IDA CREDIT NoA896-UZ AND No.5231-UZ "HEALTH SYSTEM IMPROVEMENT PROJECT" / "HEALTH 3"

Transcription

1 2 2a, Chust street, Tashkent, , Uzbekistan 2 Tel/Fax: (998-71) , , R reception(&ciar.uz; reception(aciargroup.net IDA CREDIT NoA896-UZ AND No.5231-UZ "HEALTH SYSTEM IMPROVEMENT PROJECT" / "HEALTH 3" INDEPENDENT AUDITOR'S REPORT ON SPECIAL PURPOSE FINANCIAL STATEMENTS FOR THE PERIOD FROM 01 JANUARY 2017 TO 31 DECEMBER 2017 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized `Je3 :e ce- e. -rc C-7[VA G7VCLY NT E7 NAIONAL

2 CONTENTS CONTENTS INDEPENDENT AUDITOR'S REPORT» STATEMENT OF SOURCES AND USES OF FUNDS.. 5 STATEMENT OF USES OF FUNDS BY PROJECT COMP FNT S 7 SU MMARY ST ATEMENTOFSOE... 8 BALA,N'CE SHEET STATEMENT OF PROJECT'S USD SPECIAL ACCOUNT 10 STAT EMENT OF PROJECT'S UZS SPECIAL ACCOUNT 11 NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS 12 1 PROGRAM BACK.ROU D PROJECTACCOUNTiPOLic PFr,EE L AEMENTS 18 5 F S 6 C AND CAS EQ \ A 19 S RT M 21 8 L22 9 STE F( c~- D23 10 PROJECT UDET PERFORAN PROJECTLSA s 2 14 TAxE REC DACREI N N 16 EVENT AFE RPRT' DT2 17 S A,MNO PROE SUZS BULET ACCT S PROC SUSDBDI ACOUNT STATMEN O C UZSB ACC STAET _FCPB_ SD TRNI DGAC T SCP SEURM STA O CPB3UZSMI ACCOUNT STAE FPIB<dUS TN AOT 24 E FUS P 25 S O UZLPL A C U FEL No STEMN F UZS PLAT CAD FO OMS FE NO 2 30

3 'DEPENDENT AUDITOR'S REPORT To the Management of Central Project mplomontation Bure "Healht-3" under the Mn y of Health of the R pubi c of Uzbekistan We have audited the accompanying Special Purpose Financial Statements (hereinafter - Financial Statements) of the "Health System Improvement Project" / "Health 3" (hereinafter - Project) financed against the Financing Agreement of the International Development Association (hereinafter - IDA) and against budget funds of the Government of the Republic of Uzbekistan (hereinafter - Government, GOU), based on the provisions of the Financing Agreements No.4896-UZ dated 16 September 2011 and No.5231-UZ dated 18 July 2013 (hereinafter - the Financing Agreements), for the year ended 31 December The Special Purpose Financial Statements comprise Statement of Sources and Uses of Funds, Statement of Uses of Funds by Project Components, Summary Statement of SOE, Balance Sheet, Project's Special Accounts Statements as at 31 December 2017 and for the year then ended, and a summary of significant accounting policies and other explanatory information. The Special Purpose Financial Statements have been prepared by the Central Project Implementation Bureau "Healht-3" under the Ministry of Health of the Republic of Uzbekistan (hereinafter - CPIB) according to the International Public Sector Accounting Standards (hereinafter - IPSAS), based on the cash flow method, issued by the International Public Sector Accounting Standards Board of the International Federation of Accountants. Repos iltyofth mnaer-fr drwn pfinancialstemn The management of the CPIB is responsible for preparation and fair presentation of these Special Purpose Financial Statements based on the cash flow basis in accordance with IPSAS. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the Special Purpose Financial Statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Aud to;r's responsibility Our responsibility is to express an opinion on the accompanying Special Purpose Financial Statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISA), published by International Federation of Accountants. Those standards require that we should follow ethical norms, plan and perform the audit to obtain reasonable assurance that there is no incorrect or false data in the Special Purpose Financial Statements. Audit stipulates carrying out the procedures, which are aimed to get audit proofs as regards numeric data and information, contained in the Special Purpose Financial Statements. Choosing the procedures is based on auditor's professional judgment, including the estimation of risks of substantial misrepresenting of financial statement as a result of fraud or mistakes. In the process of estimation of above-mentioned risks, Auditor considers internal control system related to the preparation and authentic submission of financial statement of the organization to develop audit procedures, which are necessary in the present circumstances, but not to express opinion on the effectiveness of organization's internal control system. An audit also includes evaluating principles of accounting policies used and estimates made by the management, as well as evaluating the overall presentation of the Financial Statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

4 4 Auditor's opinion In our opinion, the above-stated Special Purpose Financial Statements give a true and fair view of the sources and uses of the "Health System Improvement" I "Health 3" Project funds for the period from 01 January 2017 to 31 December 2017 and complies with conditions of the Financing Agreements and IPSAS. Moreover, (a) with respect to SOEs, adequate supporting documentation has been maintained to support claims to the IDA for reimbursement of expenditures incurred under the Credit No.4896-UZ; and (b) the expenditures comply with objectives stipulated in the Financing Agreement No.4896-UZ. In our opinion, the Special Accounts Statements on IDA Credit No.4896-UZ for the period from 01 January 2017 to 31 December 2017 give a true and fair view of the financial position of the Special Accounts of the Project as at 31 December 2017 and of the cash flows for the for the year then ended and complies with the World Bank's guidelines. Emphasis of Matter Without expressing the modified Auditor's opinion we would like to pay attention to the Note 9 describing the fact that it was no Project financing on the reporting date under the SOE procedure (under the Financing Agreement dated 18th July 2013 on the IDA Credit No.5231-UZ). Basis of Accountin We draw attention to Note 2 to the Special Purpose Financial Statements, which describes the basis of accounting. The Special Purpose Financial Statements are prepared to assist the Project to comply with the financial reporting provisions on the requirements conditions of the Financing Agreement and IPSAS. As a result, the Special Purpose Financial Statements may not be suitable for another purpose. Othcr Maflttcr Financial Audit reports and opinions, as ruled by the requirements set by the World Bank, shall be uploaded, published and publicly accessible on the World Bank's website. TSA3FANLLC.... ~) 2A C -sist 7

5 "Health System Improvement Project" /"Health 3" IDA Credit No.4896-UZ and No.5231-UZ 5 STATEMENT OF SOURCES AND USES OF FUNDS As of 31 December 2017 (USD) * Cumulative Indicator Indictor Note Actual beginning Actual of 2016 from the f t the Project Financing... IDA Funds IDA -Credit No.4896-UZ Letter of credit (disbursement) 4, , , ,05 Direct payment 4, , , ,17 Replenishment to Project USD Special Account , ,91 Total IDA Credit No.4896-UZ , , ,13 IDA - Credit No.5231-UZ Letter of credit (disbursement) 4, ,80 0, , Direct payment 4, ,00 0, ,00 Total IDA Credit No.5231-UZ ,80 0, ,80 Total IDA Funds i , , ,93 Government Funds _... GOU counterpartfinancingincash , , ,181 Total Government Funds , , ,18 Total on direct financing , , ,11 Other financing Other , , ,54 Total other Funds , , ,54 TOTAL FINANCING , , ,65 Expenses Direct Financing Funds 1. Goods, Consultant's services, Training and nm Operating Costs Goods , , , I_ '---I-_ Consultant's services..., , , ,80 Training , ,30' ,38 Operating costs i , , ,14 Total , , ,72 Other Funds Other , , ,10 Total , ,58 95'867,10 TOTAL EXPENSES , , ,82 Excess of Receipts over Payments i( ,26) ( ,93) ,83 Continued on the next page

6 "Health System Improvement Project" / "Health 3" IDA Credit No.4896-UZ and No.5231-UZ 6 Cash Balance as at January 1 Continued. Beginning at the previous page Project's UZS Special Account 0,18 473,40 Project's UZS Bidding Account 24901, ,96 UZS Plastic card 27,37 395,41 UZS Plastic card for combustible fuel No.1 136,50 57,19 UZS Plastic card for combustible fuel No 2 94,34 279,51 - CPIB's USD Transit bidding Account , ,00 CPIB's EUR Main Account 1 441,42 316,15 i Project's USD Special Account , ,28 Project's USD Bidding Account , ,12 Total , ,02 Net Available Funds , , ,83 Cash Balance as at December 31 Project's UZS Special Account , Project's UZS Bidding Account 87, ,03 87,38 UZS Plastic card 299,02 27,37 299,02 UZS Plastic card for combustible fuel No , 136,50 223,33 UZS Plastic card for combustible fuel No.2 144,21 94,34 144,21 CPIB's USD Transit bidding Account 1 199,36 CPIB's EUR Main Account 281, ,42 281,50 Project's USD Special Account , , ,40 Project's USD Bidding Account , , ,63 Total ,83 i , ,83 I Signed by management on 01 March 2018 R. A. lshankh djaev Sh. N. Atakhanov Executive Dire er-ofthe CP Financial Manager, Accountant of the CPIB Statement of Sources and Uses of Funds is to be read in conjunction with Notes (Pages from 12 to 30) thereto forming an integral part of the Special Purpose Financial statements.

7 (,, д +,, '......_...,..., _._......_... _... _..._..._.,..... : м,,... и...,, I г : 0 СЛ Ф, G) ' СО ' ii : СО ; 00 г j ОиD i..,...t и^о.._,,._. г..., г U. i i «s=. и ; м ;. ; л i о ; г. и i r : д' ' й ; ш i ' с а i о i м 1 в> 1 й н м' н ` O0 оо : и ' ' ; ;3 ;V ' i, i ' `n rn i й i ' ' I v ` о й ;, t, ;,:..._..._..._._._._._.,..._... с ; N...:..._. ; н...'... - :. и._._.; '_..._.._..._..._..._._..._. I... I м., 1 п, м, м i.. и.._'... м...;..._...'... г._.;._..., О с : n - ; 00 : ' ; и о i ti ' и м CO `n ;'n ui м и : i иai ий i i-a `_ i м г 1` п ;^+ м s м " ' со ' iri со, - оо N ' и j - и ао т н ; н Г й i и i н ( н н и rn, ; м с ; ( м ( г, - ( м I. i 1 с i '. i' :;..._.._ г._.;... 1 N..._ i, _......_...._..._....!, 1 _ г г I i ': ;' м, и.._.'._. : N... _. и _. о ^..._..._... м «... о..._._ г...',. ' ; : _ ` '. ' й i м i ; и О ; ш i ' с i р ' и i р! м : Q N i('и и ; 00 i о н ( ( м н + и н N N ' О, 1 и и j,н: r.. Э ` ' ; Й ( т. " I : :.. м., СО ;..._ ;.... G О..._...N...;.._..._... 1 н _N : `...L... й...l......:......_..._......_._..._......i._._ I н._. Э i V...L.... _ Й i о 0 '...' _ ; _ ; и I'+-. t i м м ш ' ' м ; й : "' i са.,. с о и : о : ;: о ; г м i 1 оо ;' и г о о! С L' г : СО с - r-' М Ш i ' Е о С а т! оио сич о ' м м м ' м с ' р О д. ; i ( i с о ( а> ; О ; V,'' оо " и г ;' "' 1 i i `t снч ` С n. i...._ _ г 1 ;._...q. _.... р......_._..._... i I ti: v i со ' г ' г `I...м...i... р со..._;..._...l...o.'... + '... 1 Q б) V; о г i у ; 1 г г? f м! 1 г и ` `. V ; а г и : и ; а о ; м ' i rn ' й о > ш и F- : г! а ;<- i и i с ; о и ; и ; о ; и ', о в С) Ш ; т ; N ; оо : и г ; rn: и :; ои i а и оc t ао м ; ' ; v; N i т ' ' ; н. О г г i О ' ai' д о! I ' I r : i ( и i г и, N :..._..._...,..._...,_...;..... _. _ j... _ i _... Q ш, а. ; j 1 о и... i и ( оо ео 1 и о! i и,,... о... I и ш _... и... _ оао Z..О! U м! й 1 о р 1 vi ':, й n с г Q с ; С о г rn с и : и ; со м ;? о о и ;! г ( с '; ; оо.е i р v И соу н м и cr о и г ;! мс rn; и ; и. : 1 м : С il, i i 3 г у = ; j N; i IX? l0 г ; I О ; и ; С i р... ; i г ; D -- р i 1 н f 1 д i : i о и. м...:... ;..._...;..._... _ i... т... t.._...: с ; I` о! м, : н 1 ш ( и и и....' _._..._i... : N..1 '..._ I I С ` > с,. 't N; ш со и м i Э оо iл, ц + г : 1. С N; о : f j О! fv i t0 м I б' ; Оо О им I( ир 1f> н I М б оv, Q.. у.. и и ; О j О h ; I Lд ' СЛ С i О-; 1 - о г h: rn Q I N б t, СЛ С! г ; т! с ' 00 ' w _; сн0 О М М i i N р ; ' й О V -Q "r. o i й м ``' I er : и ' ш Z а> ; со : и ' о н о 1 м о : и о о о оо, и ' ; ш г м ш оо : et со : СО I Й Ф СО N f с- j h i ( v w г и : F : i,.... ;......_... ' ! ,; `. и._... _.. G Ш i, ; г сд ; о о i v 1 м i. г и о ; i. '. I" ' V' N i О > I 1 N О г г : ар 1 N <р рр '.". г' Q ' а ; ; й м.- ir N _ с, И ; ;..._...._,..._i._. ; м _ г.. `-.. _.. _._ i м ш, ; '....._... : _... ;... _._;..... _..._..., -! i s + r : м : rn,,., ' ао i и с о м ' 1 ; ш v_ и ш оо ; w, оо о н ; и j 4 1 ;<`' i и - :' N i ао + ' н с о i и оо ' г н со г о i и ; I г N ; j о i г i v; г и ; ао ; и ti и, оо + i ( j ;., г н 1 N, и - О н h +, г (О h t 1 о v., н N ; =, i 1! 1 д 1 в - а0 1 р Ф г ' ; м i ; i ; ; т ' с р 1 I : о cv..._..._..._..._......_._._.....:...;._.._ _..._.. _..._..._ _._. _ L. ;... ;......'..._. и ; ;,. i- -, о., I ' ;! ; '._,, ;, ' ; i I _+ ' ', о! ' ; рр -Q ш + ; г ;,;, ; i С о,, и ;..._. ; I..._......: _._..._..._ _._:. _. _....!..._ 1 С ш ; I..а 0 `', ' I i,,,.., 4 ш ' " и Q I и : Ф т, - оо и, и ;, ; и v `U ; с ; ; ш;т г ; о i о : с о ;:, С ш д и й 'а' у ' i о а7 у? о. о С. ' ' о ; т а!и ' = п ; ауо!о D: а с шк ; ro С о`` и ' с-i 1 и i Q 1 >I_ = i( У С С С н+: С U i. С г Ф ++ _ "" v,. I С + Cj (6' G1 С ; С - а С : V У О '' ' С Ф ;... Ф i г ' N С L.C д О С С ' у С р '_ С и О > о р :,'-: й Е1 т!; со ш с,'-' ; п а С r- ijs Oi. N и!. О д Ф LL 1 ` L С I i, С1? N( s]: С. G)!. ь+.н. *' N 1 N i L N Ш г 4 U Q''Vi2 OLj j2 "'-л':,l С f6 Й С di2 и Z i О j а N и О Ш С[ ; ; г ; >: со ' Ф С! С G.! I Q- = р. й < г! :г`'?, г С :- ; L'<- Z; си. ; а. : о _ Q Х. - :. jr _; г ir i. ' ; ri сл а ; ri, t j Е- ; U) ',_.._.._..._._._ ,..._...i......:_..._. _. _;.._'..._... н м, _..._._..._...,..._... ;.._......: Ш и I i I 1

8 . "Health System Improvement ProjecC / "Health 3" IDA Credit No UZ and No. 523 l-uz 8 SUMMARY STATEMENT OF SOE As of 31 December 2017 (USD) No. of D ate of W ithdraw al Category A pplication Withdrawal I application application i Amount i 1. Goods, Consultant's services, Tralining... I I and Incremental Operafing... Costs , , I , , ý-~ , , ,1... b , I , , , , , , , I , l I ,71...1*1,11,11,11,11,11,1*1111--",-,--","**","IIIIIIIIIIIIIII**Ill",1,11,11,11,11"*,*"",-'1...11, , , Total , , Signed by management on 01 March 2018 R. A. Ishankhodj*V Sh. N. Åtakhanov Executive Directokf thå Cpl Financial Manager, Accountant of the CPIB Summary Statement of SOE is to be read in conjunction with Notes (Pages from 12 to 30) thereto forming an integral part of the Special Purpose Financial statements.

9 "Health System Improvement Project"/ "Health 3" IDA Credit No.4896-UZ and No.5231-UZ 9 BALANCE SHEET As of 31 December 2017 (USD) ASSETS Indicator Note as at 1 January, as at 31 December I Cash and cash equivalents , ,83 TOTAL ASSETS , ,83 OWN FUNDS/FINANCING IDA financing 7,8, , ,93 GOU financing , ,18 Other inflow , ,54 Project cumulative expenditures ( ,09) ( ,72) Other expenditures (46857,79) (95 867,10) TOTAL OWN FUNDSIFINANCING , ,83 Signed by management on 01 March 2018 R. A. Ishankh ev N.ahao ' J Sh. Atakhanov Executive Direc _ the Financial Manager, Accountant of the CPIB Balance Sheet is to be read in conjunction with Notes (Pages from 12 to 30) thereto forming an integral part of the Special Purpose Financial statements.

10 "Health System Improvement Project"/ "Health 3" IDA Credit No.4896-UZ and No.5231-UZ 10 STATEMENT OF PROJECT'S USD SPECIAL ACCOUNT for 2017 Account No: Depositary bank: JSCB "Invest Finance Bank" Address: 18 "b", Navoiy street, Tashkent, Uzbekistan Related Credit 4896-UZ Currency: USD Balance as at 01 January, ,42 USD Inflow: IDA Financing ,40 Total inflow: ,40 Outflow: Expenses on related categories ,14 Sale of foreign currency ,00 Transfer to the FF PIU USD Accumulated Account (pis. see Note 2.5) ,00 Transfer to the CPIB's EUR Main Account 9 935,28 Total Outflow: ,42 Balance as at December 31, ,40 Signed by management on 01 March 2018 R. A. Ishankhodjev ISh. N. Atahanov Executive Directo of te CPI Financial Manager, Accountant of the CPIB Statement of Project's USD Special Account is to be read in conjunction with Notes (Pages from 12 to 30) thereto forming an integral part of the Special Purpose Financial statements.

11 "Health System Improvement Project" /"Health 3" IDA Credit No UZ and No.5231-UZ 11 STATEMENT OF PROJECT'S UZS SPECIAL ACCOUNT for 2017 Account No: Depositary bank: JSCB "Invest Finance Bank" Address: 18 "b", Navoiy street, Tashkent, Uzbekistan Related Credit 4896-UZ Currency: UZS USD 000' UZS Balance as at 01 January, ,18 0,56 Inflow: Proceeds from sale of foreign currency , ,18 Transfer from FF FIU UZS Accumulated Account (pls. see Note 2.5) , ,22 Transfer from Project's UZS Bidding Account 1 819, ,00 Total Inflow: , ,40 Outflow: Expenses on related categories , ,19 Transfer to the CPIB's UZS Main Account , ,08 Transfer to the CPIB's UZS Transit Account , ,42 Transfer to the Project's UZS Bidding Account 17648, ,57 Total Outflow: , ,26 Balance as at December 31, , ,70 Signed by management on 01 March 2018 R. A. Ishankhodjaev Sh. N. Atakhanov Executive Director of the CPIB Financial Manager, Accountant of the CPIB Statement of Project's UZS Special Account is to be read in conjunction with Notes (Pages from 12 to 30) thereto forming an integral part of the Special Purpose Financial statements.

12 "Health System Improvement Project" /"Health 3" IDA Credit No.4896-UZ and No.5231-UZ 12 NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS for the year ended 31 December Program background On April 7, 2011 the Board of Directors of the World Bank (hereinafter - WB, Bank) has approved the financing of the <<Health System Improvement / Halth-3" Project. On September 16, 2011 the International Development Association (hereinafter - IDA, Association) and Republic of Uzbekistan have signed the Financing Agreement and IDA lent to Uzbekistan Credit No.4896-UZ to facilitate implementation of <<Health System Improvement / Halth-3" Project for the amount 59.6 million Special Drawing Rights (hereinafter - SDR) which is USD 93 million. On 18 July 2013, IDA and Republic of Uzbekistan have signed Financing Agreement of Additional Financing and IDA lent to Uzbekistan Credit No.5231-UZ to facilitate implementation of Project for the amount 60.6 million SDR which is USD 93 million. The Project is co-financed with funds from the Government of the Republic of Uzbekistan ("Government"), represented by the Ministry of Finance ("MOF"). According to the Financing Agreement, the Ministry of Finance is responsible for repayment of Credits principal and service charge of the Credits. The Project aims to have two broad objectives: (a) improve access to quality health care at the primary level at Regional Medical Units (RMUs) and separate city medical units (CMUs) and (b) strengthen the Government's public health response to the rise in non-communicable diseases (NCDs). Project financing plan is as follows:,source of fmnancing USD IDA Gvernment Total On the basis of Decree No.1614 of the President of the Republic of Uzbekistan dated 7 September 2011 «On additional measures facilitating implementation of the Project improving healthcare systems/health-ill>) with participation of the WB International Development Associations Ministry of Health of the Republic of Uzbekistan (hereinafter - Ministry) is an executive agency responsible for the target and effective use of credit proceeds and Project implementation. In order to optimize logistics and economic effectiveness, based on Joint Project Implementation Bureau "Health 2" and <<Woman and Child Health Development Project> was created Central Project implementation Bureau <<Health 3> (hereinafter - CPIB) and 14 Regional Project Implementation Bureau (hereinafter - CPIB). The CPIB is a legal entity in its operations governed by the its by-laws registered by the Resolution dated 21 October 2011 of the Khokim of Mirzo-Ulugbek district of Tashkent City CPIB is a public non-commercial enterprise with the following main objectives: * To achieve the goals and objectives of the Uzbek Health-3 project financed by the IDA credit as well as other projects to be implemented by the CPIB; * To establish and enable Monitoring and Evaluation system for the project implementation; * To ensure the targeted and effective timely disbursement of project funds for the project implementation; * Procurement of goods and services, training arrangements in line with the IDA and national regulatory requirements; * Providing assistance to the CPIB in achieving Project's goals and objectives. CPIB is located at: 51, Parkentskaya Street, Tashkent, , Republic of Uzbekistan. The Project consists of the following components: Component 1: Improving Health Service Delivery - Sub-component 1.1: Hospital Services Improvement - Sub-component 1.2: Primary Health Care Development - Sub-component 1.3: Clinical Quality Enhancement

13 "Health System Improvement Project"/ "Health 3" IDA Credit No.4896-UZ and No.5231-UZ 13 Component 2: Strengthening Health Financing and Management Reforms Component 3: Strengthening of the System for NCD Prevention & Control - Sub-component 3.1: Health Promotion and NCDs Prevention - Sub-component 3.2: Strengthening NCD Surveillance System Component 4: Project Management The expected life of the Project under the Investment Program defined the years, including initial financing for , and supplementary financing for IDA credit proceeds under the Project implementation are available to cover the following eligible costs: No. Category I!DA Financing 1 Goods, Consultant's services, Training and Incremental Operating Costs, incl.: Goods Consultant's services Training Operating costs Total Government proceeds under the Project implementation are available to cover the following eligible costs: No Category GOU Financing I Goods, Consultant's services, Training and Incremental Operating Costs, inc.: Goods Consultant's services Training Operating costs Financial costs in the investment period Exemptions from taxes and duties Total The Government contribution includes the payment of a unified social tax, income tax, social charges, INPS (Personal Defined Contribution Pension Account), agents' commission fees, taxes I duties, etc. 2. Project Accounting Policy These Special Purpose Financial Statements have been prepared, in accordance with requirements of International Public Sector Accounting Standards (hereinafter - IPSAS) issued by the International Public Sector Accounting Standards Board of the International Federation of Accountants, following the cash flow basis and compliant with the World Bank recommendations Basis for the preparation of the Special Purpose Financial Statements Statement of Sources and Uses of Funds, Statement of Uses of Funds by Project Components, Summary Statement of SOE, Balance Sheet, Special Accounts Statements and Notes to the Financial Statements are developed to reflect operations conducted in the Project's framework. Statement of Sources and Uses of Funds, Statement of Uses of Funds by Project Components, Summary Statement of SOE, Balance Sheet and Special Accounts Statements are developed based on cash flow basis in accordance with below-stated principles Financing Financing of the Project is considered as actual in the following cases:

14 "Health System Improvement Project"/ "Health 3" IDA Credit No.4896-UZ and No.5231-UZ IDA Financing: * when suppliers of material resources or services are paid by the IDA from the Credit Account (hereinafter - Credit Account) under Direct payment procedures or by the Letter of Credit; * when the funds from the IDA's Credit Account were transmitted to the Project Special accounts (hereinafter - the Special account) opened with Joint-Stock Investment Commercial Bank (drnvest Finance BANK>) (hereinafter - JSCB 'InFinBANK). 2. Government financing: * Once the funds are transferred from the MOF accounts to the CPIB accounts (budget accounts) opened in the Treasury Ministry of Finance of the Republic of Uzbekistan; * In kind of tax and duty exemptions accounted on the basis of the certificates (notes/letters) furnished by the Project suppliers and subcontractors subjected to the general taxation requirements (VAT, mandatory contributions and fees to the public ear-marked funds, customs fees) Expenditures The Project expenditures are recognized as such and stated in the financial statements when the payment is made to suppliers of goods, works and/or services. The payments are made either directly from Credit account administered by the IDA, or by the Letter of Credit, or from Special and Budget accounts Additional sources of financing and other expenses Additional funds were received as proceeds from sale of bid documents Reporting currency and exchange rate methodology The reporting currency of the Project is US Dollar (USD). A part of financing and expenditures is made in USD, through Direct Payments and by the Letter of Credit. CPIB has USD Accounts and EURO Account: USD Special Account ("Project's USD Special Account"), EURO Account ("CPIB's EUR Main Account"), Account for receipts from proceeds of sale of bid documents ("Project's USD Bidding Account"), Transit Bidding Account ("CPIB's USD Transit Bidding Account"), Account for receipts from proceeds of bid security (CBIP's USD Bid Security Account"). Besides, CPiB has Uzbek Soum (UZS) accounts: Special Account ("Project UZS Special Account") used to convert funds, Budget Account ("Project's UZS Budget Account") used for financing by the MOF, Account for receipts from proceeds of sale of bid documents ("Project's UZS Bidding Account"), Main Account ("CPIB's UZS Main Account") used to pay salary to staff, Transit Account ("CPIB's UZS Transit Account") used to transfer salary to staff on plastic cards, Corporative Plastic Cards used to CPIB's operating costs and Pension Account for the receipt pensions and benefits. Pursuant to the Presidential Decree No.5177 dated 02 September 2017 as of 05 September 2017, the foreign exchange can be freely purchased for the national currency. Commercial banks are free to charge exchange commissions at their discretion. Following up the changes and modifications introduced on 1 9th October 2017 to the Provisions on the Order of Flour Mills to accumulate the portion of the sales proceeds from fortified flour' and on 1 61h October 2017 to the Provisions on the Order of accumulating the portion of the sales proceeds from iodized salt, the CPIB has approved opening of the special accounts in servicing banks to accumulate funds in national currency and foreign exchange to be used for procurement of the fortifiers (micronutrients) under the implementation of the Project 'National program of the flour fortification' (hereinafter - FF PIU). CPIB is responsible for the implementation of the Project 'National program of the flour fortification'. In this connection, starting from 1 0th October 2017 the Project foreign exchange in UZS is carried out on the account of the FF PIU Project through the transfer of Project foreign exchange in USD to the accumulating accounts of the FF PIU Project. For preparing Project's financial statements the following principles of foreign exchange rate conversion used: * for receipts and expenses in local currency (UZS) attributed to co-financing, the rate of Central Bank of Uzbekistan (CBU) effective at the date of receipt.

15 "Health System Improvement Project" / "Health 3" IDA Credit No.4896-UZ and No.5231-UZ 15 * for IDA funds, expenses in UZS are restated in USD at the Central Bank of Uzbekistan (CBU) exchange rate (up to 5 September 2017 and 10 October 2017) and acquiring commercial bank exchange rate (from 5 September 2017 to 10 October 2017), effective on the date of conversion; a IDA fund expenditures under the procedure of Direct payments in currency other than US dollar are exchanged into US dollars according to the Client Connection; IDA funded expenses in EURO are converted into USD at the CBU exchange cross rate effective on the date of conversion, EURO: UZS respectively. Closing balance in the CPIB UZS bank accounts are recorded at the respective CBU exchange rate effective on the date of conversion\receipts. 3. Adjustments to the opening balance In 2017, the Project has introduced adjustments in the Financial Statements for the period from the Project beginning to December 31, Respective adjustments to the Project Special Purpose Financial Statements for the period from the beginning of the Project to 31 December 2016 are given below: 3.1. Statement of Sources and Uses of Funds (SSUF) Govemment Funds Inlao ndicti Cumulative to 31; Cumulative to 31 Decen1ber21December2016 Adjustments GOU counterpart financing in cash , Total Government Funds ,36 181, ,00 Tota! on direct financing ,25 181, ,89 TOTAL FINANCING ,33 181, ,97 Expenses Direct Financina Funds...~~~~ ~~~~ Goods, Consultant's services, Training and lncrernental Operatng Costs - Goods , , ,01 Consultant's services , , ,48 Training ,32 (2 880,22) ,10 Operating costs , , ,50 Total ,02 i 0, ,09 Other Funds Other 46661,61 196, Total ,61 196, ,79 -,196, ,88 Excess of Receipts over Payments ,70 (14,61) ,09 Net Available Funds ,70 (14,61) ,09 Cash Balance as at December 31 Projects UZS Bidding Account 24915,64 (14,61) 24901,03 Total ,70 1(1 4,61) j 24553,9 Key causes of adjustments introduced to the Statement of Sources and Uses of Funds are the following circumstances: - SSUF does not include the payment made on 21st December 2013 by the Government of Uzbekistan for total of UZS 400 thousand (in equivalent of USD181,64) as reimbursement of customs procedures costs; - Cost for goods include payments in 2015 to the General Motors Uzbekistan under the contract No.HP/ICB/14/ /15 IM-6 dated 20th March 2015 for total of USD ,36 for procurement of vehicles for the RPIU that is incorrect since this transaction should be reported as operational costs.

16 "Health System Improvement Project" /"Health 3" IDA Credit No.4896-UZ and No.5231-UZ Statement of Uses of Funds by Project Components Key adjustment introduced to the Statement of Uses of Funds by Project Components is the reclassification of the medical equipment procured for the central multi-task and urban family polyclinics that was initially accounted under the sub-component 'Improving hospital care' and lately updated and classified for the subcomponent 'Development of primary health care'. Major reclassified contracts are following below: Suppliers Contract Medical equipment Amount "Caetano Group Ltd", No. HP/ICB/15/ /16 Computers and displays Cyprus. IM-13 dtd "Carecamp inc" Republic of No. HP/CB/15/ iii5 Korea ora. IM-77 dtd Defibrillators with display ,00 "Eastern Trading House SA" No. HP/ICB/14/ /15 (Switzerland) MM-3 dtd Gastrofibroscope (with lighting) ,00 "Hengshui Hengze Kang No. HP/ICB/14/03-4 Medical Equipment Co.,Ltd., 507-1/15. IM-86 dtd Ob&Gyn tables and beds ,81 China No. mbnet 507-1/12 IM-23 OT AG" (Switzerland) I Ultrasonic scanner with colour an,3snosi Doppler and 2, 3 sensors ,16 No, HP/ICB/12/ /12 Gastrofibroscope (with the ,73 IM-50 dtd lighting/torch) 'MN i-)-.-- Medical OU" (Estonia) No. HP/ICB/13/ /14 IM-4 dtd Set of gynaecological tools , No. HP/ICB/13/ /14 IM-1 1 OT Medical scale for adults, children and new-borns and etc ,20 No HP/ICB/13/ /14 Sphygmomanometer with phonendo IM-7 ot scope, physician, obstetrician ,81 1stetoscope and etc. "Raduga Central Asia Trading Co., Ltd' (China) No. HP/ICB/13/ /14 Various sterilizing boxes IM-9 for dressing OT materials 475,00 No. HP/ICB/14/ /15 Set of camertones, special ,00 IM-78 dtd otolaringological chair, audiometer No. HP/ICB/15/ /15 Computer ECHOEG, 16-channel IM-76 dtd electroencephalograph ,00 No. HP/ICB/12/ /12 Refrigerator/Freezer for 140 and 200 1, i ,471 IM-48 dtd and etc. No. HP/ICB/14/ /14 Ultrasonic scanner with colour Doppler IM-77 dtd and 2, 3 sensors International Trade Co,, Ltd" td" * (China) No. HP/ICB/14/ /14 Refrigerator/Freezer for 140 and 200 IM-64 I, dtd and etc. I No. HP/ICB/14/ /15 IM-81 dtd Indirect and direct ophthalmoscope, contact tonometer and etc ,001 No. HP/ICB/13/ /14 "Yiwu Electric Trading IM-14 dtd Ophthalmoscope / Otoscope Co.,Ltd" (China) No. HP/ICB/13/ /14 Aoeam r760 ;Auto IM-5 refractometer dtd ,00i Statement of Uses of Funds by Project Components has had adjustments introduced due to the reclassification of costs as well as budget by the Project Components and sub-components (pls. see Table No.1).

17 - "Health System Improvement Project" / "Health 3" IDA Credit No.4896-UZ and No UZ 17 Table No.I Actual Budget Unused Funds Components Cumulative to- umulative to Cumulati oumuatveto Curnative t Cumulative to 31 December Adjustments 31 December 31 December Adjustments 31 December 31 December Adjustments 31 December I. Improving Health Service Delivery , , , , , , , , , Hospital Services lmprovement ,83 ( ,85) , ,43 ( ,27) , , Primary Health Care Development 77252, , , , , , ,20 ( ,09) ( ,89) 1.3. Human Resource Qualitymancemsuret ,08 (27 510,06) , , , , , , ,49 Quality Enhancement 2. Strengthening Health Financing and ,93 (12 150,46) , , , , , , ,55 Management Reforms 3. Institutional Strengthening on NCD Prevention Control ,62 (30 214,65) , ,55 (14 634,55) , , , , Health Promotion and 3NCDsl Pr NCIDs tion Prevention a ,35 (32 764,90) , ,08 (40 768,17) , ,73 (8 003,27) 1 763, NCD Surveillance , , , , , , , , ,57 4 Project Management ,67 (15 557,69) , , , , , , ,61 Total Project Expenses: ,02 0, , , , , , , ,97

18 "Health System Improvement Project" /"Health 3" IDA Credit No.4896-UZ and No.5231-UZ Balance Sheet as at 31 December, 2016 Indicator as at 31 Adjustments as at 31 December 2016 D....ec..ebr 2016 ASSETS Cash and cash equivalents ,70 (14,61) ,09 TOTA.LASSETS ,70 (14,61) ,09 OWN FUNDS/FINANCING IDA financing ,89 0, ,89 GOU financing ,36 181, ,00 Other inflow ,08 0, ,08 Project cumulative expenditures ( ,02) (0,07). ( ,09) Other expenditures (46 661,61) (618) (46 857,79) TOTAL OWN FUNDSIFINANCING ,70 (14,61) ,09 Adjustments were introduced to the balance sheet due to the concerns narrated in the Note Presented financial statements Project Special Purpose Financial Statements are generated and produced by the CPIB and have been signed for and on behalf of CPIB Executive Director Mr. Ishankhodjaev, and Financial Manager and Accountant of CPIB Mr. Atakhanov on 01 March Project Reporting Period is the same as conventional calendar year. The Project Financial Statements have been prepared in line with IPSAS based on the cash flow method: 4.1. Statement of Sources and Uses of Funds During the reported period, the Project was funded: V by IDA in the amount of USD financing USD (Credit No.4896-UZ USD and Credit No.5231-UZ USD ) under the Direct Payment Procedures (pis. see Note 7) and under the Letter of Credit Procedure (pis. see Note 8), USD replenishment of the Project USD Special Account under the SOE Procedure (pis. see Note 9) / by GOU counterpart financing for the amount of USD in cash to cover the Project recurrent costs. Other funds and expenditures include financing and expenses on bidding funds. This amount is not reported in the Statement of Uses of Funds by Project categories/components, since these funds are not direct financing of the Project expenditures. The total Project expenditures in 2017 amount USD including IDA Funds USD (Credit No.4896-UZ USD and Credit No.5231-UZ USD ) and GOU Funds USD Statement of Uses of Funds by Project Components This Statement has detailed the information on the Expenditures of the Project Reported Period by the Project components and sub-components Summary Statement of SOE This Statement has detailed the information Statement of Expenditures of the Project Reported Period withdrawn to IDA Balance Sheet This report includes data on the accumulated Project funds, financing and cumulative Project expenditures as on December 31, 2017.

19 "Health System Improvement Project"/ "Health 3" IDA Credit No.4896-UZ and No.5231-UZ Fixed Assets The fixed assets of the Project consist of office equipment, furniture and vehicles purchased for the use of CPIB for the period of the Project implementation. Cost of the fixed assets includes purchase price and other direct acquisition costs (custom duties and consumables). Costs of current refurbishment and maintenance are accounted when they occur and entered in the Accounts as Project expenditures. Fixed assets administered by the CPIB and procured from the Project funds are structured as following: Office equipment 1 Furniture Vehicles Others Total At 1 January Purchase At 1 January Purchase Disposal - (16402) - (16402) At 31December During the period from January 1, 2017 to December 31, 2017, the Project has procured automobile "Lacetti- 2" in amount USD , computers and laptops in amount USD , and furniture and other fixed assets in amount USD Also the Project balance has had written off the vehicle "Daewoo Lacetti" with value of USD due to its being transferred to the Ministry of Health of the Republic of Uzbekistan. 6. Cash and cash equivalents CPIB opened a number of bank accounts in the Joint Stock Investment Commercial Bank 'InFinBANK". The Project's accounts and their purposes are listed below: 6.1. Project's Special accounts The Project has two Special Accounts: USD and UZS (IDA Credit No.4896-UZ and No.5231-UZ) for financing eligible expenditures from IDA Credit. During the reported period the Special Accounts was used for paying to suppliers as well as to cover operational expenditures of CPIB. During the period from 01 January 2017 to 31 December 2017 the USD Special Account receipt was USD (IDA financing). Total expenditures paid from the Special Accounts for the reporting period is amount USD Budget account (Note 17) Budget account is used to cover expenditures, funded by the Government. This account receives remittances from the Ministry of Finance's accounts. Total amount of Government financing for the period from 01 January 2017 to 31 December 2017 comprised USD in UZS equivalent. The total expenditure incurred for the reporting period from the budget account is USD Bidding Accounts (Notes 18, 19) Project maintains two Bidding Accounts - one in USD and one in UZS - used for depositing cash proceeds from the sale of bidding documents. In 2017 the proceeds from sale of bidding documents was USD , including USD on the Project Bidding Account and USD on the CPIB Transit Bidding Account Other Project account 1. CP/B's USD Transit Bidding Account (p/s. see Note 20) CPIB has opened this Project Account to generate proceeds from sale of bidding documents under several projects the CPIB is responsible for implementation. 2. CP/B's EURO Main Account (p/s. see Note 21) CPIB has set a EURO Account to pay the suppliers. In the reported period the EURO funds were used to cover the training costs for the staff.

20 "Health System Improvement Project"/ "Health 3" IDA Credit No.4896-UZ and No.5231-UZ CP/B's UZS Main Account (p1s. see Note 22) CPlB has opened this Project Account to cover the recurrent costs. During the reporting period account was used for payroll and other expenses. 4. CPIB's UZS Transit Account (p/s. see Note 23) This Project Account is used to disburse salary and transfer to the plastic cards. 5. CPIB's UZS Corporative cards (p1s. see Note 24, 25, 26) CPIB has opened this Project Account to cover the recurrent costs. During the reporting period account was used for fuel and lubricants and air-flight and railway tickets. 6. CPIB's USD Bid Security Account Project Accounts among others include Bid Security Account to deposit the Bid Security from the bidding suppliers. Once Bidding is completed and contract awarded the Bid Security is returned to the lost bidders. Cash Flow on the Account is not integrated in the Project Financial Statements since these funds are not the source of financing. 7. CP/B's UZS Pension Account Pension account is used for receipt of Pension and social benefits. Cash Flow on the Account is not integrated in the Project Financial Statements since these funds are not the source of financing. Balances of the Project's bank accounts are reflected in the following table: Balance as at January 1, 2017 Account... currency 000' UZS USD Project's UZS Special Account 0,56 0,56 10, Project's UZS Bidding Account , , ,03 UZS Plastic card 87,67 87,67 27,37 UZS Plastic card for combustible fuel No.1 439,20 439,20 136,50 UZS Plastic card for combustible fuel No.2 303,53 303,53 94,34 CPIB's USD Transit bidding Account 1 199, , ,36 CPIB's EUR Main Account 1 242, , ,42 Project's USD Special Account , , ,42 Project's USD Bidding Account , ,47 Total Project Funds as at January 1, , ,09 Balance as at December 31, 2017 Project's UZS Special Account 5 743, ,70 707,36 Project's UZS Bidding Account 709, ,38 UZS Plastic card 2 402, ,05 299,02 UZS Plastic card for combustible fuel No , ,20 223,33 UZS Plastic card for combustible fuel No , ,53 312,32 CPIB's EUR Main Account 252, ,43 281,50 Project's USD Special Account , , ,40 Project's USD Bidding Account , ,63 Toa Project.. Fund as at... Decemr , Total Project Funds as at Deebr31, , ,94}

21 - "Health System Improvement Project" / "Health 3" IDA Credit No.4896-UZ and No.5231-UZ Direct payments Direct payments made by the IDA from Credit Account during the period from 1 January 2017 till 31 December 2017 are stated in the following tables: Direct payments under the Credit No UZ NoofArnount in Paid Amrount" by. ota.. mu. Withdrawal Dated Cuyr nn payment catg rin USD-_ Ta Un application ap 20.17urny oncurrencys crrny1. Goods ~ US USD , , , USD , , USD , , , USD , , , USD , , , USD , , , USD 77381, ,00i 77381, USD , , , USD -, ,00 I238940, , USD 64920, , , US USD , , , USD , , , i USD , I USD , , , I Total , , ,39 Direct payments under the Credit No UZ No Pfayrnent iitotal arnount Withdrawalen payment category(in USD) T unt application currency 1. Goods USD ,00 500, USD ,00",*60* , ,00 Total I , , Below is the summary of IDA-financed total under the Direct Payment Procedure (from the beginning of the Project): Direct payments under the Credit No.4896-UZ Reporting Year Paid Amount by category (in USD) Total Amnount Gods , , , , , , , ,39 i Total , ,17 Direct payments under the Credit No UZ... a A by oa....g.r Reporting Year Total Amount (in USD) 1. Goods , ,,00- Total i ,00

22 "Health System Improvement Project" / "Health 3" IDA Credit No.4896-UZ and No.5231-UZ Letters of Credit Letters of Credit, made by the IDA from Credit Account during the period from 1 January 2017 till 31 December 2017 are stated in the following tables: Letters of Credit under the Credit No.4896-UZ Noof Payment A ut n i adaont Total arnount Withdrawal Dated payment c.ategor (in SD Tta application currency 1. Goods USD , , EUR , , ,51i EUR , , , EUR , , ,17 Total , ,45 Letters of Credit under the Credit No.5231-UZ No. of Amountin Paid Amount by Withdrawal Dated Payment payment cate goryi USDc Total amount application C1urrency currency. Goods inusd USD , , , US , , USD , , , i USD '.320,00 320,00 l - 320, USD , , , USD i , ,80 i , USD , , , USD , , , ,07,2017 USD i , , USD ,00 i , ,00 Total , , ,80 Below is the summary of IDA-financed total under the Letters of Credit Procedure (from the beginning of the Project): Letters of Credit under the Credit No UZ Reporting Year Paid Amount by category (in USD) 1. Goods i Total Amount - in USD 2013 f , , , , , , , , , ,45 Total , ,05 Letters of Credit under the Credit No UZ Paid Amount by category Reporting Year i (in USD) Total Amount in USD 1. Goods , ,80 Total , ,80

23 "Health System Improvement Project" / "Health 3" IDA Credit No.4896-UZ and No.5231-UZ Statement of Expenditure (SOE) procedures SOE procedure used by the Project to replenish funds to the Special Account in accordance with the conditions of the Financing Agreement and IDA Guidelines' requirements. The Statement of Expenditure Procedure was used by the Project only under Credit No.4896-UZ since on the reporting date the credit funds were not fully disbursed. Summary data on funds reimbursed through SOE procedures for the period 1 January 2017 till 31 December 2017 is stated in the following table: ( Total Amount reported under SOEs Less: expenditures no submitted to IDA on 31 December 2017* ,811 Subtotal ,63 Of which: replenished to Special Account Including replenished expenditures for 2016 as per SOE 156 and Subtotal ,63 Difference *2017 expenditures for total of USD requested for IDA reimbursement under S OE procedure (SOE 196, 197 and 198) are reimbursed on 14th February ,00 Below is the summary of IDA-financed total under the SOE Procedure (from the beginning of the Project): Reporting i Paid Amount by category (in USD) Total Amount Year 1. Goods, Consultant's services, Train ing and Incrernental Operating Costs inl USD , , ,12 ^ ,81 i , , , , , , ~~ ~ , ,40 10._ Project budget performance Cumulative from the IDA UNDS.,.,.~.. IDA FUNDS beginning of the Project IDA Credit No UZ Ad.. e.paym...nt an ,00 i Replenishment to Project USD Special Account under the SOE's Procedure Direcpamnl ,17 ~... c...en Letter of credit (disbursement) , Total Financing byida Credit No34896-UZ 82.3 Total budget by IDA Credit No.4896-UZ ,00 Financing percentage of IDA Credit No.4896-UZ 89,05% IDA Credit No UZ Direct paymnent 50 o60 Letter of credit (disbursernent).,800 Total Financing by IDA Credit No.5531.UZ ,80i Total budget by IDA Credit No.5231-UZ i ,00 Financing percentage of IDA Credit No.5231-UZ 10,57% Total IDA Financing ,93 Total IDA Budget ,00 Financing percentage of IDA Funds 49,81%

24 "Health System Improvement Project" / "Health 3" IDA Credit No.4896-UZ and No.5231-UZ 24 GOU FUNDS l...-..,...~ GOU counterpartfinancing in cash ,18 GOU in kind contribution ,66 Total GOU Financing ,84 Total budgti cash16440,0 Percentage of cash financ'ing1 Total GOU Budget * ,00 Total Percentage of GOU Financing 65b,99%y Total Project Financing ,77 Total Project Budget ,00 Total Percentageof Project Financing 53.97% * GOU Counter financing budget does not include financial costs 11. Budget performance on the financing the Project expenditures/disbursements Cumulative from, the beginning of the Project IDA FUNDS IDA Credit No.4896-UZ 1. Goods, Consultant's services, ~ ,65 46~ 29 9~7å2~23, ,76 8_ ,74 104,7" Total Project Expenditures by IDA Credit No.4896-UZ , , ,74 Total budget by IDA Credit No.4896-UZ - I ---., ,00 IDANo.4896 Credit disbursement rate 88,92% f IDA Credit No UZ - 1Goods, Consultant's services, Training and ncremental Operating Costs ,80 0, ,80 Total Project Expenditures by IDA Credit No.5231-UZ , ,80 Total budget by IDA Credit No.5231-UZ ,00 Execution rate of IDA Credit No ,57% Total Project Expenditures by IDA Funds , , ,54 Total budget by IDA Funds , , ,00 Total IDA Credit disbursement rate 43,78% 72,36% 49,74% GOU FUNDS Goods, Consultant's services, , , ,18 Exemptions from taxes and duties , , ,66 Total Project Expenditures by GOU Funds ,44 i , ,84;1 Total budget in cash expenditures , , ,00 Cash disbursement rate 34,20% 42,21% %180,1% Total budget of exemptions from taxes and dluties l tr ,001 Non-cash disbursement rate - i, 74,13% GOU funds disbursement rate 65,99% TotlPoetEpniue , ,10 i ,38 Total Project Budget ,00 * Cu Project disbursement rate.cfa2os *GOU Counter financing budget does nlot include financial costs