Detail of IsDB’s disbursement policy can be obtained in IsDB Disbursement Handbook 2019.

The disbursement letter is addressed to the beneficiary and sets out the specific disbursement procedures and processes to be followed during project implementation, including minimum disbursement amount, special account thresholds, among other operational provisions. The terms of such draft disbursement letter are prepared during project preparation and agreed between the beneficiary and the Bank at negotiations

There are four modes of disbursement that are permitted by the Bank: Direct Payment, Special Account, Reimbursement & Reimbursement of Guarantee Commitment (ICR)

The following are key instruction for preparing the withdrawal application form

1. Beneficiary completes and signs a withdrawal application form.
2. Beneficiary completes and signs the Summary Statement (SS) form.
3. Beneficiary submits original or certified true copies of supporting documentation as agreed to with the Bank.

A separate withdrawal application is required for each currency of requested disbursement. 

Applicable procedures and documentations required for all mode of financings  are detailed in the annexes in the Bank’s disbursement Handbook.

As outlined in the relevant financing agreement, there are pre-conditions that must be satisfied before any disbursement process can commence, namely: the effectiveness of the financing agreement, and satisfaction of any express conditions of disbursement set out in therein, designation by the beneficiary of the authorized signatories, and approval of the relevant procurement contract (as required) to which the disbursement request relates.

It is critical for the beneficiary to ensure that such pre-conditions are satisfied in order to expedite withdrawal application processing and ensuring speedy disbursements.

Before a withdrawal application can be considered, the beneficiary through its authorized representative must designate official(s) authorized to sign withdrawal applications in a prescribed form, including submitting originals of the specimen signatures of such authorized signatories, delivered to the Bank.

The authorization request from the beneficiary must clearly state the number and/or combination of signatories required for making withdrawals. If authorized signatories change during project implementation, the beneficiary must promptly notify the Bank of such changes and provide the names and original specimen signatures of the new signatories.

For all withdrawal applications, the Bank must receive a withdrawal application confirming compliance with procurement procedures and accompanied by acceptable supporting documents showing the eligibility of the particular goods, works, services or other types of expenditure to which such withdrawal application relates.

The Bank must receive a signed original withdrawal application in the prescribed form completed and signed by the authorized representative(s) of the Borrower.  All withdrawal applications should be sent to the address indicated in the disbursement letter. 

The following are the mandatory documents in submitting withdrawal applications:

• Submission of completed and signed Withdrawal Application on the IsDB’sformat (one application for each currency);
• Provides Supporting Documentation, as agreed with IsDB. Example: Underlying Contract copy; Confirmed Purchase Order; Copy of Advance Payment Bank Guarantee; Copy of Invoice/Claim

Lack of necessary documentation or incomplete documentation (i.e. lack of a copy of invoice, lack of identification of authorized signatories); Mistakes and omissions in completing withdrawal application form. 

The beneficiary/ the Agent should carefully review the procedures, checklists and templates provided in the Bank’s Disbursement Handbook to ensure that all applicable documentary requirements have been fully complied with when the beneficiary/ the Agent finalizes its submission of a withdrawal application.

To expedite the processing of disbursement requests, beneficiaries should undertake the following practical steps:

• Ensure that effectiveness and first disbursement conditions have been fulfilled;
• Complete forms as per the instructions provided for form completion;
• Ensure that the disbursement requests are signed by the authorized signatories;
• Ensure that the names and designations of the signatories is legible on the request;
• Indicate the appropriate project and financing agreement number that is being used to finance the amounts
• being requested;
• Indicate the chargeable cost categories;
• Send original requests to the FCD or D&D Division or other Bank representative identified in the Disbursement
• Letter;
• Send a copy of the relevant contract and any amendments;
• Ensure that the wording, currency, amount and validity period of any advance payment guarantee and performance bond are as stated in the related contract;
• Submit applications denominated in a single currency;
• Attach applicable supporting documents in any official languages of the Bank, i.e. English, Arabic or French or the local language. If these are in local language, translations must be submitted in any official language of the Bank;
• Ensure that the invoice or billing statement contains complete payment instruction (i.e. bank name, branch, bank address, account number (IBAN for payments in the Euro zone) and payee’s bank SWIFT/BIC code);
• Ensure that the correspondent bank is indicated if the payee’s bank is not located in the country of currency for payment;
• Ensure that the information contained in the request is consistent with the supporting documents;
• Ensure availability of resources under the relevant cost expenditure category;
• Ensure that any changes to expenditure categories and list of goods and services have been approved by the Bank;
• Ensure that required audit reports have been sent to and approved by the Bank.
• Ensure that advance or performance guarantee remain valid.

The financing agreement requires that project accounts are audited each year in accordance with the relevant generally accepted standards. The auditors are required, among other things, to examine pertinent documents, review project financial control mechanisms to identify deficiencies and weaknesses that could affect the efficiency of the project, form an opinion on the quality of the financial statements and confirm that the funds granted to the project have been used for their intended purpose. Any audit report should be submitted to the Bank no later than six (6) months after close of the financial year for the project to which the audit report relates.

There are several costs classified as ineligible for Bank financing, namely: 

Expenditures incurred after the Last Disbursement Date (as extended); Expenditures incurred before the effectiveness date of the Financing Agreement (except in the case of approved retroactive financing) not within the project and category description defined in the financing agreement; Items and services not procured in accordance with the Bank’s policies and procedures and procurement of goods, works and consulting services; Land acquisitions (although, in very rare cases, an exception may be approved by Bank’s management); Late payment penalties imposed by suppliers; Excessive advance payments (typically in excess of 20% of the relevant contract value).

The following are the critical events affecting disbursement: 

• Accelleration: permits the Bank to declare as due and payable immediately all amounts disbursed to the beneficiary and outstanding, together with any applicable charges.
• Suspension: If the Bank concludes that there is or may be an event of default, or any reasonable possibility of the happening of a material adverse effect on the project, the Bank may suspend, i.e. stop, further disbursements. Suspension may apply to one or more financing agreements or to a specific project component under a single financing agreement.
• Cancellation : Under the Updated Conditions, the beneficiary can typically cancel the whole or part of any unutilized available approved amount at its discretion, other than any amounts that are subject to the Bank’s undertaking of a reimbursable guarantee commitment under a Letter of Credit. Cancellation events include situations when the relevant agreement has not become effective, or a first disbursement request has not been submitted, within the prescribed period. Automatic project cancellation broadly occurs upon the expiry of the period within which the related financing agreement should be signed, if there is no signing event. If the financing agreement has been signed, then automatic cancellation occurs if the signed agreement is not declared effective with the prescribed period.10 If the financing agreement has been signed and declared effective within the prescribed period, automatic cancellation may still occur if the beneficiary fails to submit the first disbursement request within the period specified in the financing agreement, or any extended period for such purpose approved by the Bank.
• Termination : Under the Updated Conditions, the Bank may terminate financing or related agreements typically upon the occurrence of what is termed as ‘termination event’. Such events include situations when the relevant agreement has not become effective, or a first disbursement request has not been submitted, within the prescribed period (unless extended by the Bank). Also included are events of default under the relevant agreement. Termination may also occur if all obligations under the relevant agreement have been fully discharged and completed.

The following are the key project dates for the standard project cycle

• Approval Date:  The date on which the relevant authority of the Bank approves the relevant financing or grant.
• Signature Date: The date on which the beneficiary and the Bank sign the financing agreement. 
• Effective Date: The date on which the Bank determines that the beneficiary has satisfied all conditions for effectiveness of the financing or grant agreement, as applicable, and issues a declaration of effectiveness to such effect to the beneficiary, where applicable.
• First Disbursement Date: of the first payment by the Bank under an approved project and signed financing agreement. This date is planned to be generally within 180 days from date of effectiveness of the financing agreement or any later date, in case such period is extended by the Bank.
• Last Disbursement Date : date specified in the Financing Agreement (as may be amended from time to time by the Bank) on which the Beneficiary’s right to submit a disbursement request shall terminate. This date typically coincides with the closing date or end of the Gestation Period for ordinary financing.
• Close Out Period : a period of 180 days before the Last Disbursement Date during which the bank will work with the beneficiary to ensure submission of disbursement requests covering all eligible expenditures as well as the closing of the special account (if any) and return of unutilized advance under the Financing Agreement.
• Gestation Period : The Gestation Period (applicable to ordinary financing modes) covers the period needed or elapsed for the completion of the asset financed by the Bank and transfer of the same to the beneficiary (i.e. the date of the first disbursement to the date of the last disbursement). Such period may be extended at the request of the beneficiary, upon approval by the Bank.

The Project Information Hub (PROJECT INFOHUB) is an online resource under which users can access a secure electronic platform for project-related transactions with the Bank. INFOHUB gives users direct access to reports on their project approvals, disbursements and repayments. Reports available through PROJECT INFOHUB include a summary of all Bank projects by country, with details of such projects including updated project statements.