Menu
Home
Log in / Register
 
Home arrow Economics arrow Loan disbursement handbook
< Prev   CONTENTS   Next >

Loan Milestone Event Dates

3.6 Major loan milestone event dates include the following:

• The approval date is the date the loan is approved by ADB's Board of Directors. This date is also used for determining the loan amortization schedule as shown in Schedule 2 of the loan agreement. For a loan under a multitranche financing facility (MFF), the approval date is the date the subproject or loan is approved by Management.

• The signing date is the date the loan agreement is signed by the borrower and ADB. For ordinary capital resources loans, commitment charges will start to accrue on the 60th day after the loan signing date.

• The effective date is the date when ADB advised the borrower that all conditions of effectiveness of the loan agreement have been fulfilled by the borrower and disbursements may be made from the loan account (Section 4.6).

• The project completion date is the date on which the project is considered physically completed. This date precedes the loan closing date (normally 6 months before).

• The loan closing date is the date ADB may terminate the right of the borrower to make withdrawals from the loan account. Expenditures incurred after the loan closing date will not be financed under the loan (see Section 4.15-4.24 for matters related to loan closing).

Retroactive Financing

3.7 Retroactive financing is the financing of project expenditures incurred by the borrower before a loan agreement becomes effective.[1]

3.8 ADB may approve retroactive financing, at the borrower's request, to finance expenditures incurred prior to loan effective date but generally no earlier than 12 months before signing the loan agreement. A period longer than 12 months may be allowed if justified in the RRP.

3.9 Retroactive financing applies to eligible expenditures as agreed between ADB and the borrower. The loan agreement contains a specific provision indicating the amount and category of expenditures and the date from which the expenditures are considered eligible. The amount to be retroactively financed does not exceed 20% of the loan amount.

Reallocating Loan Proceeds

3.10 The proceeds of an ADB loan are used only for the purposes for which the loan was approved. No disbursements therefore are made directly from the "unallocated" category of the loan agreement. ADB may agree to a borrower's request to reallocate funds from the "unallocated" or other categories to another allowable category for project purposes. Normally the loan proceeds are reallocated after project progress has been reviewed with the borrower during a review mission.

Loan Cancellation

3.11 Provisions for loan cancellation, suspension, and acceleration of maturity are contained in the Loan Regulations (see Section 3.4 for relevant regulations) which provide that, after consultation with ADB and with the concurrence of the guarantor, if any, the borrower may, by notice to ADB, cancel any amount of the loan which has not been withdrawn. The effective cancellation date is when ADB receives the borrower's notice of such cancellation.

3.12 Under the Loan Regulations, ADB may also, by notice to the borrower and the guarantor, if any, cancel[2] any un with drawn amount of the loan when

• the borrower's right to make withdrawals from the loan account has been suspended for a continuous 30 days;

• ADB determines, at any time and after consultation with the borrower, that any amount of the loan will not be required for purposes of the project;

• ADB determines, with respect to any contract to be financed out of the proceeds of the loan, that corrupt or fraudulent practices were engaged in by representatives of the borrower, the guarantor, or any beneficiary of the loan during the procurement of goods or services, consultants' selection, or the execution of the contract without the borrower or guarantor having taken appropriate action to remedy the situation;

• ADB determines that the procurement of any goods and services to be financed out of the proceeds of the loan is inconsistent with the procedure set out in the loan agreement; or

• an amount of the loan remains unwithdrawn from the loan account by loan closing date.

3.13 Upon giving such notice, ADB cancels any unwithdrawn amount of the loan.

Suspending Withdrawals

3.14 ADB may suspend in whole or in part the borrower's right to withdraw from the loan account, as provided in the Loan Regulations, if after the date of the loan agreement there is

• nonpayment of principal, interest, or any other charge;

• nonperformance of any obligation under the loan, guarantee, or project agreements;

• nonfulfillment by the borrower, the guarantor, or the EA of certain conditions necessary for carrying out its project successfully;

• suspension or cessation of membership of the borrower;

• misrepresentations made by the borrower or the guarantor;

• dissolution of the borrower or EA; or

• any other event as specified in the loan agreement.

Accelerating Maturity

3.15 If certain events as indicated in the loan agreement or in the Loan Regulations occur and continue for the period, ADB may declare as due and payable immediately the principal of the loan then outstanding, together with all accrued interest and other charges.

  • [1] ADB. 2006. Retroactive Financing. Operations Manual. OM H4. Manila.
  • [2] The effective date of cancellation is the date of such notice by ADB to the borrower or the date specified in the notice to the borrower.
 
Found a mistake? Please highlight the word and press Shift + Enter  
< Prev   CONTENTS   Next >
 
Subjects
Accounting
Business & Finance
Communication
Computer Science
Economics
Education
Engineering
Environment
Geography
Health
History
Language & Literature
Law
Management
Marketing
Philosophy
Political science
Psychology
Religion
Sociology
Travel