THE WORLD BANKIBRD* IDA I wmagemgum

23 OE, 2019

H.E. Bedri HamzaMinister of FinanceMinistry of FinanceNew Government Building '"'ICIALMother Teresa Street10000 PristinaRepublic of Kosovo DOCUMENTS

Re: IDA Credit 6416-XK (Financial Sector Strengthening Project)Additional Instruction : Disbursement and Financial Information Letter (DFIL)

Excellency:

I refer to the Financing Agreement between the Republic of Kosovo (the "Recipient") and theInternational Development Association (the "Association") for the above-referenced Project. The GeneralConditions, as defined in the Fin ncing Agreement, provide that the Recipient may from time to timerequest withdrawals of Credit am unts from the Credit Account in accordance with the Disbursement andFinancial Information Letter, and iuch additional instructions as the Association may specify from time totime by notice to the Recipient. The General Conditions also provide that the Disbursement and FinancialInformation Letter may set out Pro ect specific financial reporting requirements. This letter constitutes suchDisbursement and Financial Infornation Letter ("DFIL") and may be revised from time to time.

I. Disbursement Arrangements, ithdrawal of Credit Funds, and Reporting on Uses of Credit Funds

The Disbursement Guidelines for Investment Project Financing, dated February 2017,("Disbursement Guidelines") are available in the Association's public website athttps://www.worldbank.org and its secure website "Client Connection" athttps://clientconnection.worldbanl<.org. The Disbursement Guidelines are an integral part of the DFIL, andthe manner in which the provisions in the guidelines apply to the Credit is specified below.

(i) Disbursement Arrangements

General Provisions (Schedule 1). The table in Schedule 1 sets out the disbursement methods whichmay be used by the Recipient, information on registration of authorized signatures, processing ofwithdrawal applications (including minimum value of applications and processing of advances),instructions on supporting documentation, and frequency of reporting on the Designated Account.

(ii) Electronic Delivery. Section 1.01 (c) of the General Conditions:

The Recipient will electronically deliver applications (with supporting documents) through theAssociation's web-based portal (htps://clientconnection.worldbank.org) "Client Connection". This facilitywill become available once: (a) the Recipient has designated in writing, its officials who are authorized tosign and deliver Applications and to receive Secure Identification Credentials ("SIDC") from theAssociation for the purpose of delivering such Applications by electronic means; and (b) all such officialsdesignated by the Recipient have registered as users of "Client Connection". The designated officials willdeliver Applications electronically by completing the Form 2380, which is accessible through "Client

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THE WORLD BANKIBRD * IDA I wommammemmp

Connection". By signing the Authorized Signatory Letter, the Recipient confirms that it is authorizing suchpersons to accept Secure Identification Credentials (SIDC) and to deliver the Applications and supportingdocuments to the Association by electronic means. The Recipient may exercise the option of preparing anddelivering Applications in paper form on an exceptional basis (including when encountering legislativelimitations), and when pre-agreed ith the Association. The Association reserves the right and may, in itssole discretion, temporarily or permanently disallow the electronic delivery of Applications by theRecipient. By designating officials to use SIDC and by choosing to deliver the Applications electronically,the Recipient confirms through the authorized signatory letter its agreement to: (a) abide by the Terms andConditions of Use of Secure Identification Credentials in connection with Use of Electronic Means toProcess Applications and Supporting Documentation, available in the Association's public website athttps://worldbank.org and "Client Connection"; and (b) to cause such official to abide by those terms andconditions.

II. Financial Reports and Audits

(i) FinancialReports. The Recipiept, through the Ministry of Finance, shall cause the Project ImplementingEntity (KCGF) to prepare and furrish to the Association not later than forty-five (45) days after the end ofeach calendar semester, interim unaudited financial reports (IFR) for the Project, covering the semester, inform and substance satisfactory to the Association.

(ii) Entity Audits. The Recipient, through the Ministry of Finance, shall cause the Project ImplementingEntity (KCGF) to have its financial statements periodically audited by independent auditors acceptable tothe Association, in accordance with consistently applied auditing standards acceptable to the Association.Each audit of the Entity Financial Statements shall cover the period of one fiscal year of the Entity. Theaudited Entity Financial Statements for each such period shall be (a) fumished to the Association not laterthan six (6) months after the end o such period, and (b) made publicly available in a timely fashion and ina manner acceptable to the Association

III. Other Information

For additional informatio on disbursement arrangements, please refer to the Loan Handbookavailable on the Association's Website (http://www.worldbank.ora/ and "Client Connection". TheAssociation recommends that you register as a user of "Client Connection". From this website you will beable to prepare and deliver Applications, monitor the near real-time status of the Credit, and retrieve relatedpolicy, financial, and procurement information.

For more information about the website and registratio rrangements, o if you have ny queriesin relation to the above, please cortact the Association by e il at askloans Id

Yours sJ erely,

/arco Mantovanelli

Cuntry Manager for sovo/Europe and Cent Asia

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THE WORLD BANKIBRD * IDA I wommmemou

Attachments1. Form of Authorized Signatory Letter2. Forms of Statement of Expenditure (SOE)3. Form of Designated Account Reconciliation Statement

Cc with copies: Kosovo Credit Guarantee Fund (KCGF)

Central Bank of Kosovo

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Attachment I - Form of Authorized Signatory Letter

[Letterhead][Recipient]

[Street address][City] [Country]

[DATE]The World Bank1818 H Street, N.W.Washington, D.C. 20433United States of America

Attention: Country Director

Re: Credit No. i 0416-XK (Financial Sector Strengthening Project)

I refer to the Finar cing Agreement ("Agreement") between the InternationalDevelopment Association (the "Association") and the Republic of Kosovo (the "Recipient"),dated - , providing the above Credit. For the purposes of Section 2.03 of the GeneralConditions as defined in the Agreement, any i [one] of the persons whose authenticated specimensignatures appear below is authorized on behalf of the Recipient to sign applications forwithdrawal [and applications for a special commitment] under this Credit.

For the purpose of delivering Applications to the Association, 2[each] of the personswhose authenticated specimen signatures appears below is authorized on behalf of the Recipient,acting 3[individually] 40ointly], to deliver Applications, and evidence in support thereof on theterms and conditions specified by the Association.

This confirms that the R cipient is authorizing such persons to accept Secure IdentificationCredentials (SIDC) and to deliver the Applications and supporting documents to the Associationby electronic means. In full rec6gnition that the Association shall rely upon such representationsand warranties, including without limitation, the representations and warranties contained in theTerms and Conditions of Use of $ecure Identification Credentials in connection with Use of Electronic

Instruction to the Recipient: Stipulaie if more than one person needs to sign Applications, and how many or whichpositions, and if any thresholds apply. Please delete thisfootnote infinal letter that is sent to the Association.

2 Instruction to the Recipient: Stipulat if more than one person needs tojointly sign Applications, if so, please indicatethe actual number. Please delete this otnote infinal letter that is sent to the Association.

Instruction to the Recipient: Use thi bracket if any one of the authorized persons may sign; if this is not applicable,please delete. Please delete thisfootn te infinal letter that is sent to the Association.

Instruction to the Recipient: Use th s bracket only if several individuals must jointly sign each Application; if thisis not applicable, please delete. Pleas -, delete thisfootnote infinal letter that is sent to the Association.

Means to Process Applications and Supporting Documentation ("Terms and Conditions of Use ofSIDC"), the Recipient represents and warrants to the Association that it will cause such personsto abide by those terms and conditions.

This Authorization re places and supersedes any Authorization currently in theAssociation records with respect to this Agreement.

[Name], [position] Specimen Signature:

[Name], [position] Specimen Signature:

[Name], [position] Specimen Signature:

Yours truly,

/ signed /

[Position]

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Attachment 3 - Form of Designated Account Reconciliation Statement

DESIGNATED ACCOUNT RECONCILIATION STATEMENT

LOAN/CREDIT/PPF/COFINANCIER NUMBERACCOUNTNUMBER WITH (BANK)

I TOTAL ADVANCED BY WOR D BANK (OR COFINANCIER) US$/EUR

2 LESS: TOTAL AMOUNT RECOVERED BY WORLD BANK US$/EURi

3. EQUALS PRESENT OUTSTANDING AMOUNT ADVANCED TOTHE DESIGNATED ACCOUNT Q-TUMBER I LESS NUMBER 2) US$/EUR

4. BALANCE OF DESIGNATED ACCOUNT PER ATTACHED BANKSTATEMENT AS OF DATE US$/EUR

5. PLUS: TOTAL AMOUNT CLAIMED IN THISAPPLICATION NO. + US$/EUR

6. PLUS: TOTAL AMOUNT WITHDRAWN AND NOT YET CLAIMEDREASON: + US$/EUR

7. PLUS: AMOUNTS CLAIMED IN PREVIOUS APPLICATIONSNOT YET CREDITED AT DATE OF BANK STATEMENTS

APPLICATION NO. AMOUNT

SUBTOTAL OF PREVIOUSAPPLICATIONS NOT YET CREDITED + US$/EUR

8. MINUS: INTEREST EARNED US$/EUR

9. TOTAL ADVANCE ACCOUNTED FOR (NO. 4 THROUGH NO. 9) US$/EUR

10. EXPLANATION OF ANY DIFFERENCE BETWEEN THE TOTALS APPEARING ON LINES 3 AND 9:

11. DATE: SIGNATURE:

TITLE: