The World Bank 1818 H Street N.W. (202) 473-1000 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 20433 Cable Address: INTBAFRAD INTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A. Cable Address: INDEVAS March 1, 2013 qq? "~ His Excellency Acosta Dr. Ivan Acosta an P c iIAL Minister of Finance and Public Credit Ministry of Finance and Public Credit Avenida Bolivar, Frente a la Asamblea Nacional-4to piso Managua, Nicaragua Re: Credit No. 4471-NI, Grant No. H4070-NI and Grant No. H8150-NI for the Nicaragua Rural Water Supply and Sanitation Project Additional Instructions: AMENDED Disbursement Letter I refer to the Financing Agreements ("Agreements") between the International Development Association ("World Bank"), and the Republic of Nicaragua (the "Recipient") for the above-referenced Project, June 25, 2008 and March 1, 2013. The Agreements provide that the World Bank may issue additional instructions regarding the withdrawal of the proceeds of Credit No. 4471-NI, Grant No. 4070-NI and Grant No. H8150-NI ("Financing"). This letter ("Disbursement Letter"), as revised from time to time, constitutes the additional instructions. This letter is a Second Restatement of the Disbursement Letter dated June 25, 2008, for IDA Credit 4471-NI and Grant H4070-NI, restating Section II, (viii) to add a separate designated account for the additional financing provided under Grant No. H8150-NI, and updating attachments 2 through 9. This is consistent with the additional financing provided under the Agreement dated March 1, 2013 for IDA Grant H8150-NI. All other provisions and attachments of the Disbursement Letter dated June 25, 2008, except as amended, shall remain in force and effect. The attached World Bank Disbursement Guidelines for Projects, dated May 1, 2006, ("Disbursement Guidelines") are an integral part of the Disbursement Letter. The manner in which the provisions in the Disbursement Guidelines apply to the Financing is specified below. Sections and subsections in parentheses below refer to the relevant sections and subsections in the Disbursement Guidelines and, unless otherwise defined in this letter, the capitalized terms used have the meanings ascribed to them in the Disbursement Guidelines. I. Disbursement Arrangements (i) Disbursement Methods (section 2). The following Disbursement Methods may be used under the Financing: * Reimbursement * Advances * Direct Payment (ii) Disbursement Deadline Date (subsection 3.7). The Disbursement Deadline Date is 4 months after the Closing Date specified in each Financing Agreement. Any changes to this date will be notified by the World Bank. Disbursement Letter - IDA Credit 4471-NI, Grant H4070-NI and H8150-NI Page 2 of 6 (iii) Disbursement Conditions (subsection 3.8). Please refer to the Disbursement Condition(s) in Schedule 2, Section IV, B of the Financing Agreements. II. Withdrawal of Financing Proceeds (i) Authorized Signatures (subsection 3.1). A letter should be furnished to the World Bank, in the form attached (Attachment 2), at the address indicated below providing the name(s) and specimen signature(s) of the official(s) authorized to sign Applications: The World Bank 1818 H Street, N.W. Washington, DC 20433 United States of America Attention: Carlos F. Jaramillo, Country Director (ii) Applications (subsections 3.2 - 3.3). Please provide completed and signed (a) applications for withdrawal, together with supporting documents, to the address indicated below: Banco Mundial Setor Comercial Norte Quadra 02, Lote A Edificio Corporate Finance Center 70 andar 70712-900 Brasilia, D.F. Brazil Attention: Loan Department (iii) Electronic Delivery (subsection 3.4) The World Bank may permit the Recipient to electronically deliver to the World Bank Applications (with supporting documents) through the World Bank's Client Connection, web-based portal. The option to deliver Applications to the World Bank by electronic means may be effected if: (a) the Recipient has designated in writing, pursuant to the terms of subparagraph (i) of this Section, its officials who are authorized to sign and deliver Applications and to receive secure identification devices ("Tokens") from the World Bank for the purpose of delivering such Applications by electronic means; and (b) all such officials designated by the Recipient have registered as users of Client Connection. If the World Bank agrees, the World Bank will provide the Recipient with Tokens for the designated officials. Following which, the designated officials may deliver Applications electronically by completing Form 2380, which is accessible through Client Connection (https://clientconnection.worldbank.org). The Recipient may continue to exercise the option of preparing and delivering Applications in paper form. The World Bank reserves the right and may, in its sole discretion, temporarily or permanently disallow the electronic delivery of Applications by the Recipient. (iv) Terms and Conditions of Use of Tokens to Process Applications. By designating officials to accept Tokens and by choosing to deliver the Applications electronically, the Recipient confirms through the authorized signatory letter its agreement to: (a) abide by the Terms and Conditions of Use of Secure Identification Device in connection with Use of Electronic Means to Disbursement Letter - IDA Credit 4471-NI, Grant H4070-NI and H8150-NI Page 3 of 6 Process Applications and Supporting Documentation ("Terms and Conditions of Use of Tokens") in Attachment 3; and (b) to deliver the Terms and Conditions of Use of Tokens to each such official and to cause such official to abide by those terms and conditions. (v) Minimum Value of Applications (subsection 3.5). The Minimum Value of Applications is US$100,000 for Direct Payment and Reimbursement. (vi) Advances (sections 5 and 6) to Fondo de Inversi6n Social de Emergencia (Emergency Social Investment Fund - FISE) for IDA Credit 4471-NI. * Type of Designated Account (subsection 5.3): Segregated * Currency of Designated Account (subsection 5.4): United States Dollars * Financial Institution at which the Designated Account Will Be Opened (subsection 5.5): Central Bank of Nicaragua * Ceiling (subsection 6.1): US$ 350,000. (vii) Advances (sections 5 and 6) to Fondo de Inversi6n Social de Emergencia (Emergency Social Investment Fund - FISE) for IDA Grant H4070-NI. * Type of Designated Account (subsection 5.3): Segregated * Currency of Designated Account (subsection 5.4): United States Dollars * Financial Institution at which the Designated Account Will Be Opened (subsection 5.5): Central Bank of Nicaragua * Ceiling (subsection 6.1): US$ 1,650,000. (vii) Advances (sections 5 and 6) to Fondo de Inversi6n Social de Emergencia (Emergency Social Investment Fund - FISE) for IDA Grant H8150-NI. * Type of Designated Account (subsection 5.3): Segregated * Currency of Designated Account (subsection 5.4): United States Dollars * Financial Institution at which the Designated Account Will Be Opened (subsection 5.5): Central Bank of Nicaragua * Ceiling (subsection 6.1): US$ 500,000. Disbursement Letter - IDA Credit 4471-NI, Grant H4070-NI and H8150-NI Page 4 of 6 III. Reporting on Use of Financing Proceeds (i) Supporting Documentation (section 4). Supporting documentation should be provided with each application for withdrawal as set out below: 9 For requests for Reimbursement: o Summary Statements, in the form attached (Attachment 4), with records evidencing eligible expenditures (e.g., copies of receipts, supplier invoices) for payments made for: > Goods and Works under contracts costing US$150,000 equivalent per contract or more; > Consulting and Non-Consulting Services under contracts costing US$50,000 equivalent per contract or more; and > Training and Operating Costs costing US$25,000 equivalent or more; o Custom Statement of Expenditure, in the form attached (Attachment 5), for payments under Category 2 - subprojects; o Custom Statement of Expenditure, in the form attached (Attachment 6), for payments under Category 4 - FISE Employee Salaries o Statement of Expenditure, in the form attached (Attachment 7), for all other categories and for payments that do not exceed the thresholds established above; and, O List of payments, in the form attached (Attachment 8), against contracts that are subject to the World Bank's prior review. * For reporting eligible expenditures paid from the Designated Account: o Summary Statements, in the form attached (Attachment 4), with records evidencing eligible expenditures (e.g., copies of receipts, supplier invoices) for payments made for: > Goods and Works under contracts costing US$150,000 equivalent per contract or more; > Consulting and Non-Consulting Services under contracts costing US$50,000 equivalent per contract or more; and > Training and Operating Costs costing US$25,000 equivalent or more; o Custom Statement of Expenditure, in the form attached (Attachment 5), for payments under Category 2 - subprojects; o Custom Statement of Expenditure, in the form attached (Attachment 6), for payments under Category 4 - FISE Employee Salaries o Statement of Expenditure, in the form attached (Attachment 7), for all other categories and for payments that do not exceed the thresholds established above; and, O List of payments, in the form attached (Attachment 8), against contracts that are subject to the World Bank's prior review; and, O A Designated Account activity statement, in the form attached (Attachment 9), with a copy of the Designated Account bank statement. * For requests for Direct Payment: records evidencing eligible expenditures, e.g., copies of receipts, supplier invoices Disbursement Letter - IDA Credit 4471-NI, Grant H4070-NI and H8150-NI Page 5 of 6 (ii) Frequency of Reporting Eligible Expenditures Paid from the Designated Account (subsection 6.3): Timesterly V. Other Important Information For additional information on disbursement arrangements, please refer to the Disbursement Handbook available on the World Bank's public website at http://www.worldbank.org and its secure website "Client Connection" at http://clientconnection.worldbank.org. Print copies are available upon request. If you have not already done so, the World Bank recommends that you register as a user of the Client Connection website (http://clientconnection.worldbank.org). From this website you will be able to download Applications, monitor the near real-time status of the Financing, and retrieve related policy, financial, and procurement information. For more information about the website and registration arrangements, please contact the World Bank Nicaragua country office. If you have any queries in relation to the above, please contact the World Bank Loan Department by sending a message to loa-lcr@worldbank.org and placing the project name, grant number and credit number in the subject line. Very truly yours, Patricia Hoyes Senior Finance Officer World Bank Loan Department Disbursement Letter - IDA Credit 4471-NI, Grant H4070-NI and H8150-NI Page 6 of 6 Attachments 1. (same as attached to original DL dated June 25, 2008) 2. Form for Authorized Signatures 3. Terms and Conditions of Use of Secure Identification Devices in connection with Use of Electronic Means to Process Applications and Supporting Documentation, dated January 20, 2010 4. Sample Summary Statement 5. Custom Statement of Expenditure for Category 2 6. Custom Statement of Expenditure for Category 4 7. Sample Statement of Expenditures 8. List of Contracts Subject to Prior Review 9. Sample Designated Account Statement Cc: Jose Adrian Chavaria Montenegro Vice Minister Ministry of Finance and Public Credit Fax. (505) 222 4383 email: josemontenegro@mhcp.gob.ni Julio Cesar Cuadra Executive Director Emergency Social Investment Fund (FISE) Fax: (505) 2277-3340 email: icuadra@fise.gob.ni Attachment 2 [Letterhead] Ministry of Finance and Public Credit [Street address] [City] [Country] [DATE] The World Bank [address] Dear [Country Director]: Re: IDA Grant No. (Project Name) I refer to the Letter Agreement ("Agreement") between the International Development Association] ("World Bank") and [name of recipient] (the "Recipient"), dated , providing the above IDA Grant. For the purposes of Section 3.04 (b) of the Standard Conditions, as defined in the Agreement, any ['one] of the persons whose authenticated specimen signatures appear below is authorized on behalf of the Recipient to sign applications for withdrawal [and applications for a special commitment] under this Grant. For the purpose of delivering Applications to the World Bank, 2[each] of the persons whose authenticated specimen signatures appears below is authorized on behalf of the Recipient, acting 3[individually] 4 ointly], to deliver Applications, and evidence in support thereof on the terms and conditions specified by the World Bank. 5[This confirms that the Recipient is authorizing such persons to accept Tokens and to deliver the Applications and supporting documents to the World Bank by electronic means. In full recognition that the World Bank shall rely upon such representations and warranties, including without limitation, the representations and warranties contained in the Terms and Conditions of Use of Secure Identification Devices in connection with Use of Electronic Means to Process Applications and Supporting Documentation ("Terms and Conditions of Use of Tokens"), the Recipient represents and warrants to the World Bank that it will deliver to each such person a copy of the Terms and Conditions of Use of Tokens and will cause such persons to abide by those terms and conditions.] ' Instruction to the Recipient when sending this letter to the World Bank: Stipulate if more than one person needs to sign Applications, and how many or which positions, and if any thresholds apply. 2 Instruction to the Recipient: Stipulate if more than one person needs to jointly sign Applications, if so, please indicate the actual number. Please delete this footnote in final letter that is sent to the World Bank. Instruction to the Recipient: Use this bracket if any one of the authorized persons may sign; if this is not applicable, please delete. Please delete this footnote in final letter that is sent to the World Bank. 4 Instruction to the Recipient: Use this bracket only if several individuals must jointly sign each Application; if this is not applicable, please delete. Please delete this footnote in final letter that is sent to the World Bank. Instruction to the Recipient: Add this paragraph if the Recipient wishes to authorize the listed persons to accept Tokens and to deliver Applications by electronic means; if this is not applicable, please delete the paragraph. Please delete this footnote in final letter that is sent to the World Bank. This Authorization replaces and supersedes any Authorization currently in the World Bank records with respect to this Agreement. [Name], [position] Specimen Signature: [Name], [position] Specimen Signature: [Name], [position] Specimen Signature: Yours truly, Isigned/ [Position] Attachment 3 Terms and Conditions of Use of Secure Identification Devices in connection with Use of Electronic Means to Process Applications and Supporting Documentation January 20, 2010 The World Bank (Bank)6 will provide secure identification devices (Tokens) to permit the Borrower to deliver applications for withdrawal and applications for special commitments under the Agreement(s) and supporting documentation (such applications and supporting documentation together referred to in these Terms and Conditions of Use as Applications) to the Bank electronically, on the terms and conditions of use specified herein. A. Identification of Users. 1. The Borrower will be required to identify in a completed Authorized Signatory Letter (ASL) duly delivered to and received by the Bank each person who will be authorized to deliver Applications. The Bank will provide Tokens to each person identified in the ASL (Signatory), as provided below. The Borrower shall also immediately notify the Bank if a Signatory is no longer authorized by the Borrower to act as a Signatory. 2. Each Signatory must register as a user on the Bank's Client Connection (CC) website (https://clientconnection.worldbank.org ) prior to delivery of Tokens. Registration on CC will require that the Signatory establish a CC password (CC Password). The Signatory shall not reveal his/her CC Password to anyone or store or record the CC Password in written or other form. Upon registration as a CC user, the Signatory will be assigned a unique identifying account name. B. Distribution, Initialization and Return of Tokens. 1. The Bank will physically deliver a Token to each Signatory in a manner to be determined by and satisfactory to the Bank. 2. At the time of delivery of a Token to a Signatory, the Signatory will receive a copy of these Terms and Conditions of Use for purposes of initializing the Token. 3. The Bank will verify that the Token, Temporary Password and Terms and Conditions of Use have been duly delivered to and received by the CC User. 4. Promptly upon receipt of the Token and Terms and Conditions of Use, the Signatory will access CC using his/her account name and CC Password and register his/her Token and set a personal identification number (PIN) to be used in connection with the use of his/her Token, after which the Token will be initialized for use by the Signatory exclusively for purposes of delivering Applications. Upon initialization of 6 "Bank" includes IBRD and IDA. ' "Borrower" includes the borrower of an IBRD loan, IDA credit, or Project Preparation Facility advance and the recipient of a grant. the Token, the Signatory will be a "Token User". The Bank will maintain in its database a user account (Account) for each Token User for purposes of managing the Token of the Token User. Neither the Borrower nor the Token User will have any access to the Account. 5. Prior to first use of the Token by the Token User for delivering Applications, the Borrower shall ensure that the Token User has received training materials provided by the Bank in use of the Token. 6. Tokens shall be promptly returned to the Bank upon request of the Bank. C. Management of Tokens. 1. Tokens will remain the property of the Bank. 2. Use of the Token is strictly limited to use in the delivery of Applications by the Token User in the manner prescribed by the Bank in the Agreement(s) and these Terms and Conditions. Any other use of the Token is prohibited. 3. The Bank assumes no responsibility or liability whatsoever for any misuse of the Token by the Token User, other representatives of the Borrower, or third parties. 4. The Borrower undertakes to ensure, and represents and warrants to the Bank (such representation and warranty being expressly relied upon by the Bank in delivery of a Token to each Token User) that each Token User is provided, understands and will abide by, these Terms and Conditions of Use, including without limitation the following: Security 4.1. The Token User shall not reveal his/her PIN to anyone or store or record the PIN in written or other form. 4.2. The Token User shall not allow anyone else to utilize a Token to deliver an Application to the Bank. 4.3. The Token User shall always logout from CC when not using the system. Failure to logout properly can create a route into the system that is unprotected. 4.4. If the Token User believes a third party has learned his/her PIN or has lost his/her Token he/she shall immediately notify clientconnection@worldbank.org. 4.5. The Borrower shall immediately notify the Bank at clientconnection@worldbank.org of any lost, stolen or compromised Tokens, and take other reasonable steps to ensure such Tokens are disabled immediately. Care of Tokens 4.6. Tokens contain delicate and sophisticated instrumentation and therefore should be handled with due care, and should not be immersed in liquids, exposed to extreme temperatures, crushed or bent. Also, Tokens should be kept more than five (5) cm from devices that generate electromagnetic radiation (EMR), such as mobile phones, phone-enabled PDAs, smart phones and other similar devices. Tokens should be carried and stored separate from any EMR device. At close range (less than 5 cm), these devices can output high levels of EMR that can interfere with the proper operation of electronic equipment, including the Token. 4.7 Without derogating from these Terms and Conditions of Use, other technical instructions on the proper use and care Tokens are available at http://www.rsa.com. 5. Replacement 5.1. Lost, damaged, compromised (in terms of 4.5, above) or destroyed Tokens will be replaced at the expense of the Borrower. 5.2. The Bank reserves the right, in its sole discretion, not to replace any Token in the case of misuse, or not to reactivate a Token User's Account 6. Reservation of Right to disable Token 6.1. The Borrower shall reserve the right to revoke the authorization of a Token User to use a Token for any reason. 6.2. The Bank reserves the right, in its sole discretion, to temporarily or permanently disable a Token, de-activate a Token User's Account or both. Attachment 4 BANCO INTERNACIONAL DE RECONSTRUCCION Y FOMENTO HOJA SUMARIA PRESTAMO/CREDITO/DONACION NO.:\ NO. SOLICITUD: NO. HOJA: Periodo: 1 2 3 4 5 6 7 8 9 10 11 12 Fecha Cantidad Moneda Número 100% Monto % Monto Tasa Débito Debitada Nombre del País del Descripción y Monto de la Pagado al Fecha del Financ. Admisible de Cuenta Cuenta Designad Proveedor Proveedor del Bien del Factura Proveedor Pago por BIRF (Col 6 X Col 8) Cambio a Designada (Col 9 / Col (CS,GO,OP) Contrato o Recibo 10) Total o o 0 Ñ-Í Attachment 5 Préstamo/Donación No: Fecha: No de la Sollictud: Página No: Categoria No: % Financiado: 1000/ CUENTA DESIGNADA SOLAMENTE 12 4 5 6 7 8 9 10 11 12 13 14 Monto Cóio Original 100% Fecha del Fecha Nombre del ldentif. Código del GastoAcumulados Pagos Monto Fecha % Monto Tasa débito de avance Subproyecto y de Moeda Contrato del Contrato (sin a la Pagado de Financiado Solicitado de la Cuenta Cuenta Municipio Contrato Contrato (y su Reajuste) fecha en esta pago por BIRF (Col 7 x 9) cambio Comercial Designada equiv. Solicitud en US$) 0.00 0.00 Attachment 6 BANCO INTERNACIONAL DE RECONSTRUCCION Y FOMENTO CERTIFICADO DE GASTOS POR CREDITOS ASIGNADOS- SOE CATEGORIA 4 PRESTAMO/CREDITO/DONACION NO.: FECHA: NO. SOLICITUD: NO. HOJA: NO. CATEGORIA: 1 2 3 4 5 6 7 8 9 10 11 12 13 Fecha Gastos Fecha % Avance Monto Acumulad Pagos a 100% del Financ. Monto Tasa de Fecha Cuenta Original del os la fecha Monto Pago por BIRF Solicitado Cambio Débito Designada Código Pagado Nombre del Identif. y fecha Moneda del Contrato (y su del en esta (Col 7 X Cuenta Beneficiario del Contrato Contrato equiv. en US$) Contrato Solicitud 9) Comercial (sin Reajuste) Total 0 0 0 Attachment 7 BANCO INTERNACIONAL DE RECONSTRUCCION Y FOMENTO CERTIFICADO DE GASTOS PRESTAMO/CREDITOIDONACION NO.: NO. SOLICITUD: NO. HOJA: NO. CATEGORIA: 1 2 3 4 5 6 7 8 9 10 11 12 Fecha Cantidad Moneda Número 100% Monto % Monto Tasa Débito Debitada Nombre del País del Descripción y Monto de la Pagado al Fecha del Financ. Admisible de Cuenta Cuenta Proveedor Proveedor del Bien del Factura Proveedor Pago por BIRF (Col 6 X Col 8) Cambio Designada Designada (CS,GO,OP) Contrato o Recibo (Col 9 / Col 10) Total 0 0 0 Attachment 8 Payments Made during Reporting Period A ainst Contracts Subject to the Association's Prior Review Attachment 9 Estado de Movimientos de la Cuenta Designada Correspondiente al período de declaración: 00/00/0000 al 00/00/0000 (Debe ser enviada con cada una de las Solicitudes de Reposición de Fondos) Nombre del Proyecto: Préstamo/Credito/Donacion IDA/BIRF N°: Banco de depósito: Numero de Cuenta: Numero de sub-cuenta en caso de Cuenta Unica: Moneda de la Cuenta Designada: 1 Depósito Inicial. 2 Menos - Montos Recuperados for el BIRF $- 3 Saldo por Recuperar. 4 Saldo de acuerdo al estado bancario adjunto (fecha ) 5 Monto de la Solicitud No. ____(anexa) 6 MAS Monto pendiente de Reembolso por el BIRF 1/ 7 MAS Retiros efectuados aún no solicitados al BIRF 2/ 8 MENOS Montos Debitados después de la fecha del estado adjunto. 9 MENOS Intereses $- 10 Total para reconciliar (4+5+6+7-8-9) $- 11 Diferencia entre (3 y 10) Explicacion de Diferencia y/o Observaciones: 1/ Valor pendiente de reembolso por el BIRF/IDA. No. de solicitud Monto $- No. de solicitud Monto $- Total 2/ Retiros efectuados aún no solicitados al BIRF/IDA. Montos No./Fecha de Retiro $- Total INSTRUCIONES PARA CONCILIACION DE LA CUENTA DESIGNADA Si durante el monitoreo de la Cuenta Designada el BIRF/IDA determina que ha transcurrido más tiempo (e.g. mensual, trimestral) entre cada solicitud de reposicion de lo acordado en la Carta de Desembolsos, el BIRF/IDA puede comenzar la recuperación de fondos en depósito hasta que se regularice la situación. Depósito Inicial: Indicar el monto del depósito efectuado. Menos: Montos justificados (recuperados) por el BIRFIDA. Sólo se aplica cuando el BIRF/IDA ha iniciado la recuperación de fondos en depósito. Saldo por Recuperar: Es la diferencia entre los numerales 1 y 2. Saldo en la Cuenta Designada: El saldo que se indica en el último estado bancario mensual emitido por el banco donde se mantiene la cuenta. Monto de esta Solicitud: Será el mismo que se indica en el Formulario 1903-S/2380-E. Montos Pendientes de Reposición por el BIRF/IDA: Se utiliza este espacio para indicar el monto de las solicitudes enviadas al BIRF/IDA que aún están en proceso (favor entrar detalle de las solicitudes pendientes en el pié de páginal/). Retiros procesados aún no enviados al BIRF: Este espacio se utiliza para enumerar montos debitados de la Cuenta Designada por los cuales aún no se ha solicitado la reposición de fondos (favor entrar detalle de los retiros en el pié de página 2/). Debitos efectuados después de la fecha del estado ad%unto: Utilizar este espacio en caso de que el monto solicitado represente un débito efectuado después de la fecha del estado bancario indicado en el numeral 4. Official Use Only Disbursement Letter prepared by: Patricia Hoyes, Senior Finance Officers Reviewed and Cleared by: Ignacio Jauregui, Counsel Lilian Pena Pereira Weiss, TTL