1. The World Bank Guarantee Program “ Partial Credit Guarantees ”

2. Evolution of Guarantee Programs B-loan program -1980s ECO Program -1988 Mainstreamed in 1994 IBRD “Enclave Guarantees” for IDA countries - 1997 IDA Guarantees - 1998 Policy Based guarantees – 1999 CAS envelope counting-2004

3. World Bank Guarantee Objectives “ Leveraging ” Bank resources “ Catalyzing ” private finance in support of developmental objectives Facilitating member countries access to the international debt and capital markets “ Guarantor of Last Resort ”

4. IBRD Guarantees for private and public borrowers PRG PCG (PBG) IDA Guarantees for private borrowers PRG Variety of Guarantees

5. Guarantees portion of debt service (Not 100% of debt service) Supporting commercial banks and investors Examples: Late maturities Roll-over guarantee under a put option Take-out Financing Rolling guarantees for a fixed number of payments Partial Credit Guarantees

6. PCG: Bond Issue 0 10 years $100 PV 5 years PCG (e.g. Hungary, Lebanon, Philippines) Maturity extension

7. Borrower: Ertan Power Amount: US$150 million Spread: 30 bp over LIBOR Project Cost: US$ 2.9 billion World Bank Guaranteed: Principal on accelerable basis during years 12-15 Guarantee Release Option PCG: Syndicated Bank Loans for China

8. China: Ertan Power Project $150 million Average financing term for China without World Bank Guarantee Additional uncovered risk taken by commercial banks World Bank Guaranteed Total risk assumed by commercial banks $50 million 03691215

9. Advantages of the Guarantees Market instrument (Bank loan is off- market instrument) Flexibility - market, currency, interest rate Better terms (funding cost, maturity) Market access and exposure Procurement flexibility CAS envelope counting (25%)

10. An extension of partial credit guarantee beyond investment projects to adjustment/ sector programs Facilitates borrowings in support of structural and social policy reforms Alternative / Complementary to an adjustment loan Policy-Based Guarantees

11. Strong performers: The country has a strong track record of performance Satisfactory macroeconomic, social, and structural policies Policy impact: Eligible for adjustment program Linkage to up-front conditionalities Value added: Improve market access and terms Sustainable external financing plan Policy Based Guarantees: Eligibility

12. Argentina: PBG Bond Issue Borrower: Republic of Argentina Amount : US$ 250 million Issued on October 15, 1999 Maturity : 1, 1.5, 2, 3, 4 and 5 years Priced at 94.202, 88.485, 83.450, 74.897, 66.421, and 58.701 respectively World Bank PBG: Zero coupon bonds at stated maturities on a rolling basis

13. Rolling Guarantee Structure Exposure to the Bank* *Bank’s maximum exposure is US$ 250 million

14. S&PBBBBB- AAABBBBBBBBBBBBBBB DuffBBBBB-AAAAA- BBB+BBB+BBB+ Fitch IBCABBBB+AAABBB+BBB+BBB+B BB+ BBB+ Republic or ArgentinaArgentina Serial Zero Coupon Notes* ForeignLocalSeries ASeries B Series C Series D-F CurrencyCurrency *Each of the Series B – F Notes will receive AAA ratings once the Guarantee rolls to such Series Ratings on the Argentine Bonds

15. PCG Impact on Maturity and Pricing Colombia (PBG) 10 6.5% 5% Philippines (PCG) 15 7 2.5% 3% 5 Thailand (PCG) 0 10 2.9% 8.5% Lebanon (PCG) Jordan (PCG) 5 10 3% 1% 7 23% 1% with Guarantee without Guarantee