Governance & Funding Mechanism

Once a project is approved for funding support by IDB, a financing agreement is prepared stating responsibilities of IDB and the Beneficiary. When the financing agreement is officially endorsed by both parties, the beneficiary undertakes the implementation and ensures the sustainability of the social infrastructure/facility and benefits as per the purpose agreed to and stated in the agreement.

As for the quality assurance of the social facilities (education and health), competent local firms are usually hired as Consultant(s) to prepare detailed design and tender documents as well as to supervise the project during the implementation. A shortlist of reputable local firms is prepared and selection of Consultant(s) is carried out by the Beneficiary on the basis of technical and financial soundness as per IDB procurement guidelines. Contractors for civil works are selected on the basis of Local Competitive Bidding (LCB).

Preferred method of disbursements by IDB is to transmit payments directly to the Contractor’s or Supplier’s account, based on bills for work executed on site, attested by the Consultant and endorsed by the Beneficiary. In some cases, the Contractor may request for an advance payment up to 20% of the contract amount against an irrevocable and unconditional bank guarantee from a commercial bank acceptable to the IDB. The Beneficiary may request IDB’s approval to implement the project using its own resources and then submit all required supporting documents for reimbursement of expenses. In no case, funds are paid to the Contractor or to the Beneficiary in advance other than for the mobilization of the Contractor under the stated conditions.

Projects under implementation are visited by IDB’s follow-up team, and are audited after completion by the independent Audit Office which reports directly to the IDB Management.