (in EUR) Cumulative Budgeted Disbursements Cumulative Disbursements Budgeted but Undisbursed (in total) Ros IBRD* EIB EBRD** Total RoS IBRD EIB EBRD Total RoS IBRD ElB EBRD Total Sub- Project 1: Comoonent I - Road Rehabilitation andSafgt- Emergency works - 22,973,000 22,973,000 - 45,946,000 16,024,418 18,034,791 - 34,059,209 - 6,948,582 4,938,209 - 11,686,791 Component 2 - Institutionaf Strenothening - Training and workshops - 250,000 - 250,000 - 20,399 - - 20,399 - 229,601 - - 229,601 Comconent 3 - Proiect Detailed Design, Sapervision, Management and Monitoring - Technical Control of Designs and Supervision of Road Emergency works end Environental Mon1 0ring 642,644 1,739,366 1,753,600 - 4,335,610 238,387 1,854,45B 648,182 - 2,741,027 604,257 (115,092) 1,105,418 - 1,594,583 Total. Sub- Project 1: 842,644 24,962,366 24,726,600 50,531,610 238,387 17,899,275 18,682,973 - 36,820,635 604,257 7,063,091 6,043,627 - 13,710,975 Sub- Project 2. Comoonent I - Road Rehabilitation anSafet -Emergencyworks - - _ 25,034,940 25,034,940 - - - 13,825,481 13,825,481 - - - 11 209,459 11,209,459 Total: Sub- Project 2: - - - 25,034,940 25,034,940- - -13,825,481 13,826,481 - - 11,209,459 11,209,459 Total Projects Expenditures: 842r644 24,962,366 24,726,600 25,034,940 75,566,550 23,367 7,899,275 18,682,973 13,825,481 50,646,116 804,257 7,063,091 6,043,627 11,209,459 24,920,434 Disbursements for the Period Disbursements for the Period Ended December 31, 2015 Ended December 31, 2016 Cumulative Disbursements RoS IBR* EIB EBRD** Total Ro IBRD EB EBRD Total RoS IBRD EIB EBRD Total Sub- Project 1. Component 1 - Road Rehabibitation andSafetv- Emergencyworks 9,471,296 - 9,471,296 - 6,553,122 18,034,791 - 24,587,913 - 16,024,418 18,034,791 - 34,059,209 Component 2 - Institutional Strnening- Training and workshops - 14,519 - - 14,519 - 5,880 - - 5,880 - 20,399 - 20,399 Component 3 - Project Detailed Design, Supervison. Managerent and Monitoring - Technical Control of Designs and Supervision of Road Emergency works sne Enivironmental Monitoring ronmeal 1,159.695 - - 1,159,695 238,387 694,763 648,182 - 1,581,332 238,387 1,854,458 648,182 - 2,741,027 Total: Sub- Project 1: - 10,645,510 - - 10,645,510 238,387 7,253,765 18,682,973 26,175,125 238,387 17,899,275 18,682,973 - 36,820,635 Sub- Project 2: Comoonent I - Road Rehabifitation and Safet -Emergency works - - - 3,181,000 3,181,000 - - - 10,644,481 10,644,481 -- - 13,825,481 13,825,481 Total: Sub- Project 2: - 10,645,510 - 3,181,000 13,626,510 - - - 10,644,481 10,644,481 - - - 13,825,481 13,825,481 Total Projects Expenditures: 10,645,510 - 3,181,000 13,826,510 238,367 7,253,765 18,682,973 10,644,481 36,819,606 238,387 17899,275 18,682,973 13,825,481 50,646,116 6 IBRD Prohetr lfl: P127T76 IBRD Loan No. B255-YF EIB Loan No. 82.640 EBRD Loan No. 44750 STATEMENT OF EXPENDITURES (Continued) For the Year Ended December 31, 2015 (in EUR) Disbursements for the Period Budgeted Disbursements (as it was previously reported) Ended December 31, 2015 Committed but Undisbursed RoS IBRD* EB EBRD.* Total Ro IBRD EIB EBRD Total RoS IBRD ElB EBRD Total Sub- Proiect 1: Component 1 -Road Rehabfiftation 2[d Safety- Emergency works - 22,973,000 22,973,000 - 45,946,000 - 9,471,296 - - 9,471,296 - 13,501,704 22,973,000- 36,474,704 Component 2 - Institutional Strengthening - Training and workshops - 250,000 - - 250,000 - 14,519 - - 14,519 - 235,481 - 235,481 Component 3 - Project Detailed Dcsign, Suoervision, Management and Monitorin - TechnIcal Control of Designs and Supervision of Road Emergency works and Environmentai Monitoring 730,400 1,571,000 1,753600 - 4,055,000 - 1,159,695 - 1,159,695 730,400 411,305 1,753,600 - 2,895,305 Total.Sub-Projectl: 730,400 24,794,000 24,726,600 - 50,251,000 - 10,645,510 - - 10,645,510 730,400 14,148,490 24,726,600 - 39,605,490 Sub- Proqect.2: Component I - Road Rehabilitation andSafety-Emergencyworks - 22,191,000 22,191,000 - - - 3,181,000 3,181,000 - - 19,010,000 19,010,000 Total:Sub-Proect2: - - - 22,191,000 22,191,000- - - 3,181000 3,181,000-- - 19,010,000 19,010,000 Total Projects Expenditures: 730,400 24,794,000 24,726,600 22,191,000 72,442,000 10,645,510 3,181,000 13,826,510 730,400 14,148,490 24,726,600 19,010,000 56,615,490 *Budgeted amounts refer to the Procurement Plan budget amounts for EB/IBRD/RoS contracts. -Budgeted amounts for EBRD contracts refer to the cash-flow budget amounts. 7 r -- fOAD REHA_R%LrTT1C Amt3b SAIVsTY f*c.f0.v_- IBRD Pro1et ID PI?27B76 IBRD Loan No. 8255-YF EIS Loan No. 82.640 EBRD Loan No. 44750 STATEMENT OF DESIGNATED ACCOUNTS For the Year Ended December 31, 2018 (In EUR) Designated Sub- account No Designated 840-1407764-22 Sub-account No: (old No 840- Designated Account No Designated Account No: 840-1406764-15 3960721-77) 504626-100193230 504627-100193230 (old No 840-3956721-49) Source of financing: Source of financing: Source of financing: Source of financing: RoS IBRD EIB EIB and IBRD Depository Bank: Depository Bank; Administration of National Bank of National Bank of Serbia, the Treasury, Serbia, Ministry of Ministry of Finance - Administration of the Branch Palilula Finance - Treasury Treasury Treasury, Branch Palilula Currency: RSD Currency: EUR Currency: EUR Currency: RSD Total Balance at beginning of the period January 1, 2018 2,191,609 888,465 4,431,939 1,450,598 8,962,611 Inflows Replen shment during the period 4,226,921 - - 4,226,921 Total In flows: 4,226,921 - - - 4,226,921 Outflows Transfers to RSD accounts/from EUR accounts (3,300,000) 3,300,000 - Payments for Project expenditures (935,883) (475,429) (986,597) (4,621,802) (7,019,713) Total Outflows: (935,883) (475,429) (4,286,597) (1,321,802) (7,019,713) Balance at the end of the period December 31, 2018 5,482,645 413,035 145,342 128,795 6,169,819 Reconciliation for Project expenditures: - disbursements from designated Accounts (7,019,713) - direct payments from EBRD (6,891,625) TOTAL PROJECT EXPENDITURES (13,911,338) 8 ROAD REHABILITATION AND SAF ET V PROJECT IBRD Project%D PA21%7b IBRD Loan No. 8255-YF ElB Loan No. 82.640 EBRD Loan No. 44750 STATEMENT OF DESIGNATED ACCOUNTS (Continued) For the Year Ended December 31, 2017 (In EUR) Designated Sub- account No Designated 840-1407764-22 Sub-account No: (old No 840- Designated Account No Designated Account No: 840-1406764-15 3960721-77) 504626-100193230 504627-100193230 (old No 840-3956721-49) Source of financing: Source of financing: Source of financing: Source of financing: RoS IBRD EIB EIB and IBRD Depository Bank: Depository Bank: Administration of National Bank of National Bank of Serbia, the Treasury, Serbia, Ministry of Ministry of Finance - Administration of the Branch Palilula Finance - Treasury Treasury Treasury, Branch Palilula Currency; RSD Currency: EUR Currency: EUR Currency: RSD Total Balance at beginning of the period January 1, 2017 703,323 4,765,279 2,200,000 2,521,473 10,190,075 Inflows Replenishment during the period 4,168,519 - 4,999,900 - 9,168,419 Total Inflows: 4,168,519 - 4,999,900 - 9,168,419 Outflows Transfers to RSD accounts/from EUR accounts - (3,400,000) (2,600,000) 6,000,000 - Payments for Project expenditures (2,680,233) (476,814) (167,961) (7,070,875) (10,395,883) Total Outflows: (2,680,233) (3,876,814) (2,767,961) (1,070,875) (10,395,883) Balance at the end of the period December 31, 2017 2,191,609 888,465 4,431,939 1,450,598 8,962,611 Reconciliation for Project expenditures: - disbursements from designated Accounts (10,395,883) - direct payments from EBRD (6,908,281) TOTAL PROJECT EXPENDITURES (17,304,164) 9 kBRODProjeQ%tWD:.P12-W7 ¼ IBRD Loan No. 8255-YF EIB Loan No. 82.640 EBRD Loan No. 44750 STATEMENT OF DESIGNATED ACCOUNTS (Continued) For the Year Ended December 31, 2016 (In EUR) Designated Sub- account No Designated 840-1407764-22 Sub-account No: (old No 840- Designated Account No Designated Account No: 840-1406764-15 3960721-77) 504626-100193230 504627-100193230 (old No 840-3956721-49) Source of financing: Source of financing: Source of financing: Source of financing: RoS IBRD EIB EIB and IBRD Depository Bank: Depository Bank: Administration of National Bank of National Bank of Serbia, the Treasury, Serbia, Ministry of Ministry of Finance - Administration of the Branch Palilula Finance - Treasury Treasury Treasury, Branch Palilula Currency: RSD Currency: EUR Currency: EUR Currency: RSD Total Balance at beginning of the period January 1, 2016 71,847 6,394,160 8,000,000 3,460,330 17,926,337 Inflows Replenishment durIng the period 869,863 6,569,000 11,000,000 - 18,438,683 Total Inflows: 869,863 6,569,000 11,000,000 - 18,438,683 Outflows Transfers to RSD accounts/from EUR accounts - (8,000,000) (16,635,343) 24,635,343 - Payments for Project expenditures (238,387) (197,881) (164,657) (25,574,200) (26,175,125 Total Outflows: (238,387) (8,197,881) (16,800,000) (938,857) (26,175,125) Balance at the end of the period December 31, 2016 703,323 4,765,279 2,200,000 2,521,473 10,190,075 Reconciliation for Project expenditures: - disbursements from designated Accounts (26,175,125) - direct payments from EBRD (10,644,481) TOTAL PROJECT EXPENDITURES (36,819,606) 10 "ULIAO RkE-IASXT ATIO ti Ar4Q~I'e PaJC 1BRDProjactt3 P127Tr IBRD Loan No 8255-YF ElB Loan No. 82.640 EBRD Loan No. 44750 STATEMENT OF DESIGNATED ACCOUNTS (Continued) For the Year Ended December 31, 2015 (In EUR) Designated Sub- Designated account No Designated Account No Designated Account No: Sub-account No: 840-3960721-77 504626-100193230 504627-100193230 840-3956721-49 Source of financing: Source of financing: Source of financing: Source of financing: RoS IBRD EIB EIB and IBRD Depository Bank: Depository Bank: Administration of National Bank of Serbia, National Bank of Serbia, the Treasury, Ministry of Finance - Ministry of Finance - Administration of the Branch Palilula Treasury Treasury Treasury, Branch Palilula Currency: RSD Currency: EUR Currency: EUR Currency: RSD Total Balance at beginning of the period January 1, 2015 Inflows Replenishment during the period 71,847 18,500,000 10,000,000 28,571,847 Total Inflows: 71,847 18,500,000 10,000,000 28,571,847 Outflows Transfers to RSD accounts/from EUR accounts - (12,000,000) (2,000,000) 14,000,000 - Payments for Project expenditures - (105,840) - (10,539,670) (10,645,510) Total Outflows: - (12,105,840) (2,000,000) 3,460,330 (10,645,510) Balance at the end of the period December 31, 2015 71,847 6,394,160 8,000,000 3,460,330 17,926,337 Reconciliation for Project expenditures: - disbursements from designated Accounts (10,645,510) - direct payments from EBRD (3,181,000) TOTAL PROJECT EXPENDITURES (13,826,510) 11 II ROAD REHABILITATION AND SAFETY PROJECT IBRD Project ID: P127876 IBRD Loan No. 8255-YF EIB Loan No. 82.640 EBRD Loan No. 44750 NOTES TO THE STATEMENTS For the Year Ended December 31, 2018 BACKGROUND For purposes of realization of the Road Rehabilitation and Safety Project, the Republic of Serbia ("RoS") entered into contract agreements on loans with three International Financial Institutions (IFIs) on November 27, 2013, as follows: Loan Agreement with IBRD, EIB and EBRD, the National Assembly ratified all three agreements by adopting the Law on Confirmation of the Agreements (Official Gazette of RS - International Agreements No. 6114 dated 20 June 2014). By Subsidiary Agreements executed by and between the RoS and PERS, regarding IBRD loan on November 19, 2014 and regarding EBRD loan on November 28, 2014 the funds of these loans have been made available to PERS for implementation of the Project pursuant to the Project Agreement signed between PERS, EBRD and IBRD on December 9, 2013. The Road Rehabilitation and Safety Project ("Project") is a part of a larger IFl's coordinated effort to support RoS in the implementation of the first phase of the National Road Network Rehabilitation Program (NRNRP). The Project refers to two sub-projects: (i) the sub-project co-financed by IBRD, EIB and RoS (ii) the sub- project financed in parallel solely by EBRD. Over the implementation period the Project is designed to cover the following: * improvement of condition on the state road network by means of rehabilitation of approximately 1,100 km of the existing roads; * increase of road safety condition through appliance of measures for improvement of road safety in all phases of the Project implementation; * strengthening capacity and development of institutional coordination in the field of road and traffic safety through implementation of a number of various services. The Project is designed, as per Operation manual, to use, for the most part, resylts-based features and will include three components: 1. Component 1: Road Rehabilitation and Safety will cover emergency works and regular works: periodic maintenance and rehabilitation works, partial pavement widening, works concerning traffic signalization improvement and structure renewal as well ancillary road connections. This component will also support the incorporation of road safety measures as recommended by road safety audits in the design of the Project's road sections and their subsequent implementation as a way to institutionalize these practices for all road works; 2. Component 2: Institutional Strengthening will cover the following: a) Subcomponent2A: Support to road safety will cover road safety inspections and the implementation of low cost road safety measures such as signage, traffic calming measures and road furniture for an additional 1,000 km of national roads beyond what is covered in Project. The implementation of these measures will be covered out of PERS's annual maintenance budget. The subcomponent will also include road safety awareness campaigns, strengthening enforcement on the Project-improved roads and training on road safety audits and inspections. b) Subcomponent 28: Strengthen road rehabilitation and planning processes will cover a road condition survey for the entire National Road Network, an update of the national road database, institutionalization of the development of multi-year maintenance plans based on clearly-defined economic, social and regional criteria; and the adoption and implementation of updated design standards for maintenance and rehabilitation; c) Subcomponent 2C: Strengthening maintenance management will cover the development of a strategic plan for Performance-based maintenance contracts ('PBMC"), preparation of model bidding documents for PBMC and contractors on PBMC, and provision of implementation support. 3. Component 3: Project Detailed Design, Supervision, Training staff, Management and Monitoring will cover the following: a) Subcomponent 3A: Supervision and Technical Control for emergency works and for regular works. This subcomponent covers the design and supervision costs for all the roads covered by the Project. b) Subcomponent 3B: Project management support. This includes project management support and capacity building to PIT as may be necessary in procurement, financial management, environmental and social safeguards and annual program planning. 12 ROAD REHABILITATION AND SAFETY PROJECT IBRD Project ID: P127876 IBRD Loan No. 8255-YF EIB Loan No. 82.640 EBRD Loan No. 44750 NOTES TO THE STATEMENTS For the Year Ended December 31, 2018 BACKGROUND (Continued) c) Subcomponent 3C: Project Audits. This includes: (i) the Integrated Performance Audit which will review engineering designs, management of social and environmental issues, procurement, quality assurance, contract management and compliance to agreed conditions, quality of project supervision, review of traffic safety implementation, and achievement of disbursement-linked indicators ("DLIs") to trigger disbursement. Works on the rehabilitation of the road network are expected to be executed on 55 sections under the Project, with wide geographic distribution and by implementing the specific measures to improve the road safety, environmental protection and to enhance social aspects in the works execution area, pursuant to policies and procedures stipulated by IFIs. In order to provide proceeds to remedy the damage occurred to the Serbian road network, sections under the Project, due to the floods and heavy rains from May 2014, a framework for the inclusion of the Emergency works component has been established in cooperation with IFIs in the period May - June 2015 and the restructuring of the financial arrangements commenced. Emergency works component covered execution of the works on repair and rehabilitation of 10 road sections (based on design and build contract conditions), 6 financed by the IBRD and EIB, and 4 financed by EBRD, as well as implementation of Consulting Services for technical control of designs and supervision of road emergency works and environmental monitoring financed by IBRD and EIB. All Emergency works are now completed as well as related Consulting Services. Total contracted value of the Emergency works is EUR 70,396,494. Contracted and paid amount at the end of 2018 per source of financing is as follows: - IBRD/EIB financing: contracted EUR 45,554,722 and paid EUR 40,846,993 (as it was disclosed in Statement of Expenditures) - EBRD financing: contracted EUR 24,841,771 and paid EUR 20,236,647 (direct payment to the vendors). Remaining payment from the Emergency works component covers amounts which shall be determined by the Final Payment Certificates after expiration of DNP. In terms of financing, the Project is composed of two sub-projects: 1. Sub-project co-financed by RoS, EIB and IBRD proceeds, which, in addition to the road rehabilitation works, will cover all other activities and services envisioned by the Project in the original total amount of approximately EUR 290 million and after IBRD Restructuring of the Project in 2018, in the amount of EUR 272.6 million (where the Project payments are effected from disbursed proceeds pursuant to the terms of financial agreements); 2. Sub-project financed by funds of EBRD, which includes only the road rehabilitation works in the amount of EUR 100 million (where payments are to be made directly by EBRD to the Contractors' account). According to the Operational Manual for the implementation of the Project, dated October 31, 2014 and Restructuring letter Signed by WB dated June 27, 2018 respective individual shares in financing are as follows: Amendment Loan Amount Loan Amount % of Sub - Description (EUR million) (EUR million) Project EIB/IBRDIRoS Sub - Project IBRD 73.8 56.4 15% EIB 100.0 100.0 27% RoS 116.2 116.2 31% Sub Total: 290,0 272.6 73% EBRD Sub - Project EBRD 100.0 99.0 27% 100.0 99.0 27% Total RRSP 390.0 371.6 100% 13 ROAD REHABILITATION AND SAFETY PROJECT IBRD Project ID: P127876 IBRD Loan No. 8255-YF EIB Loan No. 82.640 EBRD Loan No. 44750 NOTES TO THE STATEMENTS For the Year Ended December 31, 2018 BACKGROUND (Continued) The Loan Agreements executed with IBRD and EBRD define distribution of expenditures according to the respective categories being financed, while the Finance Contract executed with EIB does not define distribution of expenditures. The Operation Manual for the Implementation of the Project, uniting and aligning the policies of all three IFIs, defines classification of expenditures across the Project components. Therefore, expenditures classified per components should be relevant for subsequent assessment of the Project' performance. For the purpose of unification of the terminology applied in financial reporting on the Project expenditures, expenditures under the Sub-project 1 will be recorded through all three components, while total expenditures financed from the EBRD loan funds will be recorded through Sub-project 2 and component 1. Not one of the creditors (lFls) have so far issued specific approval of the expenditure classification per components nor have they delivered any comments on the interim financial statements submitted up to date suggesting any weaknesses in the expenditure classification applied. During Project restructuring, it was accepted that the Emergency works were to be treated as part of category 1 under the IBRD Loan Agreement and as a constituting element of category 1 of the EBRD Loan Agreement. These expenditures within Sub-project 1 and Sub-project 2 are treated under component 1. Since this category of expenditures is not financed by RoS, the agreement of IFIs was that the principle of financing shall be 50% from the IBRD and 50% from the EIB funds within Sub-project 1. This principle is applied during disbursement of tranches, but due to non-harmonized payments and different policies of IFIs in respect of conditions for disbursement of tranches, the applied principle is not mandatory and strict in final distribution of expenditures under this category. The principle of share in financing under Sub-project 1 with the general share of IBRD 25%, EIB 35% and RoS 40% was of higher significance for IFIs until a new Project restructuring has begun. In addition, although within the classification of expenditures, the Services of Supervision and Technical Control for Emergency works do not belong to component 1, given the type of the works for which the Services were contracted, the principle of financing was planned as with the Emergency works, i.e. RoS was also excluded from financing of these Services. Additionally, for all categories of expenditures that are not recognized as eligible expenditures in EIB's procedures, the original general approach (25%:35%:40%) could not be applied. The example of such approach is training under the Project which is fully (100%) funded from the IBRD loan, as well as design services procured through CQS method. After IBRD Project restructuring in 2018, which covered cancellation of funds and change of loan closing date, distribution of shares between co-financing parties under the Sub-project 1 lost the purpose. Instead of shares, the available amounts under loans shall apply. 2. LOAN AGREEMENT 2.1. A brief description of the Loan Agreement - IBRD Loan No. 8255 - YF IBRD and the RoS executed Loan Agreement No. 8255 on November 27, 2013. An Amendment to the Loan Agreement was signed on February 3, 2015. According to the provisions of the Loan Agreement, the total loan amounts to FUR 73,800,000. On September 19, 2014, the Supplementary Agreement was signed on the transfer of loan proceeds stipulating the commitment of IBRD to transfer to PERS the right to use funds in the amount of EUR 73,615,500, i.e. the agreed Loan amount reduced by the amount of front - end fee. On June 27, 2018, the Amendment to the Loan Agreement together with Supplement Letter No. 2 for IBRD source of financing was signed and submitted to the Government of Serbia and PERS. The restructuring became effective on the date of signature of RS Minister of Finance on October 23, 2018. The following table specifies the categories of eligible expenditures that may be financed out of the proceeds 14 ROAD REHABILITATION AND SAFETY PROJECT IBRD Project ID: P127876 IBRD Loan No. 8255-YF EIB Loan No. 82.640 EBRD Loan No. 44750 NOTES TO THE STATEMENTS For the Year Ended December 31, 2018 2. LOAN AGREEMENT (Continued) 2.1. A brief description of the Loan Agreement - IBRD Loan No. 8255 - YF (Continued) of the Loan ("category"), the allocation of the amounts of the Loan to each category, and the percentage of expenditures to be financed for eligible expenditures in each category in accordance with the Amendment. Amount of the Loan Percentage of Expenditures to Category Allocated be financed __(expressed in EUR) (exclusive of Taxes) (1) Goods, works, non-consulting services, and consultant services for Part 1 and Part2 of the Project 42,630,000 100% (2) Goods, consultants' services, training, incremental operating costs for Pad 3 of the Project, and audit 13,590,000 100% Fee payable by RoS equal to 0.25% of the Loan amount for (3) Front-end fee 184,500 draw-down of Loan funds TOTAL LOAN AMOUNT 56,404,500 The main terms and conditions of the Loan Agreement are described below: 1. The Closing date of Loan Agreement according to Amendment to the Loan Agreement No. 2 is June 30, 2020. 2. After conditions for the Loan effectiveness in the amount of the estimated expenditures for the Project Year 1 are met, the Loan repayment is scheduled in semi-annual installments payable on each June 15 and December 15 for each year. 3. The first tranche was drawn in the amount of EUR 18,500,000. The Minister of Finance and Assistant Minister of Finance are signatories of the requests for tranche drawdown, which are sent to the National Bank of Serbia ('NBS"). The second tranche was drawn on July 5, 2016 in the amount of EUR 6,569,000.00 4. The method of disbursement applied is advance payment (based on the procedures of IBRD). 5. The Procurement Plan defines certain road sections on which works will be conducted. 6. During the 5-month period between the date of the Loan Agreement effectiveness and the date of availability of the proceeds, IBRD and the RoS completed all necessary activities to finalize the operational procedures for the withdrawal of the first tranche and first requests for payments were submitted under the concluded contracts 7. For the purposes of the Project, PERS' obligation was to open and maintain two foreign currency designated accounts (in EUR) with NBS, one for IBRD and ElB each. These two separate designated accounts are accounts to which the funds drawn from IBRD and EIB are placed (deposited). Funds from these accounts needed for payments in local currency are thereafter transferred to PERS' sub-account in Serbian dinars with the Treasury as frequently as necessary (possibly on a daily basis) at the exchange rate effective as of the transfer date. These designated accounts are to be used to ensure effective implementation of the Project and utilization of IBRD and ElB financing. 2.2. A brief description of the Loan Agreement - EIB Loan No. 82.640 ElB and RoS executed Loan Agreement No. 82.640 on November 27, 2013. An Amendment to the Loan Agreement was signed on July 17, 2015. 15 ROAD REHABILITATION AND SAFETY PROJECT IBRD Project ID: P127876 IBRD Loan No. 8255-YF ElB Loan No. 82.640 EBRD Loan No. 44750 NOTES TO THE STATEMENTS For the Year Ended December 31, 2018 2. LOAN AGREEMENT (Continued) 2.2. A brief description of the Loan Agreement - EIB Loan No. 82.640 (Continued) According to the provisions of the Loan Agreement, the total loan amounts to EUR 100,000,000. The main terms and conditions of the Loan Agreement are described below: 1. The final Loan availability date was November 30, 2018, identifying time for the last disbursement of loan funds, while the Project is intended to be completed by the end of 2019. Preparation of the Amendment for extending of the loan availability date is in progress. 2. EIB shall disburse the Loan in up to 20 tranches. The amount of each tranche, if not being the undrawn balance of the Loan, shall be in a minimum amount of EUR 5,000,000. 3. The Loan proceeds were made available on July 17, 2015, but the first tranche of the Loan totaling EUR 10 million was effected on December 7, 2015. Payment of the first tranche was delayed as the procedure for application for disbursement had to be repeated and re-certified to fulfil the conditions for payment by ElB. Meanwhile, payments under the Emergency works were effected out of IBRD Loan proceeds. The first transferfrom EIB funds to ElB and IBRD sub-account was made on December 12, 2015 in the amount of 2 million EUR, and the first direct payment from EIB deisgnated account was made on February 29, 2016. The first payment from sub-account from ElB funds was made February 2, 2016. * The second tranche was made on August 05, 2016 in the amount of EUR 11 million * The third tranche was made on August 16, 2017, requested amount was 5 million euros, but amount of tranche withdraw was EUR 4,999,900.00 4. As already described under IBRD Loan, point 7, for the purpose of the Project two separate designated accounts were opened with NBS. 5. The Loan Agreement do not set forth the categories, the amounts of loan funds allocated to each category and the percentages of expenditures to be financed in each category. 2.3. A brief description of the loan agreement - EBRD Loan No. 44750 EBRD and RoS executed Loan Agreement No. 44750 on November 27, 2013. An Amendment to the Loan Agreement was signed on October14, 2015. According to the provisions of the Loan Agreement, the total loan amounts to EUR 100,000,000. The following table sets forth the categories, the amounts of the Loan allocated to each category and the percentages of expenditures to be financed in each category. Amount of the Loan % of Allocated Expenditures to Category Description (expressed in EUR) be financed 100% (excluding Category 1 Civil Works for Part A - Road Section 1 27,853,000 taxes & duties) 100% (excluding Category 2 Civil Works for Part A - Road Section 2 20,053,000 taxes & duties) 100% (excluding Category 3 Civil Works for Part A - Road Section 3 41,260,000 taxes & duties) 100% (excluding Category 4 Civil Works for Part A- Road Section 4 9,834,000 taxes & duties) Ctgoryl5 Front-End Fee 1,000,000 100% Total Loan Amount 100,000,000 16 ROAD REHABILITATION AND SAFETY PROJECT IBRD Project ID: P127876 IBRD Loan No. 8255-YF EIB Loan No. 82.640 EBRD Loan No. 44750 NOTES TO THE STATEMENTS For the Year Ended December 31, 2018 2. LOAN AGREEMENT (Continued) 2.3. A brief description of the loan agreement - EBRD Loan No. 44750 (Continued) The main terms and conditions of the Loan Agreement and Amendment of Loan Agreement dated November 02, 2018 are described below: 1. The final Loan availability date is December 31, 2021 and by that time Loan funds may be drawn. 2. RoS shall repay the Loan in 24 equal semi-annual instalments on June 15 and December 15 of each year, the first Loan repayment date being the interest payment date falling on or immediately after the third anniversary of this Loan Agreement. The minimum drawdown amount shall be EUR 100,000, the minimum prepayment amount shall be EUR 5,000,000 and the minimum cancellation amount shall be EUR 5,000,000. The rate of the commitment charge shall be 0.5% per annum. 3. The method of disbursement applied is direct payment (based on the procedures of EBRD). 4. The Loan is subject to a variable interest rate. RoS may, as an alternative to paying interest at a variable interest rate on all or any portion of the loan then outstanding, elect to pay interest at a fixed interest rate on such a portion of the loan as per the standard terms and conditions. 5. The Loan became effective on May 13, 2015, but the Loan funds were not available for expenditures of the Emergency works until the effectiveness of Amendment 1 to the Loan Agreement. Delayed payments with two to five months of delay have been recorded. 6. A designated account has not been open for the proceeds from EBRD because EBRD pays contractors directly in the amount of costs. 2.4. A brief description of the Contribution of RoS RoS's share in the total financing of the Project equals 31% as the result of decrease in the IBRD funds under the Sub-Project 1 and amounts to approximately EUR 116.2 million. There are no detailed allocation of the contribution of RoS to each category and the percentages of expenditures to be financed in each category. The restructuring of the Project through incorporation of the Emergency works component and rescheduling dynamics of works from the regular part of the Project program to the later period of implementation, excluded the RoS contribution from the Emergency works financing. Therefore, the percentage of the national co- financing share will be increased in the following years to attain the amount of RoS total contribution at the overall Project level. 2.5. Breakdown of unspent funds for approved credit lines The following table presents the breakdown of unspent funds per each co-financing party as at December 31, 2018: (EUR million) Disbursed Description Loan Amount expenditures Undisbursed funds ElBIBRD/RoS Sub - Project IBRD 56.4 24.62 31.78 ElB 100.0 25.76 74.24 RoS 116.2 3.85 112.35 Sub Total: 272.6 54.23 218.37 EBRD Sub - Project EBRD 99.0 27.63 71.37 99.0 27.63 71.37 Total RRSP 371.6 81-86 289.73 17 ROAD REHABILITATION AND SAFETY PROJECT IBRD Project ID: P127876 IBRD Loan No. 8255-YF EIB Loan No. 82.640 EBRD Loan No. 44750 NOTES TO THE STATEMENTS For the Year Ended December 31, 2018 2. LOAN AGREEMENT (Continued) 2.6. Breakdown of committed but undisbursed funds per components and sub projects The following table presents the breakdown of committed but undisbursed funds per components and sub projects as at December 31, 2018: (EUR) Disbursed Committed but Description Contracted* expenditures undisbursed EIBIIBRDIRoS Sub - Project Component I - Road Rehabilitation and Safety - Emergency works 45,554,722 40,846,993 4,707,729 Component 1 - Road Rehabilitation and Safety - Regular works 48,113,838 4,604,417 43,509,420 Component 2 - Institutional Strengthening - Road Safety Inspection on Roads out of RRSP 149,452 149,452 - Road Safety Auditors for Training and Certification 125,000 100,000 25,000 Awareness Campaigns in schools 79,978 - 79,978 Road Network Condition Surveying 2,234,718 2,234,718 Sub Total: 96,257,708 45,700,862 50,556,846 Component 3 - Project Detailed Design, Supervision, Managementand Monitoring, Trainings and Workshops- 21,221,078 8,535,362 12,685,716 Sub Total: 117,478,786 54,236,224 63,242,562 EBRD Sub - Project Component I - Road Rehabilitation and Safey - Emergency works 24,841,771 20,236,647 4,605,124 Component 1 - Road Rehabilitation and Safety - Regular woks 21,635,578 7,388,739 14,246,838 Sub Total 46,477,349 27,625,387 18,851,962 Total 163,956,135 81,861,619 82,094,524 The following table presents the breakdown of committed but undisbursed funds per components and sub projects as at December 31, 2017: (EUR) Disbursed Committed but Description Contracted* expenditures undisbursed EIBIIBRDIRoS Sub - Project Component 1 - Road Rehabilitation and Safet - Emergency works 45,554,017 39,041,269 6,512,748 Component 1 - Road Rehabilitation and Safety- Regular works 8,671,118 2,222,240 6,448,878 Component 2 - Institutional Strengthening - Training and workshops 149,452 20,399 129,053 Component 3 - Proiect Detailed Design, Supervision, Management and Monitoring 9,797,912 5,932,610 3,865,302 Sub Total: 64,172,499 47,216,518 16,955,981 EBRD Sub - Project Component 1 - Road Rehabilitation and Safety - Emergency works 25,034,940 18,613,430 6,421,510 Component 1 - Road Rehabilitation andaetV -.Regular woks 5,134,548 2,120,332 3,014,216 Sub Total 30,169,488 20,733,762 9,435,726 Total 94,341,987 67,950,280 26,391,707 * Contracted values originally expressed in Serbian dinars were translated into EUR at the NBS middle exchange rate effective as of the contract execution date 18 ROAD REHABILITATION AND SAFETY PROJECT IBRD Project ID: P127876 IBRD Loan No. 8255-YF EIB Loan No. 82.640 EBRD Loan No. 44750 NOTES TO THE STATEMENTS For the Year Ended December 31, 2018 3. BASIS OF PREPARATION OF THE STATEMENTS AND ACCOUNTING CONVENTION 3.1. General The accompanying Statements have been prepared for the purposes of reporting to IFIs and RoS on the activities of the Project with respect to the funding received for the completion of the Project objectives in accordance with the respective Loan Agreements. In the records of IBRD, EIB and EBRD, Loans are stated in EUR, which is the contractually defined currency. Consequently, as per the adopted accounting policy, PIT accounts for and reports all the transactions in EUR amounts as well. As requested by Operational Manual for the implementation of the Project, these Statements include all Project-related expenditures incurred, which are financed by IBRD Loan No. 7463 YF, EIB Loan No. 82.640, EBRD Loan No. 44750, as well as the expenditures financed by RoS. 3.2. Accounting Records and Basis of Presentation All funds originated from Loans are accounted for using the cash receipt and disbursement basis, On this basis, funds are recognized by PIT within PERS when actually received on the designated accounts in the case of IBRD, EIB and RoS and expenses are recognized when they are paid, rather than when incurred. Considering that the model applied by EBRD is direct payment, the Project costs are recorded when the payments are made. 3.3. Exchange Rates Expenditures paid in Serbian dinars from the sub-account for uses of IBRD and EIB funds were translated into EUR at the exchange rate effective at the date of conversion from EUR designated accounts. The exchange rates of those conversions are stated by NBS in its official letter at the conversion date. NBS uses the buying exchange rate at the date of each conversion. For the purpose of presenting the use of funds converted to the sub-account in Serbian dinars and for identification of the source of funds (Loan), PIT applies the exchange rate specified by NBS for converting the expenditures paid from the sub-account in Serbian dinars. Expenditures paid in Serbian dinars from the sub- account for uses of RoS funds were translated into EUR at the NBS middle exchange rate effective at the date of payment. Thefunds disbursed in Serbian dinars under EBRD Loan were translated into EUR at the exchange rate stated in Disbursement Advice issued by EBRD for every payment. 4. EVENTS AFTER THE REPORTING DATE There were no significant events after the reporting date that will require disclosure or modification of the Statements. 19 Å{ Deloitte d.o.o. Beograd Terazije 8 11000 Belgrade Serbia Tel: +381 (0) 11 381 21 00 +381 (0) 11 381 22 00 Fax:+381 (0)11 381 21 12 ceyuinfo@deloittece.com www.deloitte.corm/rs Deloitte d.o.o. Podgorica Bulevar Svetog Petra Cetinjskog bb, zgrada Maxim 81000 Podgorica Montenegro Tel: +382 (0) 20 228 324 +382 (0) 20 228 096 Fax: +382 (0) 20 228 327 www.deloitte.com/me Deloitte d.o.o. Banja Luka Brace Mažar i majke Marije 58 i 60 78000 Banja Luka Republic of Srpska Bosnia and Herzegovina Tel: +387 (0) 51 223 500 +387 (0) 51 224 500 Fax: +387 (0) 51 224 990 www.deloitte.com Deloitte DOO Skopje Partizanski odredi1SA 1000 Skopje Republic of Mac-edonia Tel: +389 (0) 2 3111 300 Fax: -389 (0) 2 3119 544 cemkmacedonia@deloittece.com w.deloitte.com/mk Member of Deloitte Touche Tohmatsu Limited