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The World Bank Group Instruments

The World Bank Group Instruments. World Bank Group financing and risk mitigation instruments. IBRD Enclave Loan for IDA-Only Country. IBRD. Guarantee. IDA-Only COUNTRY. Loan. Loan Repayment. Guarantee. Offshore Escrow Account. Project Revenues. Power Company. Purchaser. Throughput.

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The World Bank Group Instruments

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  1. The World Bank Group Instruments

  2. World Bank Group financing and risk mitigation instruments

  3. IBRD Enclave Loan for IDA-Only Country IBRD Guarantee IDA-Only COUNTRY Loan Loan Repayment Guarantee Offshore EscrowAccount Project Revenues Power Company Purchaser Throughput Equity Sponsors

  4. World Bank Guarantees:key features • Catalyzes private financing for key sectors such as infrastructure • Covers private debt against a government’s (or government entity’s) failure to meet specific obligations to a private or public project • Mobilizes private sector participation; helps extend maturities and lower financing costs • Flexibility – structured to meet borrower and project requirements • Counter guarantee from Member Country

  5. World Bank Partial Risk GuaranteesCover these risks • tariff • regulatory risk • collection risk • arbitration • change in law • convertibility • transferability • subsidy payments (e.g. Output-Based Aid)

  6. Partial Risk Guarantees help access finance at sustainable terms Debt Maturity Interest Spread1 Vietnam (P. Risk) 5 5% 2% 16 1 3% Bangladesh (P. Risk) 14 2% 3% 1 Cote d’Ivoire (P. Risk) 12 2.75% 0 N/A Lao PDR (P. Risk) 16.5 2.25 % without Guarantee with Guarantee 1Spreads at the time of the guarantee issuance

  7. MIGA: Risks and Investments • 4 Basic Covered Risks: - Expropriation - War and Civil Disturbance - Currency Transfer (Inconvertibility) - Breach of Contract (+ Denial of Justice) • Principal Covered Investments: • Equity • “Associated” (loosely) Debt • Shareholder Loans • Debt in project with Insured Equity Investment

  8. MIGA: Finance Structure MIGA Agreement COUNTRY Insurance Banks Loans Power Company Support Equity Sponsors

  9. IFC: 4 Basic Products • Equity and Quasi Equity (Participating loans; Convertible debentures; Preferred stock) • Loans from IFC resources(A-loans) • Syndicated Loans (B-loans) • Lender of record umbrella • Not a “guarantee” • Degree of currency transfer protection • Other Political Risk Mitigation • Guarantees

  10. IDA also provides special support for regional integration projects • Regional Integration Projects receive 2/3 IDA funding from a special allocation, and the country only contributes 1/3 funding from its IDA allocation • Projects must cover at least 3 countries, and demonstrate benefits to more than one country • IDA15: US$2.1 billion allocated to Africa Regional Integration

  11. A 865km 26-inch diameter Pipeline between the Gas Fields and Sasol’s plant in Secunda, South Africa, including 5 take off-points in Mozambique for future domestic gas use Southern Africa Regional Gas Project Development of Gas Fields in Mozambique Inhambane Region (Pande and Temane) A Central Processing Facility (CPF) to process/clean the gas before transport

  12. IFC IFC Investment and Advisory Role: Equity investment in Upstream Advisory assistance to CMH in mobilizing financing for the Upstream Facilitating local participation MIGA Political Risk Cover for equity and debt to SPT & Rompco including: Breach of contract Currency transferability Expropriation War & Civil Disturbance Combined Support ofIFC, MIGA, IBRD • IBRD Enclave PRG Political Risk Cover for debt to SPT & Rompco including: • Sovereign obligations including changes in laws • Currency transferability • Expropriation

  13. Eastern and Southern Africa Technical Advisory Services Project • Aims to help Governments assess and respond to major investment proposals • Will provide just-in-time technical advisory support for infrastructure and natural resource projects (e.g. on legal, financial, social and environmental issues) • Will help develop the policy and legal frameworks for regional infrastructure projects

  14. For further information Please contact: Peter Nicholas, World Bank pnicholas@worldbank.org +1-202-458-0420 Diep Nguyen-van Houtte, World Bank dnguyenvanhoutte@worldbank.org +1-202-458-7548

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