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Discussion on IFAD Disbursement Procedures

Display Date: 10/9/13

This space is created for the FM Forum Asia Pacific participants to share their ideas, queries and anlaysis of IFAD Disbursement Procedures.
The questions will be answered by Finance Officers Md. Abodu Boussalem, Mr. Claduio, Mr. Dario, and Ms. Irene.
Please feel free to use this space for sharing your relections, ideas and asking queries. 

Thank you.

Comments
Hello Everyone
I would like to share the summary of the session of IFAD Disbursement Procedures and also I am sending questions to the group to discuss:

- Common sources of funding for a IFAD project are IFAD loan/grant, government counterpart funds, beneficiaries in kind contributions, and/or bilateral and multilateral funding; IFAD loan/grant must be proceed in line with IFAD disbursement procedures.
- IFAD funding is defined in the project documents: Design Report, Financing Agreement Minutes of Negotiations, Letter to the Borrower and Amendments. There are also IFAD General Documents including General Conditions, Loan Disbursement Handbook, Financing Administration Manual, Procurement Guideline and Handbook as well as Audit Guidelines;
- IFAD loans are disbursed as per the allocation of loan proceeds listed in the Schedule 2 in the Financing Agreement (FA) denominated in Special Drawing Rights (SDR); Designated Account Procedure is recommended;
- There are key financing milestone dates predetermined in the FA, such as board approval date, entry into force date, project completion date, and closing date. The implementation period is during project entry into force until project completion date;
- Due to the nature that retroactive financing is considered as exception with the General Condition, it is therefore required that details of retroactive financing be reflected in the negotiation minutes and submit to the Executive Board for approval. It shall be listed in the Schedule 2 of FA with limitation of starting date and activities.
- AWPB and 18 months Procurement Plan is mandatory condition as per the General Condition. Other additional conditions are listed in the LTB. The new LTB is about 4-page long and the other remaining is listed in the Loan Disbursement Handbook (LDH);
- Withdrawal application(WA) forms are legal instruments for withdrawal of loan proceeds; The size of the WA should be at least 20%-30% of the authorized allocation for replenishment and reimbursement. The amount under is encouraged to apply to Designated Account Procedure. In some new projects, it is stipulated that USD100,000 is the minimum amount for single WA.
- It is recommended to send WA to CFS of IFAD directly without putting any specific names on the envelop of the WA.
- There are four disbursement procedures, commonly used is Designated Account (DA) Procedure in the APR countries.
- Interest is charged upon the initial WA is disbursed to the Designated Account. Idle replenishment will impact project negatively.
- Recovery of the advance in the DA will be triggered either(a) 6 months before project completion date or (b) when the undisbursed balance of the financing is equal to twice the amount of DA balance.
- Any changes related to the DA and signatories shall be submitted by the government in official writing;

Please send your understanding of these questions:

Question 1: Is there standard financial monitoring templates to track difference sources of funding, such as IFAD and government counterpart fund? Any good practices are also welcome.


Question 2: Does IFAD have plans to implement any online disbursement submission system to improve efficiency? What other efforts has been made by IFAD on improving the disbursement efficiency?

Posted on 10/10/13 3:48 AM.

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The IFAD Disbursement Procedures were nicely and elaborately presented covering Project design, sources of funding, letter to the borrower, LDH, reimbursements methods , retroactive financing , Project accounts, AWPB, Initial WA etc. All the questions raised by the Participants were clearly and accurately addressed. Most of the questions put by myself were also answered to my satisfaction. However I have the following two more questions, which I request feedback ;

Q 1. If a project incurs expenditure on procurement by getting fund from the govt before signing or coming into force of the financing agreement, can this expenditure be reimbursed through retroactive financing?

Q 2. In case the USD Imprest Account for IFAD funds and the Assignment Account for counter funds by the Govt. are opened and the authorized officers or the project director and his co-signatory sign the cheques for making payment to the Contractors, after receiving bills of contractors from Project parties/Implementing Partners for payment upon satisfactory procurement of goods, services and services by them, without opening Project Bank Accounts for Project Parties/ implementing partners and transferring of funds from the imprest and Assignment Accounts. Do IFAD Disbursement procedures allow for that kind of disbursement arrangement?

With regards,
Saleh Muhammad Baloch,
Project Director Gwadar-Lasbela Livelihood Support Project(GLLSP) Gwadar Pakistan

Posted on 10/15/13 10:41 AM.

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