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Location of the Imprest Account

10.8 The imprest account may be opened at the central bank of the borrower's country or in a commercial bank the borrower, EA, or IA designates as appropriate, provided that the institution chosen is capable of

• executing foreign exchange and local currency transactions;

• opening letters of credit (LCs) and handling a large volume of transactions; and

• issuing detailed monthly bank statements promptly.

10.9 ADB may decide not to accept a financial institution for the opening and/or maintenance of the imprest account if the institution retains the right to assert or asserts a claim to set off, seize, or attach amounts on deposits to the imprest account maintained by the financial institution in order to satisfy amounts due to the bank by the borrower, EA, or IA.

Currency of the Imprest Account

10.10 The currency of the imprest account is agreed upon during loan negotiations and should be indicated in the PAM. To maintain the imprest account value against depreciation, it is to be maintained in a convertible and stable currency.

Using the Imprest Account

10.11 The borrower, EA, or IA, as appropriate, uses the imprest account to pay contractors, suppliers, and other third parties for ADB's share of eligible project expenditures incurred in local and foreign currency. Imprest fund advances are strictly for the purposes of paying eligible project expenditures. Any use of the imprest funds (including any amounts advanced to sub-accounts as described in Section 10.26) for activities other than eligible project activities will invoke corrective action deemed appropriate by ADB.

Ceiling of Advances

10.12 For project loans, the total outstanding advances should not exceed the approved ceiling (i.e., maximum amount) stated in the PAM, which is normally 10% of the loan amount.[1] The ceiling is determined on a project-by-project basis.

10.13 The borrower, EA, or IA, as appropriate, must obtain prior ADB approval for any upward changes in the approved ceiling (Sections 4.13-4.14).

Request for Advances

10.14 The borrower, EA, or IA, as appropriate, may request initial and additional advances[2] from ADB based on its projection of ADB's share of eligible project expenditures for the forthcoming 6 months which are to be paid through the imprest account (Appendix 10B). The borrower, EA, or IA, as appropriate, should not request advances for cost categories, components, or expenditures subject to conditions for withdrawal (or disbursement conditions) which have not been met.

10.15 The total outstanding advance, in any event, should not exceed the approved ceiling.

10.16 All advances are deposited into the imprest account.

Liquidation and Replenishment

10.17 After eligible expenditures are incurred and paid[3] from the imprest account, the borrower requests liquidation and replenishment of the imprest account by submitting a WA (Appendix 10A) and summary sheet (Appendix 7B) if full documentation is required, or statement of expenditures (SOE) (Appendixes 9B and 9C) if SOE procedure is approved. In addition, if the force account works (FAW) procedure is approved and used, and the amounts requested to be withdrawn are paid from the imprest fund, the certificates for FAW (Appendix 9D) are required to be attached to the WA. The corresponding bank statement and the imprest account reconciliation statement (Appendix 10C) are also required to be submitted with the WA. The WA must be prepared in the currency of the imprest account.

10.18 Replenishment of advances is normally provided only until 6 months before the loan closing date.

10.19 As ADB provides advances to cover projected eligible expenditure for 6 months, the target turnover ratio of the imprest account is 2.0 per annum.[4] If the turnover ratio of the imprest account is lower than the target, ADB may reduce the level of advance to the imprest account by adjusting the amount of replenishment or by requesting a refund to ADB, as appropriate.

10.20 If replenishment by ADB to the imprest account is less than the amount of the WA, ADB will notify the borrower in writing, by fax, email, or other means such as the Loan Financial Information System or Grant Financial Information System website (Section 4.10 and Chapter 14).

10.21 If the requested level of advance is larger than appropriate level of advance (items 7 and 8 of Appendix 10C) or additional advances are required for project activities, the borrower should submit the estimate of expenditures (Section 10.14 and Appendix 10B) for endorsement by sector division or resident mission.[5]

If justified, replenishment and/or additional advance may be provided.

  • [1] If the loan amount is denominated in a currency other than US dollars (e.g., special drawing right [SDR]) and the imprest account is denominated in US dollars, the ceiling of the advance is calculated based on the US dollar equivalent of the loan amount at the time of approval of the loan.
  • [2] Additional advances may be requested within the approved ceiling. For instance, when the approved ceiling is $1.0 million and an initial advance of $0.8 million was provided, an additional advance of $0.2 million can be provided without increasing the approved ceiling.
  • [3] Advances paid from the imprest account to EA or IA staff or sub-accounts (Section 10.26) are not considered to be incurred, and such amounts are still subject to liquidation by project expenditures actually incurred.
  • [4] The turnover ratio of the imprest account is calculated by the following formula: cumulative amount of liquidation divided by average of imprest advance amount (see Appendix 10C for sample calculations).
  • [5] Normally, the project officer or specialist in charge of administration of the project.
 
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