January 2013 July 2013 337.19 350.00 DISBURSEMENT PLAN

ANNEX 8 FinManPlan_FINAL240212 Page A.8.3 of 10 9182012

3. BUDGETING AND FUND AVAILABILITY

The Government budget preparation procedures are described in Section 3.3.2 of the PIP Main Text. These are supposed to be completed in early January with the issue of the final budget document DIPA. At that time the Ministry of Finance advises each Budget User Pengguna Anggaran - eg. Line Ministry of its total allocation and how this is divided between its Directorates and ultimately Work Units Satker, such as individual projects. Efficient project management is essential to ensure that realistic forecasts of funding needs are prepared and submitted in a timely manner during planning and budgeting process so that the DIPA reflects the real needs of the project. A problem outside the control of the project is that in most years there have been delays in the issue of DIPA. The effect of this on project implementation is reviewed in Section 4, Risk Management. It should also be noted that current regulations require all Satker officials to be formally reappointed at the beginning of each fiscal year. The large number of these officials has led to delays in the formal appointments, by way of official letter, of some. Until such letters of appointment are received, no official has the authority to act and project implementation must be temporarily halted. This risk is referred to in the PIP in Section 4.1, Risk Management. Budgetary or organizational problems may result in delays in payments to contractors. Where permitted under the Terms and Conditions of Contract, this may result in claims for compensation being submitted. This represents a financial risk to the Project.

4. DISBURSEMENT PLAN

Based on the Project Implementation Schedule in Annex 12 of the PIP, the estimated disbursement schedule during each six-month period during the Project is shown in Table 1. The amount estimated to be required during the first six months is US 19 million. The average amount for each six month period is US 44 million, peaking at US 88 million during the 5 th six month period. Table 1 : Estimated Disbursement per Six Month Periods US millions Period Estimated Amount US millions Start Finish 6 Month Period Cumulative January 2012 June 2012 July 2012 December 2012 18.78

18.78 January 2013

June 2013 33.25

52.03 July 2013

December 2013 49.88 101.91 July 2014 December 2014 58.78 160.69 July 2014 December 2014 88.17 248.86 January 2015 June 2015 53.00 301.86 ANNEX 8 FinManPlan_FINAL240212 Page A.8.4 of 10 9182012 July 2105 December 2015

35.33 337.19

January 2016 June 2016

12.81 350.00

5. DISBURSEMENT MECHANISMS As noted in Section 3.3.3a, there are three channels for disbursement of loan funds. These channels are described briefly hereunder and in more detail in the Project Management Manual PMM. 5.1. S PECIAL A CCOUNT RK It is expected that a Special Account RK will be set up in Bank Indonesia BI specifically for the Project to handle WINRIP funding and disbursements. IBRD will provide initial forward funding in an agreed sum to be deposited in this Special Account. When a payment is made for eligible expenditure, as evidenced by the payment documentation SP2D, Bank Indonesia BI is advised by KPPN and BI debits the project Special Account with the equivalent sum in loan currency. To replenish the Special Account, the FMR quarterly financial reporting system is used to furnish IBRD with forecasts of disbursements expected to be required during the next three months. If there are insufficient funds in the Special Account to meet this expenditure, IBRD will transfer sufficient funds to meet forecast needs. The FMR also provides the data needed by IBRD to record actual disbursements made in its own loan account records. The Special Account will be liquidated at the end of the Project and all unspent funds returned to the IBRD. For some small items of expenditure, where activities are implemented through self- management, funds are advanced by government to the Satker. Such advances cannot be drawn from the Loan funds, unless and until, the expenditure is duly accounted for through the Payment Order. Such expenditures are identified by a special suffix GU They are included with other payments SPM-LS when reimbursement from the Loan Account is sought. 5.2. D IRECT P AYMENTS DP Exceptionally, the Government of Indonesia may request direct payment to a contractor from IBRD. This request must be in writing and require the prior agreement of the IBRD. If agreed to by them, the IBRD would then arrange for funds to be transferred direct to the bank account of the supplier, contractor or consultant. Such requests need to be submitted at least 30 days in advance of the payments due date. The rate of exchange to be used for determining the amount of US Dollar withdrawal will be the cost on the date of withdrawal of purchasing the currency required by the supplier, contractor or consultant. ANNEX 8 FinManPlan_FINAL240212 Page A.8.5 of 10 9182012

5.3. R