Kuwait and China

Kuwait and
China
Successful Cooperation

Establishment of Kuwait
Fund
Established in 1961 as a bilateral financial – aid
agency.
1st national institution founded by a developing
country to help developing nations.
- Initial capital = KD 50 million (US$ 165 million)
- Geographical coverage = Arab Countries.
Today 2014
Our current capital KD 2 billion (US$6.6billion)
Geographical coverage = 104 countries
worldwide

Kuwait Fund - Capital
Initial Capital = 50 million K.D. (31/3/1963)
100 million K.D. (31/3/1964)
In 1967 , 200 million K.D. (31/3/1967)
In 1975, 1000 million K.D. (Geographical
distribution was expanded to cover all non-Arab
countries requiring development assistance in
addition to Arab countries).
In 1981, 2000 million K.D.
Today , The Kuwait Fund still retains the 2000
million K.D. in terms of official capital, in addition
to two reserved capitals surpassing 2000 million
K.D.(The geographical distribution : 104 countries.)

UN Development
Mandate (1974)
It stipulates that industrial as well as oil
producing countries allocate 0.7% of their
GDP to development assistance.

The UN Development
Goals
Eradicate Extreme Poverty & Hunger.
Achieve Universal Primary Education.
Promote Gender Equality & Empower Women.
Reduce Child Mortality.
Improve Maternal Health.
Combat HIV, Aids , malaria & other diseases.
Ensure Environmental Sustainability.
Develop a Global Partnership for Development

KUWAIT FUND CONTRIBUTIONS TO DEVELOPMENT INSTITUTIONS
Committed (Million
US$)
Institution Paid Up (Million US$)
Arab Fund for Economic & Social Development 576.98 576.98
Arab Bank for Economic Development in Africa 49.69 49.69
African Development Bank Group
• African Development Bank
• African Development Fund
20.44 134.54
221.30 261.49
Inter – Arab Investment Guarantee Corporation 6.80 6.80
International Development Association 117 117
International fund for agricultural Development 65.75 71
(IFAD)
• IFAD Special Program for Sub-Saharan African
Countries
109 241
Arab Gulf Program for United Nations Development 20 50
Organizations.
Total 1,187 1,509

Fund Activities
The Scope of our operations can be extended to
any country that requires development & financial
assistance.
Types of assistance
Loans
Grants & Technical Assistance
Contributions to Multilateral Development
Institutions

Geographic Regional Distribution of Fund’s Loans
Central Asia & European Countries
Arab Countries
West African
Countries
South East
Asia
& Pacific
Countries
Latin America & The
Caribbean Countries
South
Center
& East
African
Countries

Geographical Distribution of Fund’s Loans
Amount in (Million %
US$)
No. of No. of Loans
Countries
Regions
Arab Countries 16 326 9,818 56.24
East, South Asia & The 19 162 3,229 18.50
Pacific Countries
West African Countries 19 153 1,722 9.86
Central, South & East 21 120 1,276 7.31
African Countries
Central Asian & 17 58 1,022 5.86
European Countries
Latin American & The 11 39 388 2.23
Caribbean Countries
Total 103 858 17,455 100%

Geographic Regional Distribution of Fund’s Loans
Arab Countries
56.24
East, South Asia
& The Pacific
Countries
18.50
West African
Countries
9.86
Central, South &
East African
Countries
7.31
Central Asian &
European
Countries
5.86
Latin American &
The Caribbean
Countries
2.23

Sectoral Distribution of Fund’s Loans
Agriculture
Transportation
Industry
Power
Water &
Sanitation
Social
Telecommunications
Development Bank

Loan Amount in %
million US$
Sector No. Of Loans
Transportation 362 6,202 35.53
Energy 149 4,636 26.56
Agriculture 120 1,975 11.31
Water & Sewage 83 1,634 9.36
Industry 63 1,226 7.02
Social 32 805 4.62
Development Banks 18 458 2.63
Miscellaneous 17 174 1.00
Telecommunication 14 344 1.97
Total 858 17,455 100

Energy 26.56
Agriculture 11.31
Water & Sewage
9.36
Transportation
35.53
Industry
7.02
Development Banks 2.63
Social 4.62
Miscellaneous 1.00
Telecommunication 1.97

Total Loans for China 921,395,855 US$ 5,969,136,145 RMB
Total Loans for South 3,228,748,640 US$ 20,917,003,370 RMB
East Asia and Pacific
Countries
Percentage of China 28.6%
Loans from Region

Loans
Project Name Sign Date Amount in mil $ Amount in RMB
SICHUAN
Cheng Du 27/12/1990 29,474,131 191,378,284
Aluminium Foil
Kaifeng Graphite 25/10/1991 29,364,976 190,669,528
Electrode
Panzhihua Airport 31/8/2001 32,300,000 209,726,913
Jiuzhai – 27/2/2002 21,250,000 137,978,233
Huanglong Airport
Yibin – Changning 1/8/2005 28,135,000 182,683,180
Road

Loans
FUJIAN
Xiamen International 2/12/1982 19,962,701 129,619,681
Airport
Shaqikou Hydro- 5/1/1985 30,435,187 197,618,508
Electric
Airport Development
Prj.
Airport Development
Prj.
NINGXIA
Ningxia Integrated 25/11/1996 34,000,000 220,765,172
Rural Development
Project (First Stage)
Ningxia Integrated 20/6/1999 34,000,000 220,765,172
Rural Development
Project (First Stage)
Ningxia People’s 14/9/2006 34,000,000 220,765,172
Hospital Project

Loans
GUANGXI
Qinzhou Port 12/2/2001 20,400,000 132,459,103
Project (Phase II)
Qinzhou Port – 3/12/2003 29,919,958 194,273,076
Xiniujiao Highway
Wuzhou Vocational 5/12/2013 34,000,000 220,765,172
Education Center
Project
LIAONING
Jinzhou Harbour 9/3/1988 16,566,897 107,570,411
(First Phase)
Beitai Ductile Cast 21/9/1989 20,300,041 131,810,058
Iron Pipe

Loans
INNER MONGOLIA
The Inner Mongolia 21/2/2000 31,331,054 203,435,458
Railway Project
(Xuejiawan – Hushi)
The Inner Mongolia 26/3/2004 36,491,565 236,943,137
Railway Project
(Huhhot – Zhungeer)
SHAANXI
Xian – Baoji Highway 15/10/1993 30,940,000 200,896,307
Yulin - Jingbian 6/1/2003 32,514,613 211,120,413
Expressway
XINJIANG
Urumqi Fertilizer 4/5/1983 39,888,039 258,996,760
Plant
Lake Bosten River 10/5/2009 23,120,000 150,120,317
Basin Environment
Protection &
Development Project

Loans
HUNAN
Hunan Wood 8/11/1982 34,000,000 220,765,172
Based Plant
Luoyang 19/3/1987 21,080,000 136,874,407
Polypropylene
Plant
SHANDONG
Qi-Lu Ceramic 15/11/1986 6,770,639 43,962,390
Tiles Plant Project
Jinan Yao-Qiang 13/12/1988 8,952,486 58,129,324
Airport
SHANXI
Ningguo Cement 5/7/1982 47,551,672 308,757,442
QINGHAI
Qinghai Vocational 18/6/2010 39,100,000 253,879,948
Education
Development
Project

Loans
ANHUI
Chuzhou City 5/3/2008 32,911,039 213,694,449
Comprehensive
Environment
Rehabilitation Project
GUANGDONG
Shenzhen Airport 21/3/1990 27,200,000 176,612,138
GUIZHOU
Guizhou Education 8/2/2012 25,160,000 163,366,227
College Development
Project
HENAN
Zhengzhou Xuedian 6/4/1995 15,205,035 98,727,709
Airport
TIANJIN
Tianjin Mini Vehicle 6/7/1985 13,593,027 88,260,792
Manufacturing

Loans
JIANGXI
Jingdezhen And 5/4/1993 11,631,726 75,525,884
Ganzhou Airports
BEIJING
Beijing Silk Fabrics 12/2/1986 6,726,072 43,673,012

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.

Project Cycle
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.

Project Cycle
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.

Project Cycle
1.3. THE APPRAISAL:
1.3.1. Amission, 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 would 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.

Project Cycle
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.

Project Cycle
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.

Project Cycle
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.

Project Cycle
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
date 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.

Kuwait Fund Requirements for The Preparation
of A Feasibility Study
For Kuwait fund to be able to properly assess the potential of financing a
development project, a complete feasibility study must be undertaken. If the
said study is prepared in any language other than the English language, a
translation to the english language is required. A typical study may
contain the following sections:

The executive summary
Will normally contain a brief introduction to the project, description of the
contents of the following chapters, summary of costs and benefits-leading to
its technical and economic viability (indicating the firr, and eirr), and
recommendations to the course/s of action to be undertaken to implement
the project

A - The economic and financial sections
1. Country economic background:
analyze the recent economic developments in the country using the
most recent economic indicators obtained from reliable sources. The
analysis should include the basic country characteristics, the
available natural and human resources and their mobilization, the
macroeconomic performance based on the sectoral developments,
government finance within the framework of its fiscal policy, the
financial sector performance within the framework of the
government monetary and credit policy, and the external position
including the bop and the external debt within the framework of the
government international trade policy. The medium term prospect
of the country should also be demonstrated taking into
consideration the existing and planned economic reform programs.

2. Project justification:
demonstrate and prove the need and the importance of the project
to the economy using micro, macroeconomic analysis, and market
surveys if needed. The report should emphasize the prevailing
market conditions and the expected situation after the
implementation of the project.
analyze the degree of market competition and/or concentration
currently prevailing and the future prospective if applied to the
project.
3. Project area of influence
Population trends and economic activities in the project’s
area of influence

4. Market surveys and the justification of the project:
I) this section shall demonstrate and prove the need and the importance of
the project to the economy using micro and macroeconomic analysis, market
surveys if needed. The report should emphasise the prevailing market
conditions and the expected situation after the implementation of the project.
Demand and supply projections with and without the project shall be
quantified with the proper parameters used in the projections.
II) this section shall also contain the analysis of the degree of market
competition and/or concentration currently prevailing and the future
prospects if applicable to the project.

5. Economic analysis:
I). Calculate the shadow "economic" prices that can be used in calculating economic
benefits of the project.
II). Modify the financial cost of the project: investment, operation and maintenance and
replacement costs, to exclude any direct transfer payments (i.e. Taxes, subsidies, etc.)
And to include the shadow wage rates - if the labor market is not competitive - in
addition to the other economic prices of the inputs used in the production process.
III).Value intangible costs and benefits of the project if available.
Use the modified cash flows to calculate the economic internal rate of return (eirr).
IV).Demonstrate the sensitivity of the eirr to the changes in the value of the main
variables.
V). Estimate the effect of the project on the following:
1. Employment
2. Foreign exchange
3. Pollution

Financial analysis:
(this applies only to projects that can be appraised using the “financial internal rate of return” as an
indicator of viability)
I).Investigate the expected stream of income arising from the expected product mix of the project
using the current prevailing prices.
II).Utilize the estimated capital investment required.
III). Estimate the annual operation and maintenance expenses.
IV). Estimate any additional replacement cost that may be needed during the lifetime of the
project.
use the above mentioned parameters to calculate the financial internal rate of return (firr).
V).Demonstrate the sensitivity of the firr to the changes in the value of the main variables.
VI).Calculate the break-even point and the appropriate production mix and level.
VII).Review the tariff and/or pricing policy of the products to insure its adequateness if
necessary.
VIII).Present informative current and projected financial reports concerning the implementing
agency including but not limited to:
Balance sheet
Income statement
Sources and uses of funds ratio analysis including liquidity, activity, profitability, debt, and debt
coverage ratios, etc.

B - The technical section
1. Sector information:
I). An introduction about the importance of the sector to the
country.
Ii). The authorities responsible for the sector.
Iii). Demands on the means of the sector and to which extent they are satisfied.
Iv). Description in detail about all means of the sector and sub-sectors (if any) with
statistics running for the last five years, at least, and an explanation of the trend of the
statistics.
V).Effect of the means of the sector on the environment.
Vi). Sector budgeting and expenditures in the present country's budget plan, and to
what extent they are satisfied and whether foreign investments are being utilized.
Vii). Future sector development plans and means to finance and execute them, and
whether foreign investment is required.

2. Project information:
I).Aim of the project.
II). Description of the project.
III).Components of the project.
IV).Technical soundness.
(a) principal engineering features, such as the type, location, capacity and
characteristics of major facilities and their relationship to existing and future
services.
(b) justification of the criteria, standards, location and extent of the facilities
proposed as compared with those existing and other available alternatives.
(c) conceptual design or preliminary design and drawings of the elements of
recommended systems, sufficiently complete to provide a basis for
reasonably-firm estimates of the bill of quantities and costs.
V). Estimated cost of the project, with detailed break-down into:

1. Land acquisition
2. Civil engineering works
3. Electro-mechanical works
4. Supplies
5. Technical administrative assistance (training)
6. Consulting services for design and supervision
7. Physical contingencies, and
8. Price contingency.
It should be noted that all costs must be broken down into local and foreign currencies. The cost
estimates should also refer to the basis on which the costs are estimated.
VI). Financing plan of the project.
VII). Project implementation times schedule.
VIII). Possibilities of future expansion.
IX). Effects of the project on the environment.
X). Operation, maintenance, and training requirements.
XI). Institutional requirements (facility management and
financial management).

C. Project implementing agency information
1. The ministry or agency (or agencies) which is in-charge of the
project.
1. Establishing the ministry or agency ( law or decree, date and
number).
3. The departments or divisions of such ministry or agency, with a description of their functions.
4. Organizational chart for the ministry or agency.
5. Assisting government agencies, if any.
6. Supervision of the project execution.
7. Maintenance of the project.
8. Total number of the staff of the agency:
 Engineers and their classification
 Technical personnel
 Other categories
 Nationals and foreigners

9.The possibility of assigning nationals to follow the implementation
of the project.
10.Shortage in the workforce of the executing agency, if any – how
treated;
 Staff training
 Training centers and how financed, if any
 Future plans for training
11. The possibility of establishing a full-time unit to supervise the
implementation of the project.
12. The possibility of formulating a unit to operate and maintain the
project.

13.The agency managing the project, if different from the executing agency.
14. Similar projects carried out by the executing agency.
14. The financial structure and performance of the implementing
agency:
(this section is applicable only to the cases in which the implementing agency is an autonomous
entity and proven to be of legal and financial independence from the government, or wherever it is
recommended to establish a new independent agency for the proper implementation and operation of
the project)
I)The analysis of the financial structure and the financial performance of the implementing
agency for the last five years, if applicable. The analysis should be based on the audited
financial statements of the agency. The analysis shall indicate the agency's major accounting
policies, fixed assets accounts details, short and long term debt obligations, equity details,
etc. The analysis shall also include the major financial ratio indicators.

II)Projected financial statements for the implementing agency during and after the
implementation of the project. Such projections shall be done with the objective of
assessing the ability of the implementing agency to service its existing and the new
debt arising from financing the project. The projected financial statements shall cover at
least 5 years of operation and shall include projecting the following statements:
 Balance sheets,
 Income statements,
 Sources and applications of funds statements.
III)financial ratio analysis including liquidity, activity, profitability, debt ratio,
coverage ratio, ..etc.

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