The World Bank Board recently agreed that the Bank can extend its partial credit guarantee instrument to cover structural and social policy reforms. Till now the Bank has only been able to guarantee specific investment projects, but the new proposal aims to “lock in” policy measures deemed important to attract private capital flows. The Bank will guarantee a portion of the debt service on sovereign borrowings from private foreign creditors in return for governments maintaining certain structural, institutional and social policies and reforms. The Bank’s Business News publication (June 1999) explains:
“they can help eligible countries improve their access to private foreign credit in terms of increased volumes, longer maturities and reduced spreads. They can also enhance the Bank’s policy leverage by exposing clients to market discipline, which would in turn encourage greater progress on structural and social reforms.”
For further information, contact: Nina Shapiro, email:nshapiro@worldbank.org
