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4. DISBURSEMENT GUIDELINES AND PRACTICES

General Guideline

4.1 The borrower[1] is responsible for implementing the project according to the loan[2] agreement and other loan documents. The Asian Development Bank (ADB) monitors the project and reviews its progress to ensure that the loan proceeds are spent as agreed upon.

Loan Account

4.2 When a loan becomes effective, a loan account is opened in ADB's books in the name of the borrower and the loan amount is credited to that account. Withdrawal from the loan account is approved only after fulfillment of the requirements mentioned in Sections 4.6.

Discussion of Disbursement Procedures during Project Preparation

4.3 During project preparation and loan negotiations, ADB's different disbursement procedures are discussed in detail by the borrower and ADB and documented in the project administration manual (PAM) or facility administration manual (FAM).[3] These discussions are important because they allow the borrower and ADB to identify the disbursement procedures most suitable for the project.

Disbursement Letter

4.4 After the loan agreement is signed, the Loan Administration Division of the Controller's Department (CTLA) sends a disbursement letter (Appendix 4A) to the borrower to remind the borrower of the necessary actions to be taken to withdraw funds from the loan account. A web link to a copy of the handbook is provided in the letter.

Actions to be Taken by the Borrower

4.5 As soon as the loan has become effective, and to expedite the disbursement, the borrower

• assigns qualified accountants and establishes sound internal control and accounting systems in executing agencies (EAs) and implementing agencies;

• reviews Schedule 3 of the loan agreement[4] which provides details of ADB financing such as amount, disbursement percentages (Section 4.8-4.9), items of financing, and applicable conditions of financing;

• maintains records (see Section 4.29 for retention period) for all signed contracts in a contract ledger for reference; and

• takes proper actions for procurement in accordance with ADB guidelines.[5]

Basic Requirements for Disbursement

4.6 The first withdrawal from the loan account requires the following:

• ADB declared the loan effective;

• the borrower submitted to ADB sufficient evidence of the authority of the person(s) who will sign withdrawal applications (WAs) (Chapter 5) on behalf of the borrower, together with the authenticated specimen signature of each authorized person (Appendix 4B); any subsequent change in the list of authorized representatives must be reported immediately and authenticated specimen signatures of new representatives must also be provided; and

• conditions for withdrawal (i.e., disbursement conditions [Appendix 3A]), if specified in the loan agreement, were met as appropriate.

  • [1] "Borrower(s)" in this handbook refers to borrowers, recipients (of grants), and/or their executing agencies (EAs) unless the context requires otherwise.
  • [2] The term "loan(s)" as used in this handbook also refers to grant(s) for investment projects which are managed by EAs unless the context requires otherwise.
  • [3] A PAM is prepared for a project loan, and a FAM is prepared for a multitranche financing facility (MFF). The term "PAM" in this handbook also refers to FAMs unless the context requires otherwise.
  • [4] The reference to Schedule 3 of the loan agreement in this handbook also means similar schedule as provided in the grant agreement or the financing agreement.
  • [5] Refer to ADB's Procurement Guidelines (2010, as amended from time to time) and Guidelines on the Use of Consultants (2010, as amended from time to time).
 
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