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Financial Statements of Projects Funded By the International BankFor Reconstruction and Development - Grant #TF017510(Municipal Services Emergency Project)

And Auditor's Report

Council for Development and ReconstructionYear Ended December 31, 2016

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Contents

Page

Independent Auditor's Report 3

Statement of Special Account of Projects Funded by the International Bank For Reconstruction 4and Development - Grant #TF017510 (Municipal Services Emergency Project)

Statement of Project Expenditures of Projects Funded by the International Bank For 5Reconstruction and Development - Grant #TF017510 (Municipal Services Emergency Project)

Notes to the Financial Statements/ Project Expenditures 6-10

MENAFMItIDLE VANT NORTH AFRICA FINANCEINDEPENDENT AUDITOR'S REPORT

PresidentCouncil for Development and ReconstructionWorld Bank Grant No. TF017510Municipal Services Emergency ProjectBeirut, Lebanon

We have audited the accompanying financial statements comprising of the statement of Special Account,Project Expenditures, and Statement of Expenditures of Project Funded by the International Bank forReconstruction & Development, Grant #TF017510 for the year ending and cumulatively as at December31, 2016. The Project financial statements are the responsibility of the Council for Development andReconstruction's management. Our responsibility is to express an opinion on these financial statementsbased on our audit.

We have also audited compliance with the laws, regulations, guidelines and provisions governed by theGrant Agreement for the year ended December 31, 2016.

We conducted our audits in accordance with International Standards on Auditing. Those Standardsrequire that we plan and perform the audits to obtain reasonable assurance about whether the financialstatements are free of material misstatement and about whether the "Municipal Services EmergencyProject" has complied with die laws, regulations, guidelines and provisions governed by the GrantAgreement. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting principles used, aswell as evaluating the overall financial statement presentation. We believe that our audits provide areasonable basis for our opinion.

In our opinion:

(a) The accompanying Financial Statements present fairly, in all material respects, die cash receipts andpayments of the Municipal Services Emergency Project for the year ending December 31, 2016 andshowing cumulative balances as at December 31, 2016 in accordance with the International PublicSector Accounting Standards (IPSAS), under the cash basis of accounting;

(b) Internal control over financial reporting involved in the preparation of replenishments, directpayments, payments through special commitments, and reimbursements i.e. expenditures reimbursedon the basis of Statements of Expenditures can be relied upon to support the related withdrawals as ofDecember 31, 2016;

(c) The project was in all material respects in compliance with the laws, regulations, guidelines andprovisions governed by the Grant agreement.

May 17, 2017MENAF

Jihad AnoutiManaging Partner

Council for Development and ReconstructionMunicipal Services Emergency Project - Grant TF017510Financial Statements31 December 2016

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Statement of Special Account (TF017510)

Note USD

Balance as ofJanuary 1, 2016 941,553

Add:

World Bank replenishments 734,861

Direct Payment 1,606,109Deduct:

Difference in Foreign Exchange (21,454)Payments for project expenditures funded by the Grant:

Works, Consultant's Services, Goods & Equipment 3 (2,510,115)

(2,531,569)

Balance December 31, 2016 750,954

See accompanying notes to the financial statements.

Council for Development and ReconstructionMunicipal Services Emergency Project- Grant TF017510Financial Statements31 December 2016

Statement of Project Expenditures

Note USD

Works, Goods and Services 3 2,510,115

2,510,115

See accompanying notes to the financial statements.

Council for Development and ReconstructionMunicipal Services Emergency Pro)ect - Grant TF017510Financial Statements31 December 2016

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Notes to the Financial Statements

1. Project Background

A Grant #TF017510 (Municipal Services Emergency Project) for the amount of USD 10,000,000 wassigned on September 12, 2014 between the International Bank for Reconstruction and Development andthe Lebanese Republic (the borrower) to address urgent community priorities in selected municipalservices, targeting areas most affected by the influx of Syrian refugees. The project consists of thefollowing parts:

Part I: Emergency Response: Supporting high priority municipal services and initiatives that promotesocial interaction and collaboration in the Participating Unions, including.

a- Service Delivery: Carrying out sub-projects to improve service delivery in the ParticipatingUnions, including inter alia, in the areas of water supply and wastewater, solid wastemanagement, roads improvement, and recreational facilities and community centers.

b- Community Activities: Enhancing social cohesion by facilitating interaction andcollaboration among local communities and refugees, including, inter alia, establishment ofsport teams/leagues, study groups or courses, play groups, skills exchange, organization ofawareness campaigns and collective action.

Part II: Rehabilitation of Critical Infrastructure: Carrying out sub-projects to rehabilitate and/or developcritical infrastructure to increase self-reliance of communities, including inter alia; water supply, solidwaste management, roads improvement, water and sanitation, recreational facilities and communityinfrastructure.

Part III: Project Implementation Support: Strengthening the capacity of the PMU in the management ofthe project, including coordination, reporting, financial management, procurement, social andenvironmental safeguards; and supporting activities conductive to the decentralized decision making andconsultative processes for sub-project identification.

The table below sets forth categories of items to be financed out of the proceeds of the grant underCDR's management (USD 10,000,000) and the allocation of the amounts of the grant to each category:

Category USD

Works, Goods and non-consulting Consultants' service and training services,Consultants' services and training and incremental operating Costs 10,000,000Front-end Fee

10,000,000The closing date for this grant is December 30, 2017.

Council for Development and ReconstructionMunicipal Services Emergency Project - Grant TF017510Financial Statements31 December 2016

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2. Summary of Significant Accounting Policies

The accompanying statement of special account, project expenditures and statement of expenditures areprepared on the cash basis of accounting. On this basis, disbursements from grant are recognized whenreceived and expenses are recognized when paid rather than when incurred.

3. Details of Expenditures

Expenditures paid from Municipal Services Emergency Project Special account and direct payments paidduring the year 2016 are detailed as follows:

Amount financedfrom grant proceeds

Contractor's Name Description (100%) USDWorks, Goods and ServicesSonia Der Alexanina Administrative Assistant 19,240Adnan Khanfour Municipal Engineer in Baalbak 44,138Arkoub Sons Collective Org Mobile Dispensary 12,000Auto Stars Supply of Street sweaper track and boom lift 74,570Bassoul and Hnainy Supply of three Multi use Vehicle Pannels 34,290Century Motor co. Sari Supply of One Small Utility Vehicle 22,815Cultural And Social CohesionOrganization Adopting a solid waste management pain 32,000

Production for Documentary film for CHUDFantascope Production Project 25,200Michel Labban Financial Officer 38,354Halba Women Collective and EnyScouts My Forest 11,910Heart Bloom for the DisabledOrganization Silver and Gold after Fatigue 32,000

Implementation Off Civil Works In GeographicalAreas Of Unions Of UN Baalbak, Central Bekaa,

Al Bonian co and Zahle 95,966Interteck Batinorm Supply of Trucks and Water Tank Trucks 67,103Joseph Ghosh Municipal Engineer in Byblos 44,545

Lebanese Cultural Development Sent OrganizationClub Plus Baalback Cultural Club 31,853

Purchase of Server and Storage System forMidwhare Data System Archiving 17,950Nidal Chhayib Consultant 44,138Mohamad Arabi Rapid Social Assistant 11,600

Together through a partnership support andRashaya Child Care Organization integration of Children 31,050

Supply and Installation of eight generators forSakkal SARL Union of Arkoub, Zahle and Tyr 22,886lad Jaber Social Expert 22,350Somico Supply of 4 Back Hoe Loaders 46,800Bassoul and Hnainy Supply of 4 Utility Panel Vehicle 5,080Est Bou Shalhoub Industry And Supply of Steal Waste Containers (660) for TheTrading Union of Central Bekaa Municipality 20,615

Council for Development and ReconstructionMunicipal Services Emergency Project - Grant TF017510Financial Statements31 December 2016

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Amount financedfrom grant proceeds

Contractor's Name Description (100%) USDTogether for Development Creating Cultural awareness in sorting Garbage 32,000Welfare Organization Teach Me before you Feed Me 32,000Woman Social Development Development Cultural Programs for the SyriansOrganization Immigrants 31,552Amount paid from special account 904,005

Execution of Emergency works in Baalback, CenterAl bonian co Bekaa and Zahle 121,334

Third Payment for the Execution of EmergencyWorks in Jabal El Sheikh, Qalaat El Istilal, Al

Hamoud Establshment Sahel and Al Buhaira Union 107,579First payment for Supply of Trucks and Water Tank

interteck batinorm Trucks 340,736Third and fourth Payment to Auto Stars of Supply

Mounir Bazergi of Street sweeper track and boom ift 62,860First payment of Supply and Installation of Water

Racfo Water Technology Filter System 77,400Payment as advance from CDR local finds while

Advance CDR Payments wating for retroactive financing from WB 31,934First payment for Supply and Installation of eight

Sakkal Industries generators for Union of Arkoub, Zahle and Tyr 205,976Second and Third Payment for Supply of 4 hackhioeloaders and 15 Steer loaders and 1 Agricultural

Somico tractor 395,100Interteck Batinorm The Supply of Copactor Garbage Trucks 263,191Direct Payment 1,606,110Total 2,510,115

4. S.O.E Withdrawals During the Year 2016

Withdrawal Works, Goods and ServicesDescription(100%)UDUSD

15 584,432S.O.E withdrawals 31.12.2016 584,432

Council for Development and ReconstructionMunicipal Services Emergency Project - Grant TF017510Financial Statements31 December 2016

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5. Cumulative Statement of Special Account

The cumulative drawings and payments made in this account since inception up to December 31, 2016 aredetailed as follows:

USD

World Bank initial deposit 1,500,000World Bank replenishments 734,860Increase of the special account

Interest earned

2,234,860

Payments for project expenditures funded by the Loan:

Works, Consultant's Services, Goods & Equipment (1,483,906)

(1,483,906)Balance - December 31, 2016 750,954

Council for Development and ReconstructionMunicipal Services Emergency Project - Grant TF01 7510Financial Statements31 December 2016

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6. Cumulative Statement of Project Expenditures

USD

Works, Goods and Services 3,195,162

3,195,162