Aid Accounts Audit Division Government of India Website

Aid Accounts & Audit Division Government of India Website: www. aaad. gov. in

Outline • Part A • Details of External Assistance • Part B • Functional aspect

Part – A

GOI policy on External Assistance • Guide lines issued in 2005 on Bilateral Assistance emphasize reduced reliance on external assistance • Bilateral Assistance accepted only from G-8 countries and EC; tied aid not accepted. • Channelization of external assistance from smaller partners (other than those mentioned above), through multilateral organizations to promote greater aid harmonization • Countries can provide bilateral development assistance directly to autonomous institutions, universities, NGOs, etc.

Facts • GOI o/s External Sovereign Debt as on 31 st March 2012 at US $ 63. 37 Billion • 2011 -12: Receipts at US$ 5. 14 (US$ 4. 57 Loans and US$ 0. 56 grants) Billions and repayment at US$ 3. 35 (Principal US$ 2. 67 and interest & commitment US$ 0. 68) Billion • 2012 -13: Receipts estimated at US$ 5. 44 (US$ 4. 90 Loans and US$ 0. 54 grants) repayment at US$ 3. 74(Principal US$ 2. 99 and interest &commitment US$ 0. 75) Billion • External sovereign debt as %age of GDP for 2011 -12: 3. 62%

Bilateral Donors All figs. In millions of US Dollar Donor Japan Germany Russian Federation Disbursements Debt Outstanding During 2011 -12 (Loans As on 31 st March on Govt. Account) 2012 1, 185. 38 14, 995. 32 292. 58 2, 701. 58 7. 05 1, 364. 62 France - 325. 29 USA - 297. 64 Switzerland - 3. 57 Italy - 0. 37 1, 485. 39 19, 685. 39 Total

Multilateral Donors All figs. In millions of US Dollar Donor Disbursements During 2011 -12 (Loans on Govt. Account) Debt Outstanding As on 31 st March 2012 1, 453. 66 26, 853. 06 IBRD 619. 68 8, 896. 47 ADB 976. 26 7, 568. 20 IFAD 27. 99 326. 17 OPEC 3. 31 14. 12 EEC Total 3, 080. 9 27. 65 43, 685. 67 IDA

Maturity Profile and Terms of Loans Donor Type of Interest Grace Period Maturity Remarks ADB LIBOR + Spread 0 -5 years 15 -25 years IBRD LIBOR + Spread 5 years 18 years LIBOR Range 0. 40 to 5. 54 For last 10 years IDA @ Fixed 0. 75% 10 years 35 & 25 Years 1. 25 % Japan * Fixed 0. 01 to 4. 25% 10 years 30. 5 & 40. 5 years 0. 55, 0. 65 and 0. 75 for Environment Projects with 40 years maturity Germany ** Fixed 0. 75 to 5. 50% 5 -10 years 15 -50 years IFAD Fixed 0. 75% 10 years 40 years Note: Does not include other charges such as commitment fees * 0. 01% for Consultancy and 0. 65% for environmental. ** Current being 0. 75% for treasury portion and 2. 49 % for bank portion. @ New IDA terms and conditions: Under Blend/Harden Terms apart from Service fee of 0. 75% Interest Rate of 1. 25% will be charged

Commitment Charges Indicates cost incurred on undisbursed amount: slow moving projects bear greater liability. US $ in million Donor (rate) ADB (0. 15%) 2007 -08 2008 -09 2009 -10 2010 -11 2011 -12 15. 57 12. 38 11. 81 9. 83 8. 30 IBRD (0. 25%)* 8. 83 7. 03 6. 05 4. 17 2. 73 IDA (0. 50%)** 6. 17 2. 97 - - - 5. 20 4. 09 0. 43 0. 82 1. 23 5. 99 1. 22 Japan (0. 10%)*** Germany (0. 25%) Note: * Commitment Charges are not levied on the agreements signed after 16. 05. 2007. ** At present commitments charges have been fully waived. *** Commitments Charges are on the agreements signed after 01. 10. 2007 and arrears paid during FY 2010 -11.

Currency Composition of Outstanding Stock 0. 38 Spl. Drawing Rights DOD = 40. 65% (IDA, IFAD) 5. 67 21. 43 40. 65 US Dollars DOD =31. 87% (IDA, IBRD, ADB, Russia USA) Yen DOD=21. 43% (Japan) Euro DOD = 5. 67% (Germany, France, Italy) 31. 87 Indicates debt stock as on 31 st March 2012 Inflow/outflow on indicated currency except SDR Others DOD= 0. 38% (Switzerland, EEC(SAC), Russia)

Interest rate breakdown of Outstanding Interest Range wise %age of Outstanding 48. 32 25. 85 0 to 0. 75% (IDA, Germany, Japan, IFAD) 0. 76 to 2. 50% (Japan, France, IFAD, OPEC, USA) 2. 51 to 4. 00% (Japan, France, Germany) 0. 46 Above 4% (France and Germany) 7. 76 USD 6 Months LIBOR (IBRD and ADB) 17. 61 Variable rates are applicable for ADB and IBRD loans (as per Libor). 74% of Debt Stock is at fixed rate.

Part – B Functional Aspects

Functions of AAAD Part A: Process – – – Loan agreement Disbursements (Reimbursement and Direct) Debt servicing External assistance budget Imparting training to project authorities Part B: Reporting – Brochure – MIS reports for project management – Data submission to World Bank for publication in Global Development Finance (GDF) – Data for Template on International Reserves and Foreign Currency Liquidity – Special Data Dissemination Standards (SDDS) reporting – Responsible for reconciliation of External Debt with International Agencies

Coordination with various agencies Mo. F Credit Div. /Depart ment of Expenditure Commercial Banks State Govt. AAAD Donors/ External Agencies RBI Project Authority

Dynamics at AAAD • 18 donors with varied systems and procedures • Around 1165 active loans/grants • Maintenance of two Websites – caaa. gov. in for users only and aaad. gov. in in public domain • Maintenance of debt records in loan currency and INR

Role of Borrower Ministry of Finance (DEA) (Multilateral Institutions and Bilateral Cooperation Divisions) § § § § Facilitates Appraisal Processing and Negotiations Signing of Agreements Causing agreements to take effect Follow up of project implementation and monitoring Coordinating mid-term review and completion report to donor All other actions relating to Agreements viz. Amendments, Reallocation, etc.

Role of Project Implementing Authority § § § § Helps in project appraisal Signing project agreement Ensuring proper procurement procedures acceptable to donor Responsible for all project activities and sending periodical reports to donor Maintaining proper accounting records based on sound financial management Responsible for preparing reimbursement claims and sending the same to Aid Accounts & Audit Division, New Delhi Ensuring timely audit of accounts and reports to donor by due date Prepare completion report of the project identifying further phase of the project where donor can finance

Role of Central Bank towards External Aid § § § Repository of all Foreign Currencies Inflows INR equivalent of Foreign Currency Flow from External Aid is passed on to the Credit of CAA&A Maintenance of Loan-wise Special Account in disbursed currency for the advance/deposits received from Donors. Coordinating with CAA&A for sending External Debt data to Donor and other institutions. Providing Exchange Rate for Government transactions of major Foreign Currencies to AAAD on daily basis

Project Financing Budgeting Step-I n Annual Requirement of Rupee resources the expenditure of the Project to be approved by the Planning Commission. Step-II n Inclusion of the funds requirement in the Annual Budget of the Government. 19

PROJECT CYCLE Identification By Govt. Evaluation by Donor Proposal To Donor Completion Report Appraisal By Donor Project Completion Negotiations (Donor & Govt. ) Project Execution Declaring the Agreement Effective Financial Agreement Donor –- GOI Project Agreement Project State – Donor

CONDITIONS PRECEDENT TO DISBURSEMENT 1 Loan Agreement to be declared effective 2 Procurement Procedures as laid down in the agreement to be followed. 3 Authorized signatory to withdraw funds (CAAA) 4 Authorized Signatory to sign claims (PIA) 5 Participatory Agreements to be entered into between Government of India / State Government and the Project Executing Agency, if applicable. 6 Submission of audit certificate by the prescribed date.

Disbursement Flow Chart- Reimbursement Expenditure Budget of P. I. A. Claims A. A. & A Div. For Claims Under Revolving Fund For Claims Outside Revolving Fund RBI Mumbai Donor Statement A. A. & A. Div. Disbursement to CAA&A Account P. F. Div. of D. O. E PAO Expenditure Through Local office RBI, C. A. S. Nagpur State Govt. Account- Credit P. I. A. : Project Implementing Agency P. F. : Plan Finance D. O. E. : Department of Expenditure C. A. S. : Central Accounts Section

Disbursement Flow Chart- Direct Project Implementing Agency AA&A Div. Donor office in India/ Head Quarters Direct Payment to Payees Account Advise AAAD Recommendation of ACA to Department of Expenditure RBI, C. A. S. Nagpur State Govt. Account- Credit/Debit Credit AAAD Account

System supported activities Loan Agreement Claim Handling Disbursements Additional Central Assistance Disbursement Process Donor’s Demand Repayment Sanction Recording of Repayments Repayment Process Budget Preparation Brochure Generation MIS Compilation Process Interface with CS-DRMS Debt Management Consolidation & Compilation Portfolio Analysis

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