The World Bank Group

Instruments
 World Bank Group financing and risk
mitigation instruments

IBRD/IDA MIGA IFC

IBRD Loan for middle Political Risk Insurance IFC A-Loan
income countries • expropriation IFC B-Loan
IDA concessional Credits • transfer restriction IFC C-Loan
and Grants for poorer • breach of contract IFC Guarantees
countries (partial credit
• war & civil disturbances
Guarantees structures –
•partial risk offshore & local
•partial credit financing)
Interest Rate and
Currency
Tech. Assistance
swaps

The World Bank

 IBRD Enclave Loan for IDA-Only Country

IBRD Guarantee
IBRD

Loan
IDA-Only
IDA-Only
COUNTRY
COUNTRY
Loan Repayment
Guarantee
Offshore
OffshoreEscrow
Escrow Account
Account
Project Revenues
Power
Power Company
Company Purchaser
Purchaser
Throughput

Equity

Sponsors
Sponsors

The World Bank

 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
The World Bank
 World Bank Partial Risk Guarantees
Cover these risks

• tariff
• regulatory risk
• collection risk
• arbitration
• change in law
• convertibility
• transferability
• subsidy payments (e.g. Output-Based Aid)

The World Bank

 Partial Risk Guarantees help access finance
at sustainable terms

Debt Maturity Interest Spread1

Vietnam 5 5%
(P. Risk) 16 2%

Bangladesh 1 3%
(P. Risk) 14 2%

1 3%
Cote d’Ivoire
(P. Risk) 12 2.75%

0 N/A
Lao PDR
(P. Risk) 16.5 2.25 %

without Guarantee with Guarantee

1
Spreads at the time of the guarantee issuance

The World Bank

 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
The World Bank
 MIGA: Finance Structure

MIGA
MIGA
Agreement

Insurance
COUNTRY
COUNTRY
Banks
Banks
Loans

Support
Power
Power Company
Company

Equity

Sponsors
Sponsors
The World Bank
 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

The World Bank

 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

The World Bank

 Southern Africa Regional Gas Project

Development of Gas
Fields in Mozambique
Inhambane Region
(Pande and Temane)

A 865km 26-inch diameter Pipeline between A Central Processing

the Gas Fields and Sasol’s plant in Secunda, Facility (CPF) to
South Africa, including 5 take off-points in process/clean the gas
Mozambique for future domestic gas use before transport

The World Bank

 Combined Support of
IFC, MIGA, IBRD

•IFC •MIGA • IBRD Enclave PRG

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

The World Bank

 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

The World Bank

 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

The World Bank