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BP 12.00 - Disbursement


These policies were prepared for use by World Bank staff and are not necessarily a complete treatment of the subject.
BP 12.00
March, 2007
 

This Bank Procedures statement was revised in April 2012 to streamline clearance procedures by removing the requirement for legal clearance of the notice to the Borrower confirming disbursement conditions have been met and notice of reallocation if the reallocation does not result in a change to the project activities or require a modification to the project description in the Loan Agreement. It was previously revised in March 2012 to take into account the provisions of OP/ BP 9.00, issued in February 2012. 

Note: These OP and BP 12.00 replace OP/BP 12.00, Disbursement, dated February 1997; OP/BP 12.20, Special Accounts, dated May 1994; OP/BP 12.30, Statements of Expenditure, dated September 1993; and the Operational Memoranda Impact of Eligibility Reforms on Disbursement Policies, dated April 19, 2004, and Impact of New Audit Policies and Practices and Eligibility Reforms on Disbursement Policies - Special Accounts, dated April 19, 2004. For investment loans,   OP/BP 12.00 should be read in conjunction with OP/BP 6.00, Bank Financing, and OP/BP 10.02, Financial Management. Investment loans in countries without approved country financing parameters to which OP/BP 6.00, Bank Financing, do not apply, are subject to the Operational Memorandum Specific Expenditure Eligibility and Cost Sharing Requirements for Investment Projects in Countries Without Approved Country Financing Parameters; for such loans, OP/BP 12.00 should be read in conjunction with the said Operational Memorandum. For development policy loans, see also OP/BP 8.60, Development Policy Lending. Questions on disbursement should be addressed to the Director, Loan Department or sent by electronic mail to wbdisbursement@worldbank.org.

Revised April 2012


1. For each operation, Bank1 staff establish disbursement arrangements that are consistent with the provisions of OP 12.00, Disbursement, and with the policies and procedures applicable to the particular operation.2 

Disbursement under Investment Loans

 

Project Preparation and Appraisal

 

2.  Disbursement Arrangements. The task team and finance officer ensure that disbursement arrangements are consistent with the Bank’s disbursement policies and procedures and that they are supported by the financial management and procurement assessments of the operation.3 The number of expenditure categories is normally kept to a minimum, taking into account project design considerations.4

 

3. The task team leader ensures that the proposed disbursement arrangements for the operation are discussed with the borrower during project preparation and appraisal. These arrangements are documented in the Project Appraisal Document and the Disbursement Letter.5 The Disbursement Letter is prepared by the finance officer, cleared by the task team leader and lawyer, and included in the negotiations package. The disbursement arrangements are discussed with the borrower and finalized at negotiations, and the final Disbursement Letter is included in the loan signing package.

 

Project Implementation

4. Disbursement Conditions. 6 Regional staff notify the borrower when disbursement conditions, if any, have been met and disbursements may begin for that part of the operation. Prior to issuing such notice, the TTL submits to the lawyer for clearance the evidence of compliance with conditions of disbursement that have legal content such as subsidiary agreements and issuance of legal norms. The notice is copied to the lawyer and Controller's.7

5. Monitoring the Adequacy of Fiduciary Arrangements for Disbursements. During project implementation, the task team reviews the continued adequacy and appropriateness of the borrower’s financial management and procurement arrangements and alerts the finance officer to any deficiencies that could affect the disbursement arrangements. The task team leader, in consultation with the finance officer, may recommend changes to the disbursement arrangements, or remedial action. The finance officer also reviews the continued adequacy and appropriateness of disbursement arrangements and advises the task team when changes are needed. The finance officer issues a revised Disbursement Letter, cleared by the task team leader,8 to notify the borrower of changes to the disbursement arrangements.

 

6. Processing Requests for Withdrawal. Before approving any withdrawal of loan proceeds, the Loan Department examines the application for withdrawal to verify that (a) the borrower is entitled to withdraw loan proceeds, (b) the supporting documentation is adequate and in accordance with the disbursement arrangements, and (c) funds are available in the loan account. Controller's notifies the borrower and task team of the reasons for rejecting all or part of any request. When project or country issues that may affect the disbursement arrangements under an operation arise, Controller's alerts the task team so that appropriate remedial action can be taken.

 

7. When disbursement arrangements include the use of advances, the task team leader reviews the reasonableness of the borrower’s forecasts from time to time to ensure that these amounts are in line with the operation’s periodic financing requirements. The task team leader alerts the finance officer when forecasts are considered to be unreasonable, and recommends appropriate action.

 

8.  Reallocations and Changes in Disbursement Percentages. The task team leader consults with Controller's9 and the borrower when considering the need for reallocations among categories and changes in disbursement percentages, as may be required, to support project needs. If the reallocation does not result in a change to the project activities or require a modification to the project description in the Loan Agreement, Regional staff prepare a simplified restructuring paper and the notice of reallocation in accordance with restructuring guidelines and clear it with Controller's and the Sector Manager.10 The Bank may decrease the disbursement percentage by notice to the borrower. Increases in disbursement percentages require an amendment to the Loan Agreement.11 Retroactive increases in disbursement percentages (i.e., increases in percentages for expenditures that the Bank has already disbursed against) may be approved in exceptional circumstances by the Regional vice president and the Director, Controller's,12 provided such increases will not result in Bank financing of expenditures financed by any other party.

Project Completion

9. Withdrawals after the Closing Date. Controller's may process eligible applications for withdrawal received within four months after the closing date for expenditures incurred on or before the closing date.13 The deadline for receipt of applications for withdrawal is indicated in the Disbursement Letter or separate notification to the borrower. The Director, Controller's, may consider extensions of up to two months beyond the four-month period.

 

10.  Designated Account Balance. Controller's monitors that the borrower has (a) furnished supporting documentation for the expenditures paid out of the designated account, normally before the deadline for receipt of applications for withdrawal, and (b) refunded any remaining undocumented balance within two months after the deadline for receipt of applications (the “lapsed loan date”). When reviewing disbursement arrangements for new loans being made to or guaranteed by the borrower, the finance officer considers the status of the borrower’s designated accounts and does not authorize disbursement into designated accounts under the new loans if there are undocumented balances remaining after the lapsed loan date under other loans.



  1. “Bank” includes IBRD and IDA; “loan” includes IBRD loans, IDA credits, IDA grants, Project Preparation Facility (PPF) advances, grants made under the Institutional Development Fund (IDF), and Global Environment Facility (GEF) grants unless otherwise provided in OP 10.20; “borrower” includes the recipient of a grant.  The policy also applies to recipient-executed grants financed from trust funds, unless, exceptionally, the terms of the agreement with the donor make provision for different requirements.  For arrangements where the Bank acts as an agent of another financier for the purpose of administering the disbursement of the financier’s funds, (see OP/BP 14.20, Cofinancing), OP/BP 12.00 normally applies; exceptions should be determined in consultation with the Director, Loan Department. “Loan Agreement” includes agreements for loans, credits, grants or PPF advances.
  2. See OP/BP 10.00, Investment Lending:  Identification to Board Presentation, for investment loans, OP/BP 9.00, Program-for-Results Financing, for program-for-results loans, and OP/BP 8.60, Development Policy Lending, for development policy loans. For investment loans, see also OP/BP 6.00, Bank Financing, and OP/BP 10.02, Financial Management. 
  3. See OP/BP 10.02, Financial Management, and OP/BP 11.00, Procurement. 
  4. Project design considerations include disbursement conditions and country financing parameters established in accordance with OP/BP 6.00, Bank Financing.
  5. The Disbursement Letter sets out the provisions within the World Bank Disbursement Guidelines for Projects that apply to the operation. The Guidelines apply to all loans, credits and grants that are using the simplified legal agreements which incorporate the IBRD General Conditions for Loans or the IDA General Conditions for Credits and Grants dated July 1, 2005 or later, or which incorporate the Standard Conditions for Grants Made by the World Bank Out of Various Trust Funds. A copy of the Guidelines is provided to the borrower with the Disbursement Letter.
  6. Such conditions are referred to as “withdrawal conditions” in the Loan Agreement.
  7. Refer to the contact section of the Controller's Web site to identify the appropriate client service e-mail account.
  8. The finance officer and task team leader consult the lawyer, as needed.
  9. Refer to the contact section of the Controller's Web site to identify the appropriate client service e-mail account.
  10. Reallocation may result in a change in project activities and may require an amendment of the Loan Agreement, which amendments would be prepared by the lawyer. See OP/BP13.05, Project Supervision. See also Operational Memorandum, Project Restructuring: New Procedures (Revised) dated November 18, 2009.
  11. Changes to the disbursement percentages may also result in a change in project activities, design or implementation arrangements, which may require additional modifications to the Loan Agreement. Any amendments to the Loan Agreement would be prepared by the lawyer. See OP/BP 13.05, Project Supervision.  See also Operational Memorandum, Project Restructuring: New Procedures (Revised) dated November 18, 2009.
  12. An amendment to the Loan Agreement would be required; see OP/BP 13.05, Project Supervision. See also Operational Memorandum, Project Restructuring: New Procedures (Revised) dated November 18, 2009.
  13. See OP/BP 13.30, Closing Dates.  As provided in OP 12.00, footnote 10, the Bank may finance the reasonable cost of audits required by the Bank under an operation, the costs of which may be incurred after the closing date.



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