"Pasture and Livestock
Management Improvement Project"
IDA Credit No. 5521-KG,
IDA Grant No. H976-KG


Project financial statements
for the year ended De.cember 31, 2018


and independent auditors' report
"PASTURE AND LIVESTOCK MANAGEMENT IMPROVEMENT PROJECT"
IDA CREDIT NO. 5521-KG, IDA GRANT NO. H976-KG



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, 2018                                     2

INDEPENDENT AUDITORS' REPORT                                           3-4

PROJECT FINANCIAL STATEMENTS FORT.HE YEAR ENDED DECEMBER 31, 2018:
                             .
  Summary of funds received and expenditures paid                      5-6

  Summary of expenditures paid by project components                     7

  Notes to the project financial statements                           8-18

  A rmex to the project financial statements                         19-20
       STATEMENT OF MANAGEMENT'S RESPONSIBILITIES FOR THE PREPARATION AND
       APPROVAL OF THE PROJECT FINANCIAL STATEMENTS
       FOR THE YEAR ENDED DECEMBER 31, 2018

       The following statement, which should be read in conjunction with the independent auditors' responsibilities is
       made with a view to distinguish the respective responsibilities of management and those of the independent
       auditors in relation to the project financial statements of the "Pasture and Livestock Management Improvement
       Project" , IDA Credit No. 5521-KG , IDA Grant No. H976-KG (the "Project").

       Management is responsib le for the preparation of the project financial statements that present fairly, in all
       material respects , the summary of funds received and expenditures paid and and the summary of
       expenditures paid by project components of the Project for the year ended December 31 , 2018 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").

       In preparing the project financial statements, n:ianagement is responsible for:

       •
                                      .
           selecting suitable accounting policies and applying them consistently;
       •   making judgments and estimates that are reasonable and prudent;
       •   stating whether IPSAS and WB Guidelines have been followed , subject to any material departures
           disclosed and explained in the project financial statements; and
       •   preparing the project financial statements on a going concern basis , unless it is inappropriate to presume
           that the Project will continue its activity for the foreseeable future.

       Management is also responsib le for:
r·~~
       •   designing, implementing and maintaining effective and sound system of internal control and for revealing
           risks in system of internal control ;
       •   maintaining proper accounting records that disclose, with reasonable accuracy at any time, the financial
           position of the Project, and which enable them to ensure that the project financial statements of the
           Project comply with IPSAS and WB Guidelines;
       •   compliance with laws and regulations of the Kyrgyz Republic, accounting system of the Project and the
           requirements of the World Bank ;
       •   taking such steps as are reasonably available to them to safeguard the assets of the Project; and
       •   detecting and preventing fraud and other irregularities.

       The project financial statements for the year ended December 31, 2018 were approved and authorized for
       issue by the management of the Project on July 4, 2019 .




                                                               Acting financial manager

       July 4, 2019                                            July 4, 2019
       Bishkek, the Kyrgyz Republic                            Bishkek, the Kyrgyz Republic



                                                               2
    <t bakertilly                                        103, lbraimov str.
                                                         BC "Victory'', 7th floor
                                                         Bishkek, 720011
                                                                                                T +996 (312) 90 05 05
                                                                                                F +996 (312) 91 05 05
                                                                                                contact@bakerti lly.kg
                                                         Kyrgyz Republic                        www.bakertilly-ca .com




              INDEPENDENT AUDITORS' REPORT


              To the management of the Project "Pasture and Livestock Management Improvement Project" under the
              Ministry of Agriculture, Food Industry and Melioration of the Kyrgyz Republic:

              Report on the project financial statements

              Opinion

              We have audited the project financial statements of the "Pasture and Livestock Management Improvement
              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, 2018, and a summary
              of significant accounting policies and other explanatory information (the "project financial statements").

              In our opinion, 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 , 2018 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
r   "'{..-=   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 opinion

              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
              St~ndards 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 in the Kyrgyz
              RepubJic, 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 opinion .

              Emphasis of matter

              Without qualifying our opinion, we draw attention to Note 2 to the project financial statements which describe
              the basis of accounting . These project financial statements were prepared for complying with the appropriate
              World Bank Guidelines and Financing agreement requirements .

              Other matter

              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

              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.


                                                                           3
Auditor's responsibilities for the audit of the project financial statements

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 i nternal 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.
    •   Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
        estimates and related disclosures made by management.
    •   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 Project's ability to continue 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 project financial 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 to cease to continue as a
        going concern .
    •   Evaluate the overall presentation, structure and content of the project financial statements, including
        the disclosures, and whether the project financial statements represent the underlying transactions
        and events in a manner that achieves fair presentation.

We commun icate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.




Certified accountant, FCCA
Audit certificate of the Kyrgyz Republic No . 0069
Audit Partner, "Baker Tilly Bishkek" LLC

"Baker Tilly Bishkek" LLC , License Series A No. 0049 issued
by the State Committee on Review and Regulation of the
financial market of the Kyrgyz Republic

July 4, 2019
Bishkek, the Kyrgyz Republic




                                                         4
        "PASTURE AND LIVESTOCK MANAGEMENT IMPROVEMENT PROJECT"
        IDA CREDIT NO. 5521-KG, IDA GRANT NO. H976-KG

        SUMMARY OF FUNDS RECEIVED AND EXPENDITURES PAID
        FOR THE YEAR ENDED DECEMBER 31, 2018
        Un US Dollars)
                                                             Notes    For the year        For the year       Cumulative
                                                                        ended               ended
                                                                     December 31,        December 31,
                                                                          2018                2017
        Opening balance                                        5           1,682,580           1,585,509
        APIU                                                                 258, 193            393 ,402
        ARIS                                                               1,424,387           1, 192, 107
        Funding sources
        IDA Credit No. 5521-KG                                6            2,166,550                             2,166,550
        ARIS                                                               2, 166,550                            2, 166,550
        IDA Grant No. H976-KG                                 6            2,826,354           1,165,054         6,192,404
        APIU                                                                  695 ,851           328 ,580        1,725,427
        ARIS                                                               2, 130,503            836 ,474        4,466,977
        Community contribution                                6            1,671,732              27,821         1,699,553
        ARIS                                                               1,671 ,732             27 ,821        1,699,553

        Total receipts                                                     6,664,636           1, 192,875       10,058,507
        Other income                                          7               13,295              20,388            61,236
        APIU                                                                   3,268               4,599            27 ,396
        ARIS                                                                  10,027              15,789            33,840

~   '{.- Total funds received                                             6,677,931            1,213,263        10,119,743
        Project expenses
        1. Goods, works, non-consulting
        services, consultant's services,
        training, and incremental operating
        costs for Parts l.A(i), (ii), and (iv), Part
        1.8, Parts l.C(i) - (iii), Parts 11.A(ii) - (iii),
        Parts 11.B(i) and (iii) - (v), and Part lll(i) of
        the Project                                           8             687,522              454,579         1,466,798
        APll,J                                                              687 ,522             454 ,579        1,466,798
        2. G·oods, works, non -consulting
        services, consultant's services,
        training, and incremental operating
        costs for Parts l.A(iii) and (v) and Part
        lll(ii) of the Project                                8             642,381              451,280         1,334,320
        ARIS                                                                642,381              451,280         1,334,320
        3. Sub-Grants for Part l.A(v) and Part
        l.C(iv) of the Project                                8           6,268,213              194,845        6,538,316
        ARIS                                                              6,268,213              194,845        6,538,316
        4. Sub-Grants for Part 11.A(i) and Part
        11.B(ii) of the Project                               8               47,906                                47,906
        ARIS                                                                  47,906                                47 ,906

        Total project expenses                                            7,646,022            1,100,704        9,387 ,340




                                                                     5
"PASTURE AND LIVESTOCK MANAGEMENT IMPROVEMENT PROJECT"
IDA CREDIT NO. 5521-KG, IDA GRANT NO. H976-KG

SUMMARY OF FUNDS RECEIVED AND EXPENDITURES PAID (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 2018
(in US Dollars)

                                               Notes          For the year             For the year     Cumulative
                                                                ended                    ended
                                                             December 31,             December 31,
                                                                  2018                    2017
Other expenses                                   9                    10,592                 15,488           28,506
APIU                                                                    9,917                 13,809          26, 152
ARIS                                                                      675                  1,679           2,354
Closing balance                                  5                   703,897               1,682,580         703,897
APIU                                                                 259,873                258 , 193        259,873
ARIS                                                                 444,024               1,424,387         444,024




                                                               Mefheritskii D.
                                                               Acting financial manager

July 4, 2019                                                   July4 , 2019
Bishkek, the Kyrgyz Republic                                   Bishkek , the Kyrgyz Republic

The notes on p-ages 8-18 form an integral part of the project financial statements.
The independent auditors' report is on pages 3-4 .




                                                              6
        "PASTURE AND LIVESTOCK MANAGEMENT IMPROVEMENT PROJECT"
        IDA CREDIT NO. 5521-KG, IDA GRANT NO. H976-KG

        SUMMARY OF EXPENDITURES PAID BY PROJECT COMPONENTS
        FOR THE YEAR ENDED DECEMBER 31, 2018
        (in US Dollars)

                                                                     For the year             For the year     Cumulative
                                                                       ended                    ended
                                                                    December 31,             December 31,
                                                                         2018                     2017

        Component I. Community-based Pasture
        Management                                                        6,967,060                 669,093        7,950,405
        1.1. Carrying out strengthening of comm unity-
        based pasture management and related
        investments                                                       6,848,878                 595 ,058       7,724,877
        APIU                                                                254 ,649                148,971          496 , 155
        ARIS                                                              6,594,229                 446 ,087       7,228,722
        1.2. Strengthening MoAM Pasture Department, local
        departments of                   •
        agrarian development, and the KLPRI                                 118,182                  74,035          225,528
        APIU                                                                118,182                  74 ,035         225,528
        ARIS
        Component II. Community Based Animal Health
        and Husbandry Services                                              217,310                  56,867          343,464
        2.1. Carrying out community animal health and
        husb§lndry planning and investments                                    6,148                  5,812           11,960
        APIU                                                                   5,086                                   5,086
'~- ARIS                                                                       1,062                  5,812            6,874
r   ·   2.2. Strenghening the development of private
        veterinariansin the Project Area                                    211,162                  51,055          331,504
        APIU                                                                153,391                  48,441          269 ,585
        ARIS                                                                 57,771                   2,614           61,919
        Component Ill. Project Management                                   461,652                 374,744        1,093,471
        APIU                                                                156,214                 183,132          470 ,444
        ARIS                                                                305,438                 191,612          623 ,027

                                                                          7,646,022               1,100,704        9,387,340




                                                                      MeZf1'elitSkiiD:
                                                                      Acting financial manager

        July 4, 2019                                                  July 4, 2019
        Bishkek, the Kyrgyz Republic                                  Bishkek, the Kyrgyz Republic

        The notes on pages 8-18 form an integral part of the project financial statements.
        The independent auditors' report is on pages 3-4.




                                                                      7
"PASTURE AND LIVESTOCK MANAGEMENT IMPROVEMENT PROJECT"
IDA CREDIT NO. 5521-KG, IDA GRANT NO. H976-KG

NOTES TO THE PROJECT FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2018
un US Dollars)

1.     GENERAL INFORMATION

      According to the Financing Agreement between the Kyrgyz Republic and International Development
      Association (the "IDA") signed on December 10, 2014, the IDA provided a Credit No . 5521-KG in the
      amount of 5,400,000 Special Drawing Rights and a Grant No. H976-KG in the amount of 4,400,000
      Special Drawing Rights to the Kyrgyz Republic.

      The financing was provided for the Project "Pasture and Livestock Management Improvement Project"
      (the "Project").

      Estimated contribution of the Pasture Users Unions (the "PU Us") to the Project equals to S37,500 Special
      Drawing Rights. ContribJ,Jtion of the PUU 's to the Project should be not less than 25% of provided sub-
      grants amount. At least 5% of the contribution must be provided in-cash, while 20% should be provided in
      labor and materials.

      Effective date of the Project is August 27, 2015 . Initial Project completion date is March 31 , 2019. On
      February 27, 2019 Project completion date was extended until June 28, 2019 .

     . Project purpose

      The objective of the Project "Pasture and Livestock Management Improvement Project" (the "Project") is
      to improve community based pasture and livestock management in the Project Area.

      The Project comprises the following components :

      Component I: Community-based pasture management;
      Component II : Community-based animal health and husbandry services ;
      Component Ill : Project management.

     ' Component I: Community-based pasture management

      This component focuses on improving community-based pasture management in the Project Area .
      The component consists of 3 sub-components:

      Sub-component I.A. Carrying out strengthening of community-based pasture management and related
      investments through: .

      (i)     carrying out public awareness workshops on pasture legislation and providing legal advice to
              Pasture User Unions (the "PUUs") ;
      (ii)    carrying out pasture boundary demarcation and inventory;
      (iii)   strengthening commun ity-based pasture governance;
      (iv)    strengthening the capacity of PUUs; and
      (v)     delivering PUU Sub-Grants .

      Sub-component 1  .8 . Strengthening MoAM Pasture Department, local departments of agrarian
      development, and the KLPRI through:

      (i)     building capacity of the MoAM Pasture Department, and carrying out a public awareness campaign
              on pasture management;
      (ii)    building capacity of local departments of agrarian development; and
      (iii)   building capacity of the KLPRI and supporting field research on pasture improvement.




                                                         8
     Sub-component I. C. Piloting community-based management of Forestry Enterprise pastures by:

     (i)     providing legal and administrative advice to MoAM Pasture Department and training for PUUs;
     (ii)    carrying out an inventory of land use;
     (iii)   providing advice on the integration of Forestry Enterprise pastures into PUU plans; and
     (iv)    providing PUU sub-grants.

     Component II: Community-based animal health and husbandry services

     This component focuses on improving animal health and husbandry in the Project Area. The component
     consists of 2 subcomponents:

     Sub-component II.A. Carrying out community animal health and husbandry planning investments by:

     (i)     providing PUU Sub-Grants for the preparation and implementation of PUU animal health plans;
     (ii)    supervising the provision of veterinary services to PU Us;
     (iii)   providing specialist advice on implementation and monitoring of national disease control strategies.


                              .
     Sub-component 11.B. Strengthening the aevelopment of private veterinarians in the Project Area by:

     (i)     training of private veterinarians;
     (ii)    providing Private Veterinarians Sub-Grants for veterinary equipment and
             veterinary medicine;
     (iii)   strengthening rayon associations of private veterinarians;
     (iv)    supporting a Graduate Incentive Program on veterinary medicine;
     (v)     building capacity of the Veterinary Chamber.

     Component Ill: Project management

     This component finances :

     (i)     supporting APIU;
     (ii)    supporting ARIS .

     The Project is implemented jointly by the Agriculture Projects Implementation Unit (the "APIU") under the
     Ministry of Agriculture, Food, Industry and Melioration (the "MoAM") of the Kyrgyz Republic; and the
     Community Development and Investment Agency (the "ARIS").

     The APIU is the Lead Programme Agency, and takes overall responsibility for the Project implementation,
     coordination , oversight and reporting to the World Bank and the Government of the Kyrgyz Republic,
     including liaising closely with the ARIS which shall be accountable to APIU .

     ARIS is an independent legal entity, and it is registered in the legal organizational form envisaged by the
     legislation of the Kyrgyz Republic for non-for-profit organizations:


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 approach 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 budg~t disclosed by categories of expenses is not publicly available and as such
     comparison of budget and actual amounts is not presented .


                                                        9
     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;
         •   Annex to the project financial statements.

     The reporting currency of these project financial statements is US dollars (the "USO").


3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Cash basis of accounting

     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. 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 accounted in functional currency using the currency exchange
     rate settled by commercial bank on a date of operation .

     All payments made in national currency are translated into USO at the currency exchange rate defined by
     commercial bank at the date of transaction .

     Funds are provided by IDA in US dollars at official exchange rate of Special Drawing Rights (the "SOR") at
     the date of transfer of funds .

     Monetary assets and liabilities expressed in foreign currency are converted to functional currency at
     currency exchange rate on a date settled by commercial bank.

     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 .

     Taxes

     Calculation and payment of personal income tax and social security contributions from income of staff
     and consultants is made in accordance with the requirements and rates of the Tax Code of the Kyrgyz
     Republic and relevant legislation of the Kyrgyz Republic.

     Project expenses

     The expenses are recorded in the period when they were actually paid .

     Sources of funds

     The funds were provided by the International Development Association to the Project by providing
     advances and replenishment of designated account.

     Community contribution for the year ended December 31 , 2018 comprises contribution in-cash.




                                                      10
           4.   PRIOR PERIOD RESTATEMENT

                In 2018 the Project made retrospective restatement to the project financial statements for the year ended
                December 31, 2016 due to corrections of other income and other expenses of the Project expenses for
                the amount of taxes on interest income . Comparative amount in the previous periods have been
                adjusted.

                Effect of changes to the project financial statements for the years ended December 31 , 2016 and 2017 is
                presented below:

   Summary of funds received and expenditures paid
                              As previously reported                       Reclassified                      As reclassified
                                                                             amount
                              For the year        Cumulative                                     For the year            Cumulative
                                ended                                                              ended
                             December 31,                                                       December 31,
                                 2016                                                                2016


   Other income                      25 ,600               25 ,600                 1,953                    27 ,553                 27 ,553
   APIU                              17,576                17,576                  1,953                    19,529                  19,529
   Other expenses                        473                   473                 1,953                     2,426                   2,426
   APIU                                  473                   473                 1,953                     2,426                   2,426

                                  As previously reported                   Reclassified                      As reclassified
                                                                             amount
                              For the year        Cumulative                                     For the year            Cumulative
                                ended                                                              ended
-. .....                     December 31,                                                       December 31,
                                 2017                                                               2017


  Other income                       20,388                45,988                  1,953                    20,388                  47 ,941
  APIU                                4,599                22 ,175                 1,953                     4,599                  24,128
  Other expenses                     15,488                15,961                  1,953                    15,488                  17,914
  APIU                               13,809                14,282                  1,953                    13,809                  16,235



           5.   CASH AND CASH EQUIVALENTS

                Cash and cash equivalents as at December 31 , 2018 and 2017 comprise:

                                                Account              Currency              December 31,           December 31,
                                                 holder                                        2018                   2017
                IDA Credit No. 5521-KG
                Designated account                ARIS                US dollar                   86 ,609
                IDA Grant No. H976-KG
                Designated account                APIU                US dollar                  249 ,990                250 ,259
                Designated account                ARIS                US dollar                  324 ,785              1,402,253
                IDA Credit No. 5521-KG
                Transit account                   ARIS                US dollar                    1, 164
                Other
                Interest account                  APIU                US dollar                    1,243                   7,892
                Interest account                  ARIS                US dollar                   31 ,458                 22 ,134
                Interest account                  ARIS               Kyrgyz som                         8
                Accounts receivable from
                employees and implementers       APIU                 US dollar                    8,640                       42

                                                                                                 703,897               1,682,580




                                                                     11
6.   FUNDS RECEIVED

     The funds were provided to the Project by the following methods and from the following sources of
     financing :

                                                       For the year         For the year         Cumulative
                                                         ended                ended
                                                      December 31,         December 31,
                                                           2018                 2017
     IDA Credit No. 5521-KG
     Advance                                                 850,463                                   850 ,463
     Replenishment of designated account                   1,316 ,087                                1,316 ,087
                                                           2, 166,550                                2,166,550
     IDA Grant No. H976-KG
     Advance                                                                                         1,950 ,000
     Replenishment of designated account                   2,826,354            1, 165,054           4,242 ,404

                                                           2,826,354            1, 165,054           6, 192,404

     Community contribution
     Contributions in cash                                 1,671 ,732              27,821            1,699 ,553

                                                           1,671,732               27,821            1,699,553

     Total funds received                                  6,664,636            1, 192,875          10,058 ,507

     In-cash contributions should not be less than 5% of financing provided to PU Us.

     In accordance with the Financing agreement communities should also provide in-kind contributions,
     which should not be less than 20% of provided financing . In-kind contribution includes contribution with
     labor and contribution with materials. The amount is presented for information purposes and is not
     included in the summary of funds received and expenditures paid and summary of expenditures paid by
     project components , which are prepared in accordance with cash basis of accounting.

                                                       For the year         For the year         Cumulative
                                                         ended                ended
                                                      December 31,         December 31,
                                                           2018                 2017

     Community contributions in kind                          34, 115                                   34 , 115

                                                              34,115                                    34 , 115

7.   OTHER INCOME

     Other income represents interest income accrued by the serving bank on the outstanding balances of
     cash on designated account and income from selling of tender documents.




                                                      12
      8.      PROJECT EXPENSES

              Project expenses on major categories are presented in the summary of funds received and expenditures
              paid . Project expenses by components are presented in the summary of expenditures paid by project
              components. Breakdown of Project expenses by sources of financing is presented as follows :

                                                                 For the year ended December 31, 2018
                                                           IDA Credit           IDA Grant         Community         Total
                                                          No. 5521-KG         No. H976-KG         contribution
 1. Goods , works, non-consulting services,
 consultant's services, training , and
 incremental operating costsfor Parts l.A(i) ,
 (ii) , and (iv) , Part l.B, Parts l.C(i) - (iii) ,
 Parts 11.A(ii) - (iii), Parts 11.B(i) and (iii) - (v),
 and Part lll(i) of the Project                                                       687,522                          687,522
 2. Goods, works, non-consulting services ,
 consultant's services, training, and
 incremental operating costs for Parts 1.A(iii)
 and (v) and Part lll(ii) of the Project                         50,490               591 ,891                         642 ,381
 3. Sub-Grants for Part 1.A(v) and Part
 I. C(iv) of the Project                                      2,029,451             2,567,030          1,671 ,732    6,268,213
 4. Sub-Grants for Part 11.A(i) and Part
 11.B(ii) of the Project                                                               47,906                           47 ,906

                                                              2,079,941             3,894 ,349         1,671 ,732    7,646,022

                                                                  For the year ended December 31, 2017
                                                           !DA Credit           IDA Grant          Community        Total
                                                          No. 5521-KG          No. H976-KG        contribution
-- 1. Goods , works, non-consulting services ,
 consultant's services, training , and
 incremental operating costsfor Parts 1.A(i),
 (ii), and (iv) , Part l.B, Parts l.C(i) - (iii) ,
 Parts 11.A(ii) - (iii), Parts 11.B(i) and (iii) - (v),
 and Part lll(i) of the Project                                                      454,579                           454,579
 2. Goods, works , non-consulting services ,
 consultant's services, training , and
 incremental operating costs for Parts 1.A(iii)
 and M .and Part lll(ii) of the Project                                              451 ,280                          451 ,280
 3. Sub-Grants for Part l.A(v) and Part
 l.C(iv) of the Project                                                               167,024             27 ,821      194,845
 4. Sub-Grants for Part 11.A(i) and Part
 11.B(ii) of the Project

                                                                                    1,072 ,883            27,821     1,100,704

                                                                                 Cumulative
                                                           IDA Credit            IDA Grant        Community         Total
                                                          No. 5521-KG           No. H976-KG       contribution
 1. Goods , works, non-consulting services,
 consultant's services, training , and
 incremental operating costsfor Parts l.A(i) ,
 (ii) , and (iv), Part 1.B, Parts l.C(i) - (iii) ,
 Parts 11.A(ii) - (iii), Parts 11.B(i) and (iii) - (v),
 and Part lll(i) of the Project                                                     1,466,798                        1,466,79'8
 2. Goods, works, non-consulting services ,
 consultant's services , training , and
 incremental operating costs for Parts l.A(iii)
 and (v) and Part lll(ii) of the Project                         50,490             1,283,830                        1,334 ,320
 3. Sub-Grants for Part l.A(v) and Part
 l.C(iv) of the Project                                       2,029,451             2,809,312         1,699,553      6,538 ,316
 4. Sub-Grants for Part 11.A(i) and Part
 11.B(ii) of the Project                                                               47 ,906                          47,906

                                                              2,079 ,941            5,607,846         1,699,553      9,387,340




                                                                           13
                 9.    OTHER EXPENSES

                       Other expenses for the year ended December 31 , 2018 comprise tax expenses, bank commissions , and
                       payments for other services.


                 10.   FINANCIAL POSITION

                       Financial position as at December 31, 2018 and 2017 is presented as follows :

                                                                                            December 31,      December 31,
                                                                                               2018              2017
                       ASSETS AND EXPENDITURES
                       Cash and cash equivalents                                                   703,897        1,682,580
                          APIU                                                                     259,873          258 , 193
                          ARIS                                                                     444,024        1,424 ,387
                       Cumulative project expenditures                                           9,387,340        1,741,318
                          APIU                                                                   1,466,798          779 ,276
                          ARIS                                                                   7,920,542          962 ,042
                       Other expenses                                                               28,506           17,914
                          APIU                                                                      26, 152          16,235
                          ARIS                                                                       2,354            1,679

                       TOTAL ASSETS AND EXPENDITURES                                            10,119,743        3,441,812
                       FINANCING
                       Funds received                                                           10,058,507        3,393,871
                           APIU                                                                  1,725,427        1,029,576
                          ARIS                                                                   8,333 ,080       2,364,295
                       Other income                                                                 61,236           47,941
        -; ..~
<   ,
                          APIU                                                                      27 ,396          24 , 128
                          ARIS                                                                      33,840           23 ,813

                       TOTAL FINANCING                                                          10,119,743        3,441,812




                                                                      14
               11.   SUMMARY OF SOEs

                     Withdrawal applications for the year ended December 31 , 2018 comprise:

                                  Application            Date                Advance           Replenishment         Total
                                                                                               of designated
                                                                                                  account
           IDA Credit No.
           5521-KG
           ARIS
                                       1          September 25, 2018             650,225                              650,225
                                      2A          September 25, 2018             200,238                              200,238
                                      3A          November 19, 2018                                  616,085          616,085
                                      4A          December 12, 2018                                  265,427          265,427
                                      SA          December 18, 2018                                  434,575          434,575

                                                                                 850,463            1,316,087        2,166,550
           IDA Grant No.
           H976-KG
           ARIS
                                      6A               April 13, 2018                               1,311 ,132       1,311 ,132
                                      7A               June 28, 2018                                  819,371          819,371
                                                                                                    2,130,503        2,130,503
           APIU
                                  APIU/G-7             April 30, 2018                                283,330          283,330
                                  APIU/G-9        September 30, 2018                                 257,373          257,373
                                  APIU/G-10       December 18, 2018                                  155,148          155,148

                                                                                                     695,851          695,851
        -;_~
<   ,
                                                                                 850,463            4,142,441        4,992,904

                     *A withdrawal application No. APIU-G8 for IDA Grant No. H976-KG dated August 17, 2018 was deleted .

                     On November 28, 2018 the ARIS submitted a withdrawal application No. 4A for IDA Credit No. 5521-KG
                     for total amount of 385,427 US Dollars . On December 12, 2018 the IDA replenished designated account
                     of ARIS for 265,427 US Dollars. The difference of 120,000 US Dollars is recovery of initial advance
                     received by ARIS from IDA.

                     On June 21, 2018 the ARIS submitted a withdrawal application No. 7A for IDA Grant No. H976-KG for
                     total amount of 1,021 ,972 US Dollars. On June 28, 2018 the IDA replenished designated account of
                     ARIS for 819,371 US Dollars. The difference of 202 ,556 US Dollars is recovery of initial advance
                     received by ARIS from IDA.

                     On August 30, 2018 the ARIS submitted a withdrawal application No. SA for IDA Grant No. H976-KG and
                     documented expenses for 647,907 US Dollars .                   -

                     On December 10, 2018 the APIU submitted a withdrawal application No. APIU/G-10 for IDA Grant No.
                     H976-KG for total amount of 285,808 US Dollars . On December 18, 2018 the IDA replenished
                     designated account of APIU for 155, 148 US Dollars. The difference of 130,660 US Dollars is recovery of
                     initial advance received by APIU from IDA.




                                                                        15
              12.   DESIGNATED ACCOUNTS

                    Movement at designated accounts for the year ended December 31, 2018 is presented as follows:

                    APIU

                    Bank                                                          OJSC Commercial Bank Kyrgyzstan
                    Bank account                                                  1030120800007128
                    Currency                                                            US Dollar
                    Bank's location                                               54 A, Togolok Moldo, Bishkek
                                                                                      IDA Grant                     Total
                                                                                     No. H976-KG

                    Balance as at December 31, 2017                                           250 ,259                      250 ,259

                    Replenishment of designated account                                       695 ,821                      695 ,821

                    Total funds received                                                      695 ,821                      695 ,821

                    Expenditures paid                                                        (24,414)                    (24,414)
                    Transfer to transit account                                             (665 ,693)                  (665 ,693)
                    Encashed                                                                  (5,983)                     (5 ,983)

                    Balance as at December 31, 2018 .                                         249 ,990                      249 ,990

                    Correspondent bank charged a commission in amount of 30 US dollars for the transfer of IDA financing
                    in accordance with withdrawal applications.


<   '
        ---         ARIS

              Bank                                        OJSC Commercial Bank Kyrgyzstan
              Bank account                                  1030120800007532           1030120800007835
              Currency                                          US Dollar                 US Dollar
              Bank's location                             54 A, Togolok Moldo, Bishkek

                                                              IDA Grant                 IDA Credit                    Total
                                                             No. H976-KG               No. 5521-KG

              Balance as at December 31, 2017                       1,402 ,253                                               1,402,253
              Advance                                                                           850 ,463                       850 ,463
              Replenishment of designated account                   2, 130,483                1,316 ,057                     3,446,540
              Total funds received                                  2, 130,483                2, 166,520                     4,297 ,003
              Transferred from designated account
              IDA Credit No. 5521-KG                                  273 ,497                                                 273 ,497
              Transferred to designated account
              IDA Grant No. H976-KG                                                            (273,497)                      (273,497)
              Return of expenditures paid                                     2                                                        2
              Transferred to transit account                       (3,479 ,681)              (1 ,806,444)                   (5,286 ,125)
              Transferred from interest account                              20                        30                             50
              Encashed                                                 (1 ,789)                                                 (1 ,789)
              Balance as at December 31, 2018.                        324,785                      86 ,609                     411 ,394

                    Correspondent bank charged a commission in amount of 50 US dollars for the transfer of IDA financing
                    in accordance with withdrawal applications.




                                                                        16
13.   UNDRAWN FUNDS

      As at December 31, 2018 undrawn funds are presented as follows :

                                                          IDA Credit         IDA Grant          Total
                                                         No. 5521-KG        No. H976-KG
                                                            in SOR             in SOR           in SOR
      Approved financing amount                                5,400 ,000        4,400,000         9,800,000
      Disbursed from August 27 , 2015 to December 31 ,
      2018                                                     1,555,796         4,399,746         5,955,542

      Undrawn financing amount                                 3,844,204                254        3,844,458

                                                          IDA Credit         IDA Grant          Total
                                                         No. 5521-KG        No. H976-KG
                                                            in SOR             in SOR           in SOR
      Financing received as at January 1, 2018                                    2,422,208        2,422 ,208
      Disbursed in 2018                                        1,555 ,796         1,977 ,538      3,533,334
      Financing received as at December 31 , 2018.             1,555,796         4,399 ,746 ·      5,955 ,542



14.   COMMITMENTS

      As at December 31 , 2018 there were no any commitments to suppliers of goods and services.


15.   LEGAL CASES

      There were no any legal claims related to the Project.




                                                         17
16.    EVENTS AFTER THE REPORTING DATE

       During 2019 until the date of issue of these project financial statements the International Development
       Association replenished designated account to the Project as follows:

                               Date                  Application          Recipient             IDA Credit
                                                                                               No. 5521-KG
                                                                                               in US Dollars
                               January 9, 2019            6A                ARIS                      284,733
                              February 5, 2019             7                ARIS                      420,303
                                 March 7, 2019            BA                ARIS                      324 ,000
                                 Marc 26 , 2019           9A                ARIS                      490 ,803
                                 May 28, 2019             10A               ARIS                      808 ,408

                                                                                                    2,328 ,247

       On February 27, 2019 Project completion date was extended until June 28, 2019. IDA Credit No. 5521-
       KG was cancelled in amount of 2,000,000 SDR, which included category 1 Goods, works , non-consulting
       services, consultant's services , training , and incremental operating costsfor Parts l.A(i), (ii), and (iv) , Part
       l.B, Parts l.C(i) - (iii), Parts 11.A(ii) - (iii), Parts 11.B(i) and (iii) - (v), and Part lll(i) of the Project in amount of
       1,540,000 SDR and category 2 Goods, works, non-consulting services, consultant's services, training ,
       and incremental operating costs for Parts l.A(iii) and (v) and Part I ll(ii) of the Project in amount of
       460,000 SDR.

        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.




                                                                18
                                                             I .


                                                                                                           .l
                                                                                                           I.
ANNEX TO THE PROJECT FINANCIAL STATEMENTS
RECONCILIATION OF THE AMOUNTS PROVIDED BY THE APIU AND ARIS AND REFUNDED BY THE IDA
FOR THE YEAR ENDED DECEMBER 31, 2018
(in US Dollars)

IDA Credit No. 5521-KG
ARIS
 Applica-          Date                          Expenditure category                                Payment type   Documented      Financing       Difference
   tion                                                                                                              expenses        received
     1       September 25, 2018                                                               Advance                                     200,238       (200,238)
    2A       September 25, 2018                                                               Advance                                     650,225       (650,225)
                                   3. Sub-Grants for Part l.A(v) and Part l.C(iv) of          Replenishment of
   3A        November 19, 2018     the Project                                                designated account         616,086         616,086
                                   3. Sub-Grants for Part l.A(v) and Part l.C(iv) of          Replenishment of
   4A        December 12, 2018     the Project                                                designated account         385,427         265,427         120,000
                                   3. Sub-Grants for Part l.A(v) and Part l.C(iv) of          Replenishment of
   SA        December 18, 2018     the Project                                                designated account         434,575         434,575

IDA Grant No. H976-KG
APIU
 Applica-         Date                           Expenditure category                                Payment type   Documented      Financing       Difference
   tion                                                                                                              expenses        received
                                   1. Goods, works, non-consulting services,                  Replenishment of
                                   consultant's services, training, and incremental           designated account
                                   operating costsfor Parts l.A(i), (ii), and (iv),
                                   Part l.B, Parts l.C(i) - (iii), Parts 11.A(ii) - (iii),
                                   Parts 11.B(i) and (iii) - (v), and Part lll(i) of the
APIU/G-7          April 30, 2018   Project                                                                               283,330         283,330
                                   1. Goods, works, non-C'.onsulting services,                Replenishment of
                                   consultant's services, training, and incremental           designated account
                                   operating costsfor Parts l.A(i), (ii), and (iv) ,
                                   Part l.B, Parts l.C(i) - (iii), Parts 11.A(ii) - (iii),
                                   Parts 11.B(i) and (iii) - (v), and Part lll(i) of the
APIU/G-9    September 13, 2018     Project                                                                               257 ,373        257,373
                                   1. Goods, works, non-consulting services,                  Replenishment of
                                   consultant's services, training, and incremental           designated account
                                   operating costsfor Parts l.A(i), (ii), and (iv),
                                   Part l.B, Parts l.C(i) - (iii), Parts 11.A(ii) - (iii) ,
APIU/G-                            Parts 11.B(i) and (iii)-(v), and Part lll(i) of the
  10         December 18, 2018     Project"                                                                              285,808         155,148         130,660




                                                                                                19
                                                         I .


                                                                                                   ,)
                                                                                                    I.
ARIS
Applica -         Date                        Expenditure category           .... .          Payment typ,e   Documented            Financing            Difference
  tion                                                                                                        expenses              received
                                  2. Goods, works, non-consulting services ,
                                  consultant's services, training , and incremental
                                  operating costs for Parts l.A(iii) and (v) and      Replenishment of
                                  Part 11 l(ii) of the Project                        designated account            187,112
                                  3. Sub-Grants for Part l.A(v) and Part l.C(iv) of   Replenishment of
   6A            April 13, 2018   the Project                                         designated account          1,124,020            1,311 ,132
                                  2. Goods, works, non-consulting services,
                                  consultan t's services, training, and incremental
                                  operating costs for Parts l.A(iii) and (v) and      Replenishment of
                                  Part lll(ii) of the Project                         designated account            139,134
                                  3. Sub-Grants for Part l.A(v) and Part l.C(iv) of   Replenishment of
   7A            June 28, 2018    the Project                                         designated account            882 ,793             819,371              202 ,556
                                  2. Goods, works, non-consulting services,
                                  consultant's services, training , and incremental
                                  operating costs for Parts l.A(iii) and (v) and      Replenishment of
                                  Part lll(ii) of the Project                         designated account            116,640
                                  3. Sub-Grants for Part l.A(v) and Part l.C(iv) of   Replenishment of
   8A       September 13, 2018    the Project                                         designated account            53 1,267                                 647 ,907


*A withdrawal application No. APIU-G8 for IDA Grant No. H976-KG dated August 17, 2018 was deleted.

On November 28, 2018 the ARIS submitted a withdrawal application No. 4A for IDA Credit No. 5521-KG for total amount of 385,427 US Dollars. On December 12, 2018
the IDA replenished designated account of ARIS for 265,427 US Dollars. The difference of 120,000 US Dollars is recovery of initial advance received by ARIS from IDA.

On June 21, 2018 the ARIS submitted a withdrawal application No. 7A for IDA Grant No. H976-KG for total amount of 1,021,972 US Dollars. On June 28, 2018 the IDA
replenished designated account of ARIS for 819,371 US Dollars. The difference of 202,556 US Dollars is recovery of initial advance received by ARIS from IDA.

On August 30, 2018 the ARIS submitted a withdrawal application No. 8A for IDA Grant No. H976-KG and documented expenses for 647,907 US Dollars.

On December 10, 2018 the APIU submitted a withdrawal application No. APIU/G-10 for IDA Grant No. H976-KG for total amount of 285,808 US Dollars. On December
18, 2018 the IDA replen ished designated account of APIU for 155,148 US Dollars. The difference of 130,660 US Dollars is recovery of initial advance received by APIU
from IDA.




                                                                                        20