What’s the value of a World Bank Policy-Based Guarantee?

Ishac Diwan and Jules Devie

No 2506, FDL Policy Notes from CEPREMAP

Abstract: The World Bank board recently approved a budget support operation for Cote d'Ivoire that includes a policy-based guarantee (PBG) to secure a new long-term commercial loan under favorable conditions, which will finance the retirement of costly short-term debt. This liability management operation unlocks significant gains for Cote d'Ivoire - in net debt reduction, and importantly, given the country's situation of illiquidity, in reduced debt service over the next few years. FDL's analysis of the deal reveals that the gains generated by PBGs can go beyond the financial savings generated by sound liability management if they can also act as a signal of creditworthiness, managing to boost debtor countries’ standing in the capital market.

Keywords: Capital Markets; Cote D’Ivoire; Debt Swaps; Guarantees (search for similar items in EconPapers)
Pages: 25 pages
Date: 2025-04
New Economics Papers: this item is included in nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:cpm:notfdl:2506

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