German Financial Cooperation with Developing Countries Disbursement of Funds: Principles and Methods

Transcription

1 German Financial Cooperation with Developing Countries Disbursement of Funds: Principles and Methods EFCA-FEACO seminar: The Role, Quality & Financial Management of Development Assistance Wolfgang Abel October 30th, 2008

2 Overview KfW Entwicklungsbank - Who we are Disbursements Principles and Methods Special Accounts Framework and Procedure Special Accounts Preconditions and legal requirements Special Accounts Reporting and audit Special Accounts KfW s experience 2

3 KfW Entwicklungsbank Who we are Our goals To effectively assist the German Government with: reducing poverty worldwide, protecting poec the eenvironment, e ensuring peace and realising democracy, and making globalisation fair. On behalf of the Federal Government we support developing and transition countries with setting up and expanding their social and economic infrastructure, developing efficient financial systems, and protecting the climate, the environment and natural resources. In our work, global sustainable development serves as our guiding principle p that is expressed equally in terms of economic performance, social justice, ecological feasibility and political stability. 3

4 Some Key Figures Staff count 423 Ongoing projects Around 1,600 in over 110 countries Offices abroad 56 Commitments of which KfW s own funds Disbursements Loans outstanding of which budget funds of which KfW funds EUR 3.0 billion EUR 1.7 billion EUR 2.0 billion (of which EUR 1.1 billion in budget funds) EUR 17.5 billion EUR 15.4 billion EUR 2.1 billion (excl. IMF) 4

5 Disbursements: Principles and Methods (I) Legal Framework: Loan/Financing agreement with Country/Project Executing Agency Disbursement of funds according to the progress of projects/programs p Disbursements on request of Project Executing Agency Disbursements based on contracts between Consultants/Suppliers and the Project Executing Agency Responsibility of KfW to ensure that funds are utilized for the purpose p agreed upon In specific cases: Direct award of supplies/services by KfW ( Direct Labour Operations ) 5

6 Disbursements: Principles and Methods (II) Direct Disbursements to Supplier/Consultant/Recipient Country (project example: hydro power plant, macro economic support) Reimbursement of funds already spent by Project Executing Agency (project example: refinancing of loans in financial sector, projects in advanced countries) Special Account (Disposition Fund) procedure (project example: small water supply systems, rural infrastructure) 6

7 Special Accounts: Framework and Procedure KfW pays advance into a Special Account. Volume of advance payment to be determined on the basis of disbursement forecast (max. 4-months requirement) Account holder pays Contractors o out of the Special Account Account holder requests replenishment and presents evidence for the use of funds to KfW Auditor examines regularly l the utilization of funds on the spot on the basis of KfW standard terms Account holders could be: Project Executing Agency, Consultant, NGO 7

8 Special Accounts: Preconditions and legal requirements Project Executing Agency is unable to prefinance Numerous individual disbursements Special Account generates interest Internal Control System of Project Executing Agency/Consultant is satisfactory Confirmation of the Bank which allows KfW to request immeditate repayment of funds Waiver of the right to offset and retention as well as right of lien by the bank No further guarantees/securites required 8

9 Special Accounts: Reporting and Audit Along with replenishment requests: statement of bank account statement of expenditures by Project Executing Agency/Consultant t (e.g. list of individual id payments, recipients etc.). Format adapted to individual requirements Reports of independent audit firm (as a rule annually) Final audit report 9

10 Special Accounts: KfW s experience Adequate instrument for all projects with numerous disbursements/service and supply contracts Application of Special Accounts procedure above average in poorer countries Problems: Delays in reporting and poor quality of reporting Disbursement forecasts too optimistic Necessity to request repayment of funds However: No significant misuse or loss of funds 10

11 Do you have any questions? 11