3. Grant Aid Process (Post-signing the Exchange of Notes)

    After signing the exchange of notes, the government of the recipient country fundamentally sets about procuring the required materials, equipment, and services, using the donated funds. The Japanese government, however, undertakes a number of activities required for the proper and efficient implementation of the aid package. JICA shoulders responsibility for activities associated with the implementation and facilitation of the various forms of grant aid.

(1) Conclusion of the Contract and Banking Arrangements
    After signing the exchange of notes, the government of the recipient country (or its designated authority) proceeds to conclude a contract with a Japanese company. Since complete impartiality is essential in the selection of the Japanese company, a competitive tendering process is generally undertaken to select the final candidate.
    In parallel with the signing of the contract, the government of the recipient country (or its designated authority) promptly draws up an arrangement with a bank in Japan to open a special account into which the funds granted by the Government of Japan will be deposited, and from which payments will be made to the Japanese contractor.
    This Banking Arrangement serves as the basis for the recipient country to issue the Authorization to Pay (A/P) that, in turn, is needed for the Japanese contractor to obtain the payments stipulated in the contract. The Banking Arrangement must therefore be concluded at the same time as the contract for the implementation of the grant aid project.

(2) Verification of the Contract
    Verification of the contract allows the Government of Japan to acknowledge that the contract described above is a suitable vehicle for implementation of the proposed grant aid. The contract cannot come into effect unless it has been verified. The Ministry of Foreign Affairs checks the details of the contract submitted by the recipient country government and Japanese contractor, and, where necessary, consults with relevant ministries and agencies to determine whether or not to approve the contract.

(3) Execution of the Contract and Payment
    Upon receiving the verified contract and the Authorization to Pay (A/P), the Japanese contractor proceeds to perform its obligations under the contract. Under the payment terms stipulated in the contract and the A/P, the Japanese contractor submits a request for payment to the designated bank, accompanied by a certificate issued by the recipient country government (or agency) or export and shipping documents, in accordance with the specified procedures. Upon receiving a request presented by the designated bank, the Government of Japan, via the Ministry of Foreign Affairs, remits the due amount in yen into a grant account in the name of the recipient country at the designated bank, in line with statutory procedures. After the remittance is finalized, the bank promptly makes the payment to the Japanese contractor on behalf of the recipient country. If the contract terms stipulate installments or partial payments, the procedure described above may be repeated several times, as required.

Procedure for the Execution of Grant Aid Contract (After Signing the Exchange of Notes)

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