OFFICIAL L DOCUMENTS i The World Bank 1818 H (202) 473-1000 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT as Ington, D. . 20433 Cable Address: INTBAFRAD INTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A. Cable Address: INDEVAS May 20, 2014 H.E. Lazar Krstice Minister of Finance Ministry of Finance Kneza Milosa 20 Belgrade Republic of Serbia Excellency, Re: IBRD Loan 7746-YF (Corridor X Highway Project) Additional Instructions: First Restatement Disbursement I refer to the Loan Agreement between the International Bank for Reconstruction and Development (the "Bank") and Republic of Serbia (the "Borrower") for the above-referenced project, dated July 13, 2009. The Agreement provides that the Bank may issue additional instructions regarding the withdrawal of the proceeds of Loan 7746-YF ("Loan"). This letter ("Disbursement Letter"), as revised from time to time, constitutes the additional instructions. I refer to the letter from the Ministry of Finance dated May 9, 2014 addressed to the World Bank, requesting an increase of the ceiling of the Designated Account from EUR 10,000,000 to EUR 15,000,000. In response, this Revised Disbursement Letter replaces the Disbursement Letter dated July 13, 2009 for the above referenced project and raises the Ceiling for the Designated Account from EUR 10,000,000 to EUR 15,000,000. This letter has also been updated to include two new subsections (iii) and (iv) under Section II (Withdrawal of Loan Proceeds) on the option to deliver Applications to the Bank by electronic means, which necessitated the renumbering of subsections under the said Section II of the Disbursement Letter. The attached World Bank Disbursement Guidelines for Projects, dated May 1, 2006, ("Disbursement Guidelines") (Attachment 1), are an integral part of the Disbursement Letter. The manner in which the provisions in the Disbursement Guidelines apply to the Loan 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. 2 I. Disbursement Arrangements (i) Disbursement Methods (section 2). The following Disbursement Methods may be used under the Loan: * Reimbursement * Advance * Direct Payment * Special Commitment (ii) Disbursement Deadline Date (subsection 3.7). The Disbursement Deadline Date is (4) months after the Closing Date specified in the Loan Agreement. Any changes to this date will be notified by the Bank. II. Withdrawal of Loan Proceeds (i) Authorized Signatures (subsection 3.1). A letter in the Form attached (Attachment 2) should be furnished to the Bank 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 D.C. 20433 U. S. A Attention: Jane Armitage, Country Director (ii) Applications (subsections 3.2 - 3.3). Please provide completed and signed (a) applications for withdrawal, together with supporting documents, and (b) applications for special commitments, together with a copy of the commercial bank letter of credit, to the address indicated below: The World Bank Radnicka cesta 80, 9th floor. Zagreb, HR - 10 000, Croatia. Attention: Disbursement Management Group (iii) Electronic Delivery (subsection 3.4) The Bank may permit the Borrower to electronically deliver to the Bank Applications (with supporting documents) through the Bank's Client Connection, web-based portal. The option to deliver Applications to the Bank by electronic means may be effected if: (a) the Borrower has designated in writing, pursuant to the terms of subparagraph (i) of this Section, its officials who are authorized to sign and deliver Applications 3 and to receive secure identification credentials ("SIDC") from the Bank for the purpose of delivering such Applications by electronic means; and (b) all such officials designated by the Borrower have registered as users of Client Connection. If the Bank agrees, the Bank will provide the Borrower with SIDC 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 Borrower may continue to exercise the option of preparing and delivering Applications in paper form. The Bank reserves the right and may, in its sole discretion, temporarily or permanently disallow the electronic delivery of Applications by the Borrower. (iv) Terms and Conditions of Use of SIDC to Process Applications. By designating officials to use SIDC and by choosing to deliver the Applications electronically, the Borrower confirms through the authorized signatory letter its agreement to: (a) abide by the Terms and Conditions of Use ofSecure Identification Credentials in connection with Use ofElectronic Means to Process Applications and Supporting Documentation ("Terms and Conditions of Use of Secure Identification Credentials") provided in Attachment [3]; and (b) to cause such official to abide by those terms and conditions. (v) Minimum Value of Applications (subsection 3.5). The Minimum Value of Applications for reimbursement, direct payments and for issuance of special commitments is EUR 2,000,000. equivalent. (vi) Advances (sections 5 and 6). * Type of Designated Account (subsection 5.3): Segregated. * Currency of Designated Account (subsection 5.4): Euro (EUR) * Financial Institution at which the Designated Account will be opened (subsection 5.5): a commercial bank acceptable to the Bank * Ceiling (subsection 6.1): EUR 15,000,000 III. Reporting on Use of Loan Proceeds (i) Supporting Documentation (section 4). Supporting documentation should be provided with each application for withdrawal as set out below: * For requests for Reimbursement: o List of payments against contracts that are subject to the Bank's prior review, in the form attached (Attachment 4) o Records evidencing eligible expenditures (e.g. copies of receipts, supplier invoices) for payments for works and goods against contracts valued at EUR 800,000 equivalent or more; for consultant services against contrats valued at 4 EUR 160,000 equivalent or more for firms and at EUR 35,000 equivalent or more for individual consultants; and o Statement of Expenditure in the form attached (Attachment 3) for all other expenditures / contracts. * For reporting eligible expenditures paid from the Designated Account: o List of payments against contracts that are subject to the Bank's prior review, in the form attached (Attachment 4) o Records evidencing eligible expenditures (e.g., copies of receipts, supplier invoices) for payments for works and goods against contracts valued at EUR 800,000 equivalent or more; for consultants services against contracts valued at EUR 160,000 equivalent or more for firms and at EUR 35,000 equivalent or more for individual consultants; and - o Statement of Expenditure in the form attached (Attachment 3) for all other expenditures / contracts. * For requests for Direct Payments: records evidencing eligible expenditures, e.g., copies of receipts, supplier invoices (ii) Frequency of Reporting Eligible Expenditures Paid from the Designated Account (subsection 6.3): Replenishment applications should be submitted monthly. The replenishment application must include reconciled bank statements as well as other appropriate supporting documents. IV. Other Important Information For additional information on disbursement arrangements, please refer to the Disbursement Handbook available on the Bank's public website at http://www.worldbank.ore 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 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 Loan, and retrieve related policy, financial, and procurement information. For more information about the website and registration arrangements, please contact the Bank by email at . 5 If you have any queries in relation to the above, please contact Mr. Jose C. Janeiro, Senior Finance Officer at JJaneiro@worldbank.org using the above reference. Regards, Jo e C eiro Senior Finance Officer Loan Department INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Attachments remain valid as provided under the original disbursement letter. 6 Prepared by: M. Khoury, CTRLA Cleared with and cc: Ramiro Ignacio/Jauregui-Zabalaga - Counsel (LEGLE) Fiona Collin - TTL (ECSTR) Cc: Jose C. Janeiro - CTRLA