THE WORLD BANK OFFICIAL IBRD* IDA WORLD BANKGROUP DOCUMENTS September 5, 2018 H.E. Mr. Siniga Mali Minister Ministry of Finance Government of the Republic of Serbia Kneza Milo§a 20 11000 Belgrade Republic of Serbia Re: IBRD Loan No. 8832-YF State-Owned Financial Institutions Strengthening Project Additional Instructions: Disbursement and Financial Information Letter (DFIL) First Restatement Excellency: I refer to the Loan Agreement ("Agreement") between the International Bank for Reconstruction and Development ("Bank"), and the Republic of Serbia (the "Borrower") for the above-referenced project. The General Conditions, as defined in the Loan Agreement, provide that the Borrower may from time to time request withdrawals of Loan Amounts from the Loan Account in accordance with the Disbursement and Financial Information Letter, and such additional instructions as the World Bank may specify from time to time by notice to the Borrower. The General Conditions also provide that the Disbursement and Financial Information Letter may set out Project specific financial reporting requirements. This letter constitutes such Disbursement and Financial Information Letter ("DFIL"), and may be revised from time to time. This First Restatement replaces the DFIL dated March 21, 2018 in its entirety and is aimed at providing additional clarification on the disbursement methods applicable to the project, relevant supporting documentation requirements, ceilings for the Designated Accounts and disbursement deadline date for the Loan. I. Disbursement Arrangements, Withdrawal of Loan Funds, and Reporting on Uses of Loan Funds The Disbursement Guidelines for Investment Project Financing, dated February 2017, ("Disbursement Guidelines") are available in the Bank's public website at https://www.worldbank.org and its secure website "Client Connection" at https://clientconnection.worldbank.org. The Disbursement Guidelines are an integral part of this DFIL, and the manner in which the provisions in the Disbursement Guidelines apply to the Loan is specified below. (i) Disbursement Arrangements The table in Schedule 1 sets out the disbursement methods which may be used by the Borrower, conditions, information on registration of authorized signatures, processing of withdrawal applications (including minimum value of applications and processing of advances), instructions on supporting documentation, and frequency of reporting on the Designated Accounts. (ii) Electronic Delivery. Refer to section 10.01 (c) of the General Conditions. I THE WORLD BANK IBRD * IDA I WORLD BANK GROUP The Bank may permit the Borrower to electronically deliver applications (with supporting documents) through the Bank's web-based portal (https: clientconnection.worldbank.or) "Client Connection". This option may be effected if the officials designated in writing by the Borrower who are authorized to sign and deliver Applications have registered as users of "Client Connection". The designated officials may deliver Applications electronically by completing the Form 2380, which is accessible through "Client Connection". By signing the Authorized Signatory Letter, the Borrower confirms that it is authorizing such persons to accept Secure Identification Credentials (SIDC) and to deliver the Applications and supporting documents to the Bank by electronic means. The Borrower may continue to exercise the option of preparing and delivering Applications in paper form. The Bank reserves the right and may, in its sole discretion, temporarily or permanently disallow the electronic delivery of Applications by the Borrower. By designating officials to use SIDC and by choosing to deliver the Applications electronically, the Borrower confirms through the authorized signatory letter its agreement to: (a) abide by the Terms and Conditions of Use of Secure Identification Credentials in connection with Use of Electronic Means to Process Applications and Supporting Documentation, available in the Bank's public website at https://worldbank.org and "Client Connection"; and (b) to cause such official to abide by those terms and conditions. II. Financial Reports and Audits (i) Financial Reports. The Borrower shall prepare and furnish to the Bank not later than forty-five (45) days after the end of each calendar semester, interim unaudited financial reports ("IFR") for the Project covering the respective semi-annual period. (ii) Audits. The Borrower shall have the Project's Financial Statements audited in accordance with the provisions of Section 5.09(b) of the General Conditions. Each audit shall cover the period of one fiscal year of the Borrower. For each such period, the audited Financial Statements for the Project shall be (a) furnished to the Bank not later than six (6) months after the end of such period; and (b) made publicly available in a timely fashion and in a manner acceptable to the Bank. III. Other Information For additional information on disbursement arrangements, please refer to the Loan Handbook available on the Bank's public website and "Client Connection". The Bank recommends that you register as a user of "Client Connection". From this website you will be able to prepare and deliver Applications, monitor the near real-time status of the Loan, and retrieve related policy, financial, and procurement information. For more information about the website and registration arrangements, please contact the Bank by email at clientconnection(wworldbank.org. If you have any queries in relation to the above, please contact Jasna Mestnik, Finance Officer at jmestnik@worldbank.org, with copy to Darjan Dragi6evi6, Finance Analyst at ddragicevic@worldbank.org using the above reference. Y urs since Jasna Mestnik Finance Officer World Bank Group Finance and Accounting 2 THE WORLD BANK IBRD * IDA I WORLD BANKGROUP Attachments 1. Form of Authorized Signatory Letter 2. A. Statement of Expenditures for DLRs achieved 2. B. Interim Financial Report (IFR) 3. Form of Designated Account Reconciliation Statement 4. Forms of Results Achievement Notification and Confirmation of Results Achievement Notification Cc with copies: Ministry of Finance 20 Kneza Milosa St. 11000 Belgrade Republic of Serbia kabinet@&mfin.gov.rs 3 Schedule 1 : Disbursement Arrangements Basik Information Country Republic of Serbia Closing Date Section III.B.2. of Schedule 2 to Loan Borrower Ministry of Finance the Loan Agreement Number IBRD 8832-YF Name of the Project State-Owned Financial Institutions Disbursement Four months after the Closing Strengthening Project Deadline Date Date (Subsection 3.7 **) Disbursement Methods and Supporting Documentation Disbursement Methods Methods Available Supporting Documentation Section 2 Subsections 4.3 and 4.4 Direct Payment Yes (available for Copy of records (e.g. suppliers' invoices, guarantees for advance and retention payments, etc.) Category 2 only) Reimbursement Yes For Category I - Statement of Expenditures in the format provided in Attachment 2A of the DFIL; Confirmation of Results Achievement Notification signed by the Country Director/Manager in the format provided in Attachment 4 of the DFIL (as a response to the Results Achievement Notification received from the Borrower, in the format also provided in Attachment 4 of the DFIL) For Category 2- Interim un-audited Financial Report in the format provided in Attachment 2B of the DFIL Designated Account Yes For Category 1 - Statement of Expenditures in the format provided in Attachment 2A of the DFIL; Designated Account Reconciliation Statement in the format provided in Attachment 3 of the DFIL; Confirmation of Results Achievement Notification signed by the Country Director/Manager in the format provided in Attachment 4 of the DFIL (as a response to the Results Achievement Notification received from the Borrower, in the format also provided in Attachment 4 of the DFIL) For Category 2- Interim un-audited Financial Report in the format provided in Attachment 2B of the DFIL Special Commitments No N/A Designated Account (Section 5 and 6) Segregated - two separate Designated Accounts: one Designated For Category I - Fixed Type Account for Category 1 and one Designated Account for Category Ceiling 2 For Category 2 - Variable Financial Institution - Name National Bank of Serbia Single Treasury Account Currency EUR For Category 1 - EUR 7,500,000 n oSemi-annually, or more frequently if needed and in case of DLRs Frequency of Reportig achievement. Amount For Category 2- Forecast for 2 quarters as provided in the Interim un-audited Financial Report Minimum Value of Applications (subsection 3.5) The Minimum Value of Applications for Reimbursement and Direct Payment is EUR 100,000. Authorized Signatures (Subsection 3.1 and 3.2) The form for Authorized Signatories Letter is provided in Attachment 1 of this letter Withdrawal and Documentation Applications (Subsection 3.3 and 3.4) The World Bank Radnicka cesta 80/IX 10000 Zagreb, Croatia Attention: Loan Department Notice that all information will be sent to the some address, and to the regional TL. Additional Instructions N/A Other Disbursement instructions Category 1 - the financing of eligible expenditures from Category 1 depends on the achievement of results measured by DLRs. The Bank's Task Team will certify the level of achievement of one or more DLRs and the corresponding amounts for reimbursement and/or advance documentation purposes. The SOE evidencing eligible expenditures under the EEPs for reimbursement and advance documentation purposes will be submitted to the Bank in the currency of the Loan. [Attachment 1 - Form of Authorized Signatory Letter] [Letterhead] Ministry of Finance [Street address] [City] [Country] [DATE] The World Bank 1818 H Street, N.W. Washington, D.C. 20433 United States of America Attention: Country Director Re: Loan No. 8832-YF (State-Owned Financial Institutions Strengthening Project) I refer to the Loan Agreement ("Agreement") between the International Bank for Reconstruction and Development (the "Bank") and the Republic of Serbia (the "Borrower"), dated _ _, providing the above Loan. For the purposes of Section 2.03 of the General Conditions as defined in the Agreement, any I[one] of the persons whose authenticated specimen signatures appear below is authorized on behalf of the Borrower to sign applications for withdrawal [and applications for a special commitment] under this Loan. For the purpose of delivering Applications to the Bank, 2[each] of the persons whose authenticated specimen signatures appears below is authorized on behalf of the Borrower, acting 3[individually] 4[jointly], to deliver Applications, and evidence in support thereof on the terms and conditions specified by the Bank. This confirms that the Borrower is authorizing such persons to accept Secure Identification Credentials (SIDC) and to deliver the Applications and supporting documents to the Bank by electronic means. In full recognition that the Bank shall rely upon such representations and warranties, including without limitation, the representations and warranties contained in the Terms and Conditions of Use of Secure Identification Credentials in connection with Use I Instruction to the Borrower: Stipulate if more than one person needs to sign Applications, and how many or which positions, and if any thresholds apply. Please delete this footnote in final letter that is sent to the Bank. 2 Instruction to the Borrower: Stipulate if more than one person needs tojointlv sign Applications, if so, please indicate the actual number. Please delete this footnote in final letter that is sent to the Bank. Instruction to the Borrower: Use this bracket if any one of the authorized persons may sign; if this is not applicable, please delete. Please delete this footnote in final letter that is sent to the Bank. 4 Instruction to the Borrower: Use this bracket only if several individuals must jointly sign each Application; if this is not applicable, please delete. Please delete this footnote in final letter that is sent to the Bank. of Electronic Means to Process Applications and Supporting Documentation ("Terms and Conditions of Use of SIDC"), the Borrower represents and warrants to the Bank that it will cause such persons to abide by those terms and conditions. This Authorization replaces and supersedes any Authorization currently in the Bank records with respect to this Agreement. [Name], [position] Specimen Signature: [Name], [position] Specimen Signature: [Name], [position] Specimen Signature: Yours truly, / signed / [Position] [Attachment 2A - Statement of Expenditures] Statement of Expenditures (SOE) Payments made during the period from to Date: Application No.: Loan: SOE No.: 1 2 3 4 5 6 7 8 9 Item Category Currency and Total Currency and Eligible % Amount Currency and Exchange Rate Remarks No. No. (**) Amount of Contract Total Amount of from Schedule Eligible for Amount Paid from (Col. 7 divided by Invoice Covered I of Financing (4 Special Account (if Col. 6) by Application Loan/Credit x 5) Applicable) (Net of Retention) Agreement TOTALS Supporting documents for this SOE retained at (insert location) (*) A separate SOE form should be used for retroactive financing (**) Items should be grouped by category; or alternatively, a separate SOE form may be used for each category [Attachment 2B - Interim Financial Report] Part A Interim un-audited financial reports (IFR) Project Name Cash Receipts and Payments For the period ending xx/xx120x In RSD Actual Bud et Variance SeDaeo -1 T hOi i Y-,i T, Cash Receipts Budget of the Rpubli,c of Serbia Totalsore Loss Cash Payments Mimstry of Finance salaries (select units agencies) Ministry of Fconomn salaries TotaI usesof funds Net cash flow Interim un-audited financial reports (IFR) Project Name Statement of Disbursement For h. period ending xx/xx/2ftx InRSD Amount of total expendtures Percentage of total expenltures Total expendfures for the period renuiested for reinbursement* reauested for reirbursemrient* Amount to be reimbursed based on exependitures for the reporting period Ministry of Fitiance salaries (select units agencies) Ministry of Economy salaries iTotal amount *as per the PAD/Loan Agreement Interim un-audited financial reports (IFR) Project Name For the period ending xx/xx/20xx Explanatory Notes and Accounting Policies Part B Interim un-audited financial reports (IFR) Project Name Cash Receipts and Payments For the period ending xx/xx/20xx Actual Budget Varance Cash receipts Designated account Drect Payment Re-nbu,rent MOLEVSA account PPS loca cu rency a count M,LEVSA Iocal unrrency account Interests Eared Total Foreign Exchange Difference Exchange ga,ns E changelosses Total sources of funds Less, Cash payments Comrponet 1 Component 2 Comnonent 3 Total u ssof funds Net increasel(Decrease) in cash flow Bank Balances beginning of period Bank Balances end of period Interim un-audited financial reports (IFR) Project Name Uses of Funds by Project Activity For the period ending xx/xx/20xx In EUR Actual Planned Variance Cuirrenit penttod Year To Cuua eneAntero Year Can tvt Curtent penodt Year To Cuoultive Component I Contract 1 Contract 2 Conttact 3 contrat 4 contract 5 contract 6 Paymetnb thorut wnrc Nu"total Component 2 Contract 1 Contract 2 Contract 3 contract 4 contract 5 contract 6 Par ttt athut ti trt su total Component 3 Contract 1 Contract 2 Contract 3 contract 4 contract 5 contract 6 Pant r 1,thr ut Sutotal Total Project Expenditure Interim un-audited financial reports (IFR) Project Name Account statement For the period ending xxlxx/20xx In Euro Opening Balance on DA Plus: Replenishment during the period Interest earned and retained on account 0 Less: Amount of eligible expenditures paid during the period Refund from DA 0 Closing Balance as of the end of period 0 Balance per Designated Account Bank Statement Euro Discrepancy in closing balance 0 Explanation NOTE: This statement should be prepared for all accounts listed in Cash receipts and payments report Interim un-audited financial reports (IFR) Project Name For the period ending xxlxx/20xx Explanatory Notes and Accounting Policies [Attachment 3 - Form of Designated Account Reconciliation Statement] DESIGNATED ACCOUNT RECONCILIATION STATEMENT LOAN/CREDIT/PPF/COFINANCIER NUMBER ACCOUNT NUMBER WITH (BANK) I. TOTAL ADVANCED BY WORLD BANK (OR COFINANCIER) USS/EUR 2 LESS: TOTAL AMOUNT RECOVERED BY WORLD BANK - USS/EUR 3. EQUALS PRESENT OUTSTANDING AMOUNT ADVANCED TO THE DESIGNATED ACCOUNT (NUMBER I LESS NUMBER 2) USS/EUR 4. BALANCE OF DESIGNATED ACCOUNT PER ATTACHED BANK STATEMENT AS OF DATE USS/EUR 5. PLUS: TOTAL AMOUNT CLAIMED IN THIS APPLICATION NO. + USS/EUR 6. PLUS: TOTAL AMOUNT WITHDRAWN AND NOT YET CLAIMED REASON: + USS/EUR 7. PLUS: AMOUNTS CLAIMED IN PREVIOUS APPLICATIONS NOT YET CREDITED AT DATE OF BANK STATEMENTS APPLICATION NO. AMOUNT SUBTOTAL OF PREVIOUS APPLICATIONS NOT YET CREDITED + USS/EUR 8. MINUS: INTEREST EARNED - USS/EUR 9. TOTAL ADVANCE ACCOUNTED FOR (NO. 4 THROUGH NO. 9) = USS/EUR 10. EXPLANATION OF ANY DIFFERENCE BETWEEN THE TOTALS APPEARING ON LINES 3 AND 9: 11. DATE: SIGNATURE: TITLE: [Attachment 4 - Form of Results Achievement Notification - notification from the borrower] [Borrower Letterhead] [DATE] The World Bank 1818 H Street, N.W. Washington, D.C. 20433 United States of America Attention: [Country Director] Re: Loan No. 8832-YF (State-Owned Financial Institutions Strengthening Project) Results Achievement Notification Dear Sir/Madam I refer to the Loan Agreement (the "Agreement") between the International Bank for Reconstruction and Development (the "Bank") and the Republic of Serbia (the "Borrower"), dated March 21, 2018. Pursuant to Schedule 2, Section IV. 1. of the Agreement, we are pleased to inform you that the following Disbursement Linked Result(s) (DLR(s)), under the respective Disbursement Linked Indicator(s) (DLI(s)) stipulated in Schedule 4 of the Agreement, [has/have] been achieved: DLI (e.g. 1, 2, 3) DLR (e.g. 1.1, Result achieved under this 1.2, 2.1) Notification Achievement of [this/these] result(s) has been verified according to the Verification Protocols for Achievement of DLRs as referred to in the Project Appraisal Document and the Operations Manual. Enclosed with this letter as Annex(es) (9 - (_) is the evidence of achievement relevant to each of the above-mentioned DLR(s). Sincerely, [Name, Position]5 To be signed by legal representative of the Borrower. [Attachment 4 - Form of Confirmation of Results Achievement Notification - notification to the borrower] [DA TE] [Borrower] [Address] Subject: Loan No. 8832-YF (State-Owned Financial Institutions Strengthening Project) Confirmation of Results Achievement Notification Dear [Name], Thank you for your Results Achievement Notification, dated . In accordance with the provisions of Schedule 2, Section IV. 1. of the Loan Agreement, we are pleased to confirm that the information provided in your notification serves as satisfactory evidence demonstrating that the Disbursement Linked Result(s) (DLR(s)) in the below table have been achieved. As a result, the following Loan proceeds are available for disbursement under this Confirmation. DLI (e.g. 1, 2, 3) DLR (e.g. 1.1, Verified result DLR Loan proceeds 1.2, 2.1) achieved available for disbursement under this Confirmation (in EUR) 6We cannot confirm at this time the full achievement of DLR(s) [for e.g. DLR#1.1_]. For such DLR(s), please provide additional information as evidence of DLR(s) achievement. We will promptly inform you as soon as we are able to confirm the achievement of such DLR(s). At your convenience, please provide a signed Withdrawal Application (Form 2380), together with this Confirmation, online through Client Connection or by mail to the World Bank at the address indicated below: The World Bank Radnicka cesta 80, 9th floor Zagreb, HR - 10 000 Croatia Attention: Loan Department 6 Insert this text for any results not accepted or that cannot be confirmed. 7In the event that Advances have been previously made against these specific DLR(s), the Advance will be deducted from the amount to be disbursed for DLR(s) achieved and any remaining balance will be available for disbursement. We also wish to notify you, that the amount disbursed will be charged to the Loan Account in the currency of the Loan, subject to the limits of the remaining balances in the Bank's records in the currency of commitment of the Bank financing for: (a) the remaining undisbursed amount of the Bank financing and (b) the limit of the specific DLR(s). Sincerely yours, [Name] Country Director Insert this text if Advances had previously been made against the specific DLI's. FOR INTERNAL DISTRIBUTION ONLY Prepared by: Jasna Mestnik, Finance Officer - WFACS Cleared with and cc: Fabiola Altimari, Country Lawyer - LEGLE Gunhild Berg, Task Team Leader - GFCEW Cc: Aleksandar Crnomarkovic, FMS - GGOEW