PPCC Training Manual 9 (1).doc

77 114 special account this procedure calls for an

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11.4 Special Account This procedure calls for an advance disbursement from the Loan Account, which is deposited in a Special Account established by the Borrower for the exclusive use of the particular project. This account is normally held in a commercial bank in a convertible currency. The World Bank's share of financing, in both local and foreign currencies, for eligible expenditures under the Loan Agreement. The purpose is to help the borrower overcome cash flow problems. The objectives of Special Account are to: a) Reduce delays in payments; b) Provide foreign exchanges for the project; c) Reduce the number of withdrawal applications submitted to the World Bank; d) Improve information on payments for the Borrower; and e) Reduce the number of documents to be sent to the World Bank, especially when the SOE procedure is used. Through the standard Application for Withdrawal (Form 1903) the Borrower requests the initial deposit to the Special Account. At periodic intervals, the Special Account should be replenished so as to maintain adequate funds to meet project expenditures as they become due. Towards the end of the project, the Special Account should be closed and the amount of the initial deposit be fully documented. 11.5 Checklist for Request to Release Funds a) Applications showing the currency and amount required and complete instructions for payment; b) Signature of person duly authorized by the Borrower to withdraw funds; c) Sufficient funds in the specific disbursement category of the Loan Account to cover the payment or commitment; d) Compliance with the Loan Conditions; e) Procurement regulations have been followed; f) Documentation covering the purchase of goods and services (except in the case of SOE). 11.6 Payment Delays 78
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To ensure the success of a project both the borrower and the Bank want to see the process of payment and withdrawal submission going smoothly. In order to maintain a steady pace of disbursement, the World Bank has simplified its withdrawal procedures, thus reducing the time necessary to process applications received. However, much more could be done to improve the quality of withdrawal applications sent by Borrowers. Well-informed procurement staff are in an excellent position to help identify payment delays, quickly locate the obstacles provide adequate solutions. Reason For Delays Delays in payment from Bank Loans have become frequent in recent years. This is in part due to the increased use of procedures designed to speed up disbursement, e.g. Special Account, Statement of Expenditures (SOE), etc). There is, however, still room for improvement. Too many applications received by the World Bank are referred back to the Borrower because of inaccuracies or lack of supporting documentation. Some of the reasons for delays are listed below: i) On the Borrower's side: a) Invoices received late by the Borrower for internal reasons; b) Pre-inspection of goods not arranged for in due time, therefore shipment and consequent payments could not be made; c) Withdrawal application incorrectly completed and returned by the
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