Protected IsDB DISBURSEMENT HANDBOOK 2025 IsDB DISBURSEMENT HANDBOOK 2025 Table of Contents ABBREVIATIONS iii FOREWORD v INTRODUCTION 2 1.1 1.2 1.3 1.4 1.5 1.6 2 2 3 4 5 5 Purpose Applicability Key Project Dates Electronic Access Outreach Inquiries THE IsDB GROUP 8 2.1 2.2 2.3 8 9 9 Overview Decentralization Islamic Modes of Finance DISBURSEMENT POLICIES 12 3.1 3.2 3.3 3.4 3.5 3.6 3.7 12 12 14 14 14 14 15 Basic Principles General Conditions Financing Agreement Effectiveness Cost Eligibility Advance Contracting and Retroactive Financing Procurement of Goods, Works and Services DISBURSEMENT MODALITIES 18 4.1 4.2 4.3 4.4 4.5 18 18 19 20 24 Modes of Disbursement Direct Payment Reimbursement Reimbursement Guarantee / Special Commitment Special Accounts DISBURSEMENT PROCEDURES 30 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12 5.13 5.14 30 30 33 34 34 34 35 35 36 36 36 37 38 39 Disbursement Letter Withdrawal of Funds Eligible and Ineligible Expenses Components and Expenditure Categories Reallocation of Proceeds Contract Management Disbursement Currency & Exchange Rate Minimum Disbursement Amount Bank References Refunds Cancellation of Undisbursed Balances Project Closure Steps to Avoid Disbursement Delays Disbursement for Special Situations PROJECT FINANCIAL MANAGEMENT 44 6.1 6.2 6.3 6.4 6.5 6.6 6.7 Background and Introduction Financial Management Capacity Capacity Assessment Project Preparation Project Implementation Audit Reports Project Documents 44 45 45 46 46 47 49 GLOSSARY OF ESSENTIAL TERMS 52 ANNEXES 59 Annex 4.1: Withdrawal Application Form Annex 4.1-A: Summary Statement / Statement of Expenditures Forms Annex 4.1-B: Expenditure Forecast (SoFE) Form Annex 4.2: Direct Payment Checklist Annex 4.3: Reimbursement Checklist 60 64 66 68 69 Page i IsDB DISBURSEMENT HANDBOOK 2025 Annex 4.4-A: Reimbursement Guarantee Commitment Application Annex 4.4-B: Reimbursement Guarantee – Swift-based Sample Annex 4.4-C: Amendment Request for Reimbursement Guarantee Underlying Letter of Credit Annex 4.5: Special Account Checklist and Forms Annex 4.5-A: Special Account – Reconciliation Statement Form Page ii 70 72 73 74 75 ABBREVIATIONS ABBREVIATIONS BED Board of Executive Directors BIC Bank Identification Code CTA Common Terms Agreement D&D Dues and Disbursement DCA Disbursement Capacity Assessment DL Disbursement Letter EA Executing Agency EDP Electronic Disbursement Platform FA Financing Agreement FAA Financial Accountability Assessment FAR Final Audit Report FCD Financial Control Department FM Financing Management FMA Financial Management Assessment FMS Financial Management Strategy IA Implementing Agency IBAN International Bank Account Number ICD Islamic Corporation for Development of the Private Sector ICIEC Islamic Corporation for Insurance of Investments and Export Credits ICR Irrevocable Commitment to Reimburse INFOHUB Project Information Hub IsDB Islamic Development Bank ISFD Islamic Solidarity Fund for Development IRTI Islamic Research and Training Institute ITFC International Islamic Trade Finance Corporation LC Letter of Credit LoF Line(s) of Finance MC Member Country MCPS Member Country Partnership Strategy MoF Mode(s) of Finance NDFI National Development Financing Institution NOC Non-Objection Confirmation OCR Ordinary Capital Resources OIC Organization of Islamic Conferences Page iii IsDB DISBURSEMENT HANDBOOK 2025 PCG Principles of Corporate Governance (IsDB Group) PFM Project Financial Management PIM Project Implementation Manual PIU Project Implementation Unit PMU Project Management Unit PPP Public Private Partnership RBA Risk-based Approach RCA Reimbursement Commitment Application RGC Reimbursement Guarantee Commitment RMA Relationship Management Application RR’ Report and Recommendation of the President SA Special Account SME Small and Medium-sized Enterprise SoE Summary of Expenditure(s) SOFE Summary of Forecasted Expenditure(s) SS Summary Statement TA Technical Assistance TC Technical Cooperation TOR Terms of Reference UCP-DC Uniform Customs and Practice for Documentary Credit WA Withdrawal Application Page iv FOREWORD FOREWORD This Disbursement Handbook reflects a summary of the disbursement policies, guidelines, and procedures of the Islamic Development Bank (‘IsDB’ or ‘Bank’). It is intended to serve as a reference tool for beneficiaries, executing agencies, project implementation units, co-financiers, suppliers and other external contracting parties involved in the preparation and implementation of projects and programs financed by or through the Bank.

For instance, the number of fragile and conflict-affected member countries escalated from 28 to 31 as reported by the OECD's State of Fragility Report in 2022 and the IsDB Resilience Index in 2023. ... This state of fragility often perpetuates a vicious cycle, rendering transition, recovery, and development exceedingly arduous.