The Project Cycle
1. Project / Loan Status: Pipeline
1.1. THE REQUEST
1.1.1. The Borrower's country should be a developing country. However, countries whose economies are in transition may be considered as eligible. No geographic, ethnic, religious, caste or cultural barrier restricts benefiting from the Fund's loans and assistances.
1.1.2. The request for assistance must be made by the governmental authority responsible for international cooperation and external borrowing.
1.1.3. The requesting authority should indicate that the project is a priority project to the government.
1.1.4 The project should have a strong public sector element and be of a developmental nature. The Fund's assistance is not limited to a particular sector. The project may be in any of the following sectors: infrastructure, agriculture, irrigation, transport, communications, energy, water supply, sewage treatment, education and health.
1.1.5 The project, if not in the education and health sectors, should be supported by a detailed techno-economic feasibility study. The feasibility of the project must be demonstrated by cost-benefit analysis and the calculation of an internal economic rate of return, with an indication of sensitivity to changes in parameters. For projects in the health and education sectors, it is sufficient to demonstrate the feasibility of the project through technical and social data, in addition to evidence establishing the need for the project. The studies of the project should include the proposed components, the cost estimates in local and foreign currencies, and the proposed financing plan. abidance to the "Kuwait Fund Requirements for the Preparation of a Feasibility Study" is advisable. It is preferable that the services of an independent specialized consultant be obtained for the preparation of feasibility studies.
1.2. THE PRELIMINARY APPROVAL:
1.2.1. A team is formed by the Operations Department of Fund to prepare a memorandum regarding the project, summarizing the available information thereof.
1.2.2. If the recommendation of the team is positive, and if the studies are adequate, the Fund's management submits, on approval of the Board's Internal Loans Committee, a recommendation to the Board of Directors to, preliminarily, approve the participation in the financing the project.
1.2.3. Upon the Board's preliminary approval, the management of the Fund may proceed to consider the project for further evaluation.
1.3. THE APPRAISAL:
1.3.1. A mission, composed usually of an engineering adviser, an economic adviser and a legal adviser, visits the country to appraise the project. The mission would visit the project site, collect all necessary project and sector information and, if satisfied, negotiate and initial a draft loan agreement before the end of the visit. The draft loan agreement wouldl state the amount of the proposed loan, the lending terms and other conditions based on the findings of the mission.
1.3.2. Under normal circumstances, and in accordance with the regulations of the Fund, the amount of the loan would not exceed 50% of the total cost of the project and would not include financing of local costs of goods produced in the territories of the borrower.
1.3.3. Upon its return, the mission would prepares a project appraisal report which includes information about the economy of the country, the sector, the implementing agency, the project, the economic and financial viability of the project (if required), and the lending terms and conditions. Such report would be discussed in a meeting attended by all the technical staff of the Fund.
1.4. THE FINAL APPROVAL:
1.4.1. Following discussion and approval of the project appraisal report by the Fund's management it is submitted to the Board of Directors with appropriate recommendations concerning participation in financing the project.
1.4.2. If satisfied, the Board of Directors grants the required approval. Following that, a date is fixed for the official signature of the of the loan agreement which usually takes place in the borrower's country.
2. Project / Loan Status: Active
2.1. THE EXECUTION:
2.1.1. The concerned government authority would invite offers from consultants for the provision of the required consulting services. Following the preparation of construction bidding documents and approval thereof by the Fund, bids may be invited from contractors for the construction of the project or from suppliers for the procurement of the required goods. Under normal circumstances, and in accordance with stipulations of the Loan Agreement, all biddings should be competitive, either through open international bidding or through restricted bidding.
2.1.2. The concerned government authority is expected to obtain the prior approval of the Fund on each implementation step, including, the evaluation of offers, texts of contracts, etc.
2.1.3. Based on the signed and approved contracts, withdrawal applications for disbursements from the proceeds of the loan would be issued by the authorized representative of the borrower. The Fund would disburse, in accordance with the Fund's "Disbursement Procedures", through either direct payments to the beneficiary for construction of works and for services, which is the most common case, or through Letters of credit for procurements, or through reimbursement to the borrower against evidence of payment already made to the beneficiary.
2.1.4. The Fund expects to receive periodic reports from the borrower regarding the progress of the implementation of the project.
2.1.5. During the progress of the project, and especially whenever a problem arises, the Fund would mount a follow-up mission to visit the project site and discuss pending matters. Also, the fund may invite representatives of the borrower and of the co-financiers if any, to meet in Kuwait to discuss outstanding matters.
3. Project / Loan Status: Completed
3.1. THE COMPLETION:
3.1.1. Upon completion of the project, the Fund expects to receive a final report from the Borrower.
3.1.2.After completion of the project, and if there is an unutilized uncommitted balance in the Loan, the Fund usually cancels the said balance and adjusts the repayment schedule accordingly. Under special circumstances, and subject to the approval of the management of the Fund, the borrower may utilize the said balance to finance additional works and goods directly related to the project, and clearly provided for in the Loan Agreement.
3.1.3.Under normal circumstances, the borrower starts repayment of the Loan after the expiry of a grace period. The said grace period, as indicated in the Loan Agreement, starts from the dare of the first disbursement and lasts one year beyond the construction period of the project, thus allowing the borrower to repay the loan through deriving benefits from the project.