ARTF Administrator s Report on Financial Status as of June 21 st, 2005 (end of Jawza 1384)

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1 ARTF Administrator s Report on Financial Status as of June 21 st, 2005 (end of Jawza 1384) According to the Ministry of Finance s Budget Department, disbursements under the Afghanistan Reconstruction Trust Fund Recurrent Window are estimated at $280 million for In addition, the Government has also budgeted an additional $130 million in development projects to be funded through the ARTF, bringing the total anticipated ARTF funding needs to $410 million for the solar year The ARTF s role in supporting the National Budget is described in more detail in Annex Donor contributions Total paid-in contributions to date amount to $153 million in SY1384, with an additional $201 million pledged ($13 million signed and $188 million unsigned), adding up to a total net pledge so far for 1384 of $352 million once the IDA fees have been deducted (see Table 1). Of Solar Year 1384 pledges, $40 million have been designated by donors for specific projects or programs, and the remaining $161 million is untargeted to date. Table 4 shows that out of the $97 million designated for specific projects or programs, $57 million has already been paid in and $40 million are pledged and still expected. During its first FY in operation, Solar Year 1381, the ARTF received $185 million in contributions. Year 1382 saw a 55% increase to $286 million and in SY1383, contributions paid in have increased another 33% to reach $380 million. 2. ARTF Sources and Uses of Funds Disbursements during 1383 amounted to US$288 million (including US$179 million for wages and US$55 million for operations and maintenance), leaving a cash balance of US$241 million as of March 20, Of this cash balance, US$102 million were committed to investments projects Afghan Calendar Starts on 1 Hamal 1384 March 21, Saur April 21 3 Jawza May 22 4 Saratan June 22 5 Asad July 23 6 Sonbola August 23 7 Mizan September 23 8 Aqrab October 23 9 Qaus November Jadi December Dalv January 21, Hoot February 20, Hamal 1385 March 20, 2006

2 The 1384 budget calls for ARTF support for $280 million to finance Recurrent and Capital costs. The amount committed to the recurrent window needs to be increased to US$130 million to comply with the cash management rule by which an amount equivalent to six months of recurrent expenditures is set aside in the recurrent window at the beginning of each quarter. Table 1: ARTF Flow of Funds (US$ million, june 21, 2005) 2002/ / / /06 Actual Actual Actual Actual and Projections SOURCES OF FUNDS (A+B) A. Paid-in and pledged contributions (net) (A1-A2) A.1. Paid-in contributions Paid-in as of June 21, with "expressed preference" 56.9 Signed pledges as of June 21, 05, of which: 13.2 with "expressed preference" 0.9 Un-signed pledges as of June 21, 05, of which: with "expressed preference" 20.7 A.2. IDA fees minus Investment income B. Cash carried-over from previous year (=D previous year) USES OF FUNDS (C+D) C. Disbursements (C1+C2+C3+C4) C.1. Recurrent window Wages O&M Debt service Bulk contracts C.2. Investment window C.3. Pass-through to LOTFA (UNDP Police) C.4. Fees to monitoring agent D. Cash Balance (end-of-period) (A+B-C=D1+D2) D.1 Committed Cash Balance In recurrent window In investment window and undisbursed To monitoring agent fees D.2 Uncommitted Cash Balance: Projections for 2005/06: If the donors' contributions pledged (including early informal pledges) to the ARTF as of June 21, 2005 for 2005/06 all materialize, paid-in contributions will reach US$354 million in 2005/06 (to date, US$153 million are paid-in, $13 million signed pledges and $188 million are informal pledges). Disbursements in 2005/06 are expected to reach US$358 million, including US$280 million under the recurrent window (as per 2005/06 Budget documents) and an estimated US$75 million under the investment window. Consequently, the cash balance at the end of 2005/06 is expected to be US$235 million, of which US$130 million is committed to the recurrent window as a cash management "cushion" to start the fiscal year, US$37 million are expected to remain undisbursed under the end-march 2006 investment portfolio, and US$3 million is set aside to cover the fees of the monitoring agent. Consequently, the "uncommitted" cash balance at the end of 2005/06 is expected to be US$66 million. 2

3 4. Recurrent Window The ARTF supports salaries of about 240,000 civil servants each month, over half of whom are outside of Kabul. In addition, the ARTF supports Operating and Maintenance costs of key government buildings and finances bulk purchases of essential equipment. A total of $638 million has been made available to the Government to date for the recurrent and capital cost component, of which a total of $544 million has been disbursed ($35 million in SY1384, $235 million in SY1383, $214 million in SY1382 and $59 million in SY1381), leaving $94 million available for additional recurrent and capital costs financing. Approval for an additional US$55 million to satisfy the cash management rule of the Recurrent Window will be presented to the next ARTF Management Committee. 5. Investment Window Table 6 shows that there are 2 closed projects in ARTF (UNDP Police) for a total disbursed of $22 million. ARTF currently finances 12 active investment projects. The total amount committed in these projects is $183 million. Of these total commitments, $109 million were made in Due to a slow start of ARTF funded investments, disbursements were only about $5 million in 1381 (UNDP Police 1&2), $38 million in 1382 for investment projects including the UNDP executed LOTFA, $22 million excluding LOTFA, and $50 million in Since the beginning of ARTF, total disbursements for the investment window (active and closed projects) add up to $115.5 million. Disbursements for the investment window to date other than of LOTFA add up to a total of $94 million, leaving an available undisbursed balance of $89 million in existing investment projects, and a disbursement ratio of 51%. The Government wishes to use ARTF beyond current donor commitments to fund its National Priority Programs. A discussion between the Government and donor community is currently taking place to determine the extent of ARTF funding for these programs. 3

4 Table 2: ARTF Management Committee Approvals for Investment Projects (in US$ million) Total TF Afghan Expatriate and Lateral Entry TF NEEP TF TA and Feasibility Studies Facility TF052452/ Microfinance TF Kabul Roads TF Telecom & Microwave Link TF Kabul Power Supply TF CCFO Project TF National Solidarity Program TF Education Quality Improvement Project TF Urban Water Supply and Sanitation TF Rehabiliation of Naghlu Hydropower Plant Additional expected commitments for investment projects: Out of a total project cost of $41 million, $20 million have been commited in 1383 for the Urban Water Supply and Sanitation project, leaving $21 million to be committed as soon as possible. An additional funding for TAFS in the amount of $5 million has been requested, and $2.2 million for the Kabul Urban Reconstruction Plan (KURP) Technical Assistance component ($6 million) remains to be commited. 6. Expressed donor preferences To facilitate donor financing of investment projects through ARTF, the Bank has prepared a note to donors describing how to accommodate expressed preferences while remaining within the parameters of Bank policies. This note is attached in Annex 2. Several donors have taken advantage of this opportunity. Table 3 shows the current status of expressed preferences. There are currently 8 programs for which donors have expressed preferences totaling $177 million. These programs are: (i) the National Solidarity Program, (ii) the Lateral Entry Program, (iii) the Afghanistan Stabilization Program, (iv) the Afghan Expatriates program, (v) the Education Quality Improvement Project (EQUIP), (vi) the Rural Water Supply Project, (vii) the Microfinance project, and (viii) the National Emergency Employment Program. Donors are encouraged to finance projects through ARTF because it reduces the number of project accounts to be managed and streamlines the financial reporting and audit requirements. 4

5 TABLE 3 - ACTUAL AND EXPECTED DONOR CONTRIBUTIONS As of June 21, 2005 Paid-In, Committed, Pledged US$ Million Donor SY 1381 SY 1382 SY 1383 SY1384 TOTAL Total Total Total Total Signed Un-signed Total SY Paid-In Paid-In Paid-In Paid-In Pledges Pledges SY1384 Australia $0.000 $2.635 $6.268 $3.867 $0.000 $0.000 $3.867 $ Bahrain $0.000 $0.504 $0.000 $0.000 $0.000 $0.000 $0.000 $0.504 Canada $ $ $5.491 $ $0.000 $ $ $ Denmark $5.000 $5.000 $3.163 $1.837 $0.000 $0.000 $1.837 $ EC $ $ $ $ $0.913 $ $ $ Finland $2.792 $2.454 $5.946 $0.000 $2.434 $0.000 $2.434 $ Germany $ $ $ $1.230 $0.000 $ $ $ India $0.200 $0.200 $0.000 $0.200 $0.000 $0.000 $0.200 $0.600 Iran $0.000 $0.989 $0.000 $0.000 $0.000 $0.000 $0.000 $0.989 Ireland $1.000 $1.733 $1.814 $0.000 $0.000 $0.000 $0.000 $4.546 Italy $ $0.000 $6.539 $0.000 $0.000 $0.000 $0.000 $ Japan MoF $2.500 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $2.500 Japan MoFA $2.500 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $2.500 Korea $2.000 $2.000 $2.000 $0.000 $0.000 $0.000 $0.000 $6.000 Kuwait $5.000 $5.000 $5.000 $0.000 $0.000 $0.000 $0.000 $ Luxembourg $1.020 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $1.020 Netherlands $ $ $ $0.000 $0.000 $ $ $ Norway NORAD $6.818 $ $9.913 $7.190 $0.000 $ $ $ Norway MOFA $0.000 $2.000 $0.000 $0.000 $0.000 $0.000 $0.000 $2.000 Portugal $0.000 $0.457 $0.725 $0.000 $0.000 $0.000 $0.000 $1.182 Saudi Arabia $ $5.000 $5.000 $0.000 $0.000 $0.000 $0.000 $ Sweden $3.103 $5.982 $ $0.000 $9.867 $0.000 $9.867 $ Switzerland $0.673 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.673 Turkey $0.500 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.500 UK $ $ $ $ $0.000 $ $ $ USA $ $ $ $0.000 $0.000 $0.000 $0.000 $ UNDP $0.000 $2.411 $0.000 $0.000 $0.000 $0.000 $0.000 $2.411 TOTAL $ $ $ $ $ $ $ $

6 TABLE 4 - EXPRESSED DONOR PREFERENCES As of June 21, 2005 Donor Program Name Total Pledged Paid in Pledged Paid in Pledged (not yet paid in) Paid in Total Expressed Of which, Own Curr. US$ Own Curr. US$ Own Curr. Est. US$ Equiv. US$ Preference paid in Canada Microfinance $ $ $4.131 $4.131 $ $ Canada National Solidarity Program $ $5.610 $5.610 $ $ Canada Afghanistan Stabilization Program $9.733 $9.733 $9.733 $9.733 EC National Solidarity Program $ $ $8.829 $ $ $ Germany National Solidarity Program $6.131 $6.131 $6.131 Norway Education - EQUIP $4.607 $4.607 $4.607 Norway Lateral Entry Program $ $3.092 $3.092 $6.010 $2.918 Norway Rural Water Supply $ $2.319 $2.319 $3.240 $0.921 Norway National Solidarity Program $3.092 $3.092 $3.092 $0.000 Sweden Microfinance $2.220 $2.220 $2.220 UK Microfinance $ $1.912 $1.912 $3.759 $3.759 UK Microfinance $ $ $9.151 $ $ $ UK National Solidarity Program $ $ $ $ $ UK Nat. Emergency Employment Program $3.651 $ $ $ $ USA National Solidarity Program $ $ $ USA Afghanistan Stabilization Program $ $8.800 $0.000 $0.000 USA Afghan Expatriates $2.300 $2.300 $2.300 USA Lateral Entry Program $2.000 $2.000 $2.000 USA Tech. Assistance and Feas. Studies $1.500 $1.500 $1.500 $1.500 USA Microfinance $5.000 $5.000 $5.000 $5.000 TOTAL $ $ $ $ $ $ $

7 TABLE 5 - STATUS OF THE DONOR CONTRIBUTIONS ACCOUNT As of June 21, 2005 (US$ Million) SY1381 SY1382 SY1383 SY1384 SY Year End Year End Year End Total Item (a) (b) (c) (d) INFLOWS 1. Paid in Donor Contributions $ $ $ $ $ Investment Income minus Administration Fee -$ $ $ $ $4.987 A - INFLOWS SUBTOTAL [1] + [2] $ $ $ $ $ OUTFLOWS 3. Transferred into Recurrent & Capital Costs TF $ $ $ $ $ Transferred into Monitoring Agent TF $2.244 $0.534 $2.311 $1.158 $ Transferred into LOTFA Passthrough Account $4.836 $ $0.000 $0.000 $ Transferred into Active Investment Projects TFs $ $ $ $ $ B - OUTFLOWS SUBTOTAL [3] + [4] + [5] + [6] $ $ $ $ $ C(*) - Cash Available in Donors Contributions Account (A - B + C of previous year) $ $ $ $ $ Of which: Untargeted Funds $ Funds set aside for specific projects $ (*) Cash/Undisbursed amounts available at year end is carried over to the next fiscal year 7

8 TABLE 6 - ARTF COMMITMENTS & DISBURSEMENTS As of June 21, 2005 Commited Disbursed Commited Disbursed(1) Commited Disbursed(2) Commited (3) Disbursed (4) SY as of June 21 Last Month Available SY1381 SY1381 SY1382 SY1382 SY1383 SY1383 Total Total Disbursed Item Year End Year End Year End Year End Year End Year End SY1384 SY1384 Commited Disbursed May 22 - June 21 (a) (b) (c) (d) (e) (f) (e) - (f) TF Recurrent & Capital Costs Component [1] Wages $ $ $ $ $ $ $ $ $ $ $0.000 $ O&M $ $ $ $ $ $ $ $8.364 $ $ $0.000 $ Bulk Contracts $1.067 $1.067 $ $ $0.557 $0.557 $0.490 $0.000 $ $ $0.000 $0.490 Debt Sevice, IDA $2.770 $2.770 $3.870 $3.870 $0.000 $0.000 $0.000 $0.000 $6.640 $6.640 $0.000 $0.000 Debt Service, IMF $0.767 $0.767 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.767 $0.767 $0.000 $0.000 Debt Service, ADB $0.000 $0.000 $0.557 $0.557 $0.000 $0.000 $0.000 $0.000 $0.557 $0.557 $0.000 $0.000 Subtotal TF [1] $ $ $ $ $ $ $ $ $ $ $0.000 $ TF Monitoring Agent [2] $2.244 $0.668 $0.534 $1.407 $2.311 $2.641 $1.158 $0.000 $6.247 $4.716 $0.000 $1.530 Closed Investment Projects [3] TF UNDP Police Pr. 1 & 2 $4.836 $4.836 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $4.836 $4.836 $0.000 $0.000 TF UNDP Police 3 $0.000 $0.000 $ $ $0.000 $0.000 $0.000 $0.000 $ $ $0.000 $0.000 Subtotal Closed Investment Projects [3] $4.836 $4.836 $ $ $0.000 $0.000 $0.000 $0.000 $ $ $0.000 $0.000 Current Investment Projects [4] TF Afghan Expatriate and Lateral Entry $5.000 $0.000 $0.000 $0.000 $3.000 $0.000 $0.000 $0.000 $8.000 $0.000 $0.000 $8.000 TF NEEP $ $ $8.800 $ $0.000 $0.000 $0.000 $0.000 $ $ $0.000 $0.000 TF TA and Feasibility Studies Facility $8.000 $0.000 $6.000 $1.723 $4.500 $3.897 $0.000 $0.677 $ $6.297 $0.022 $ TF Microfinance $1.000 $0.000 $0.000 $0.258 $0.000 $0.335 $0.000 $0.198 $1.000 $0.792 $0.000 $0.208 TF Microfinance 2 $0.000 $0.000 $8.700 $1.802 $ $ $0.000 $1.057 $ $ $0.142 $4.605 TF Kabul Roads $0.000 $0.000 $3.000 $0.000 $0.000 $2.610 $0.000 $0.000 $3.000 $2.610 $0.000 $0.390 TF Telecom & Microwave Link $0.300 $0.000 $2.700 $0.000 $3.130 $1.029 $0.000 $4.238 $6.130 $5.267 $0.000 $0.863 TF Kabul Power Supply $0.000 $0.000 $7.435 $0.000 $0.000 $2.901 $0.000 $0.123 $7.435 $3.024 $0.000 $4.411 TF CCFO Project $0.000 $0.000 $5.100 $1.146 $0.000 $0.255 $0.000 $0.871 $5.100 $2.272 $0.871 $2.828 TF National Solidarity Program $0.000 $0.000 $0.000 $0.000 $ $ $ $ $ $ $ $ TF Education Quality Improvement $0.000 $0.000 $0.000 $0.000 $5.000 $0.000 $0.000 $0.000 $5.000 $0.000 $0.000 $5.000 TF Urban Water Supply and Sanitation $0.000 $0.000 $0.000 $0.000 $ $0.000 $0.000 $0.080 $ $0.080 $0.080 $ TF Rehabiliation of Naghlu Hydropower Plant $0.000 $0.000 $0.000 $0.000 $ $0.000 $0.000 $0.000 $ $0.000 $0.000 $ Subtotal Current Investment Projects [4] $ $0.000 $ $ $ $ $ $ $ $ $ $ TOTAL COMMITMENTS & DISBURSEMENTS [ $ $ $ $ $ $ $ $ $ $ $ $ Includes disbursements made in 1382 for expenses incurred in Includes disbursements made in 1383 for expenses incurred in Commitments for Recurrent & Capital Costs are based on Government estimates and prior years disbursements 8

9 Annex 1 ARTF and the National Budget 2004/05 Core Budget (March 21, March 20, 2005): The Core Budget records all transactions that are channeled through Treasury including domestic revenues, expenditures from the Ordinary Budget and expenditures from international donors that use the Treasury system. However, it excludes expenditures that are made directly by donors outside the Treasury system. Domestic revenues in 2004/05 are estimated at US$259 million (compared to a Budget estimate of US$309 million) while expenditures are estimated at US$879 million (US$583 million of ordinary expenditure and US$296 million of development expenditure much below Budget estimates) (Table 1). As a consequence, the 2004/05 Core Budget deficit is estimated at US$620 million, of which US$284 million has been financed from the ARTF (US$235 million under the recurrent window and US$49 million disbursed under the investment window). Table 1: ARTF and the Core (Treasury) Budget (2002/ ) (US$ million) 2002/ / / / / / / /09 Actual Estimates Budget Estimates Budget Projections A. Domestic Revenues B. Expenditures (B1+B2) , ,078 1,280 1,500 1,720 B.1. Ordinary Expenditures Wages and Salaries Goods and Services Capital Expenditure Other B.2. Development Exp. (disbursement basis) , C. Budget Deficit (A-B) , ,000 D. Financing (D1+D2) , ,000 D.1. ARTF Recurrent window Investment window D.2. Others Source: Staff estimates. 2005/06 Core Budget (March 21, March 20, 2006): Domestic revenues in 2005/06 are budgeted to reach US$333 million while expenditures are estimated at US$1,078 million (US$678 million of budgeted ordinary expenditure approved on March 15, 2005 and an estimated US$400 million of development expenditure). As a consequence, the 2005/06 Core Budget deficit is estimated to reach US$745 million, of which the ARTF is expected to finance about half (US$280 million under the recurrent window and US$75 million of expected disbursement under the investment window). Projections: In the medium-term, the authorities indicated their objective to take measures to steadily increase domestic revenues. Domestic revenues are expected to reach US$440 million in 2006/07 and continue to increase afterwards. Disbursements from the ARTF are expected to stabilize around US$400 million per annum (US$300 million from the recurrent window and US$100 million from the recurrent window). Discussions on medium-term fiscal outlook are expected to take place at the 2005 Afghan Development Forum. 9

10 Annex 2 Afghanistan Reconstruction Trust Fund Note on Donor Cofinancing of Investment Projects or Programs through ARTF 1. ARTF is one of the main instruments available to the Government of Afghanistan to finance key recurrent expenditures (salaries, capital expenditures, operations and maintenance of key government institutions), as well as finance urgent investments and reconstruction activities planned in the country s economic recovery program. 2. The ARTF can either finance free-standing projects or co-finance IDA or other Donor funded projects. To minimize transaction costs on all development partners involved and more specifically to, inter alia, avoid a complexity of trust fund agreements, reporting and monitoring, the Government and the World Bank Country Team prefer ARTF to be the sole trust fund for all TF funded activities. 3. Into the second year of ARTF operation, the Government is accelerating its process and deepening dialogue with Donors, and Donors currently stand ready to support specific IDA financed projects under preparation or implementation, such as the Emergency National Solidarity Program or Microfinance Project. This is to explore possible ways to maximize the volume and the timeliness of such Donor financing, some of which are blocked due to Donor eligibility restrictions on either expenditure type and/or sectors/subsectors. 4. Under the World Bank trust fund policy, no earmarking of Donor contributions is allowed for Bank-administered multidonor trust funds. This is to enable the Bank, as fund administrator, to manage the fund flexibly and optimally in order to maximize the fund s impact in achieving its objectives. Furthermore, the Bank s accounting systems do not allow for the tracking of incoming contributions to the main Multi-donor Trust Fund to a specific project/activity. In addition, geographic preferences, such as financing activities in specific provinces, cannot be considered as it would be deemed an interference in the national politics of the country. 5. The Afghanistan Country Team therefore proposes the following in order to facilitate mobilization of additional Donor commitments and ARTF disbursements to priority operations: Donors would only be allowed to express a preference for their additional contributions over and above their otherwise expected level of contribution to ARTF. Donors who express a preference could do so for up to 50% of their total contribution in a given Afghan Fiscal Year (Solar Year - SY). The preference is expressed for a priority program or project included in the Government multi-year development budget, and for which the Government has requested ARTF funding. The project has been appraised by the Bank and deemed eligible under ARTF funding. 10

11 The amount expressed in the preference is less than the estimated total program/project cost, and there is a funding gap at the time of the expression of preference. Preference would normally be expressed for projects or programs which are scalable in nature and do not require full funding to precede implementation Where the project is very large and is not scalable, preference would be accepted as part of a complete financing plan. If the project is scaled back or cancelled, the Bank will discuss with the Donor the disposition of unused funds and whether the Donor wishes to express another new preference according to the above guidelines. In a non-legally binding side letter to the Agreement, the Bank will communicate its confidence that ARTF will fund the designated program up to the amount expressed by the donor. 6. For defined projects funded from Donor preferences, the Bank and Government may agree to recognize the direct contribution of the Donor(s) in the ARTF. This recognition will be done as a supplement to the principal recognition of the ARTF, listing all the contributing Donors and the Bank as administrator. 11

12 Annex 3 ARTF Fiduciary Standards Payroll Fiduciary Standards 1 Payrolls are reimbursable only for Ministries that have submitted proposed employment limits for the Fiscal Year, by HQ and province. 2 Payrolls submitted later than three months after the end of the relevant pay period for central ministries and four months for provinces are not reimbursable. Provided, however, that provincial payrolls may still be reimbursed after four months if at least 80 % of the provinces have met the four month deadline. 3 Payrolls submitted with no allotted funds available are not reimbursable. 4 Payrolls that would take the total staff paid in a given month beyond the Central Ministries' current Fiscal Year s budget caps are not reimbursable. ARTF will reimburse payrolls up to the budget cap. The Monitoring Agent will use the Government s employment database to determine adherence to these standards. 5 Salaries paid abroad shall be deemed eligible if claimed by a signed statement from the Ambassador for Afghanistan in the foreign country where the payment has taken place. Operations and Maintenance Fiduciary Standards 1 O&M expenditures with no allotted funds available are not reimbursable. 2 O&M expenditure is reimbursed only if documented satisfactorily no more than three months after expenditure took place for central ministries and six months for provinces. Special rules apply for Travel expenditures. See Cash management Standards 3 O&M expenditures not in accordance with the issued procurement instructions are not eligible for reimbursement. 4 Rents paid abroad shall be deemed eligible upon presentation of a valid signed lease agreement. 12

13 Cash Management Fiduciary Standards 1 Advances abroad : For advances to foreign branches (e.g.: embassies) the three month period allowed for documenting the expenditure will count starting from the date the amount is received in the bank account of the foreign branch. For this standard to be applicable the date of the receipt of the advance must be proven with the supporting bank statement of the foreign branch. 2 Advances for travel expenditures: For advances to cover travel expenditures for trips taking longer than three months the three month period allowed for documenting the expenditure will not be applied. Instead, acquittal forms must be submitted within one month after the end of travel for central ministries, and within three months for provinces. All expenditures acquitted and / or recorded after these periods will be deemed ineligible. 3 Advances to provinces: to enforce the FS requiring that advances to provinces should be settled within six months the FIFO principle shall be applied; first advance received is the first advance spent. On a monthly basis the total amount of outstanding advances to provinces will be calculated based on the weekly Treasury report. For each province this outstanding amount will be reduced with the advances received during the last six months. If the remaining amount is a positive amount this amount will be deducted from next SOE. 13