IDEAS home Printed from https://ideas.repec.org/p/cpm/notfdl/2506.html

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

Author

Listed:
  • Diwan, Ishac
  • Devie, Jules

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.

Suggested Citation

  • Diwan, Ishac & Devie, Jules, 2025. "What’s the value of a World Bank Policy-Based Guarantee?," FDL Policy Notes 2506, CEPREMAP.
    • Handle: RePEc:cpm:notfdl:2506
    as

    Download full text from publisher

    File URL: http://findevlab.org/wp-content/uploads/2025/04/FDL_Working-Paper_Whats-the-value-of-a-World-Bank-Policy-Based-Guarantee_April25.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Valentin Lang & David Mihalyi & Andrea F. Presbitero, 2023. "Borrowing Costs after Sovereign Debt Relief," American Economic Journal: Economic Policy, American Economic Association, vol. 15(2), pages 331-358, May.
    2. Mr. Marcos Chamon & Erik Klok & Mr. Vimal V Thakoor & Mr. Jeromin Zettelmeyer, 2022. "Debt-for-Climate Swaps: Analysis, Design, and Implementation," IMF Working Papers 2022/162, International Monetary Fund.
    3. Stiglitz, Joseph & Diwan, Ishac & Songwe, Vera & Guzman, Martin & Kessler, Martin, 2024. "An Updated Bridge Proposal: Towards A Solution To The Current Sovereign Debt Crises And To Restore Growth," FDL Policy Notes 2405, CEPREMAP.
    4. Martin Guzman, 2020. "An Analysis of Argentina’s 2001 Default Resolution," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 62(4), pages 701-738, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. M. Ayhan Kose & Peter Nagle & Franziska Ohnsorge & Naotaka Sugawara, 2021. "What has been the impact of COVID-19 on debt? Turning a wave into a tsunami," CAMA Working Papers 2021-99, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    2. Hwang, Young Kyu & Sánchez Díez, Ángeles, 2024. "Renewable energy transition and green growth nexus in Latin America," Renewable and Sustainable Energy Reviews, Elsevier, vol. 198(C).
    3. Sebastian M. Saiegh & Glen Biglaiser, 2024. "The value of legal recourse in sovereign bond markets: Evidence from Argentina," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 21(3), pages 669-709, September.
    4. Silvia Marchesi & Tania Masi & Pietro Bomprezzi, 2024. "Is to Forgive to Forget? Sovereign Risk in the Aftermath of Private or Official Debt Restructurings," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 72(1), pages 292-334, March.
    5. Bode, Eckhardt, 2024. "African sovereign defaults and the common framework: Divergent Chinese interests grant Western countries a "consumer surplus"," Kiel Policy Briefs 174, Kiel Institute for the World Economy.
    6. Xiaoyi Jiang & Hao Cao, 2024. "Implementing the debt-for-nature swaps for marine protected areas: case studies from Seychelles and Belize," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 11(1), pages 1-9, December.
    7. José Ramón Martínez Resano & Sonsoles Gallego, 2021. "G20 debt-relief initiatives for low-income countries during the pandemic," Economic Bulletin, Banco de España, issue 3/2021.
    8. Sayantan Ghosal & Marcus Miller & Kannika Thampanishvong, 2019. "Waiting for a haircut? A bargaining perspective on sovereign debt restructuring," Oxford Economic Papers, Oxford University Press, vol. 71(2), pages 405-420.
    9. Martin Guzman & Domenico Lombardi, 2018. "Assessing the Appropriate Size of Relief in Sovereign Debt Restructuring," Documentos de trabajo del Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET) 2018-26, Universidad de Buenos Aires, Facultad de Ciencias Económicas, Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET).
    10. Anastasia Telesetsky, 2023. "Multilateral Debt Relief for Clean Ocean Energy," Sustainability, MDPI, vol. 15(20), pages 1-20, October.
    11. Lauren Olsen & Frederic de Mariz, 2025. "Attracting More Capital for Biodiversity Finance: The Case of Debt-for-Nature Instruments," Commodities, MDPI, vol. 4(2), pages 1-20, May.
    12. Daniel A. Dias & Christine Richmond & Grant Westfahl, 2026. "Duration of Capital Market Exclusion: An Empirical Investigation," Review of International Economics, Wiley Blackwell, vol. 34(1), pages 178-197, February.
    13. Simeth, Nagihan, 2025. "Debt-for-nature swaps: A case study of Gabon," Emerging Markets Review, Elsevier, vol. 65(C).
    14. Raih, Yoan, 2025. "Can Debt-for-Development Swaps become an asset class?," FDL Policy Notes 2516, CEPREMAP.
    15. Iolanda Fresnillo, 2024. "Debt-for-Nature Swaps: Shadows in a Shiny ‘New’ Business Niche," Development, Palgrave Macmillan;Society for International Deveopment, vol. 67(3), pages 260-269, December.
    16. Silvia Marchesi & Tania Masi & Pietro Bomprezzi, 2021. "Is to Forgive to Forget? Sovereign Risk in the Aftermath of a Default," Development Working Papers 475, Centro Studi Luca d'Agliano, University of Milano.
    17. Yacouba Coulibaly, 2023. "Can Resource-backed Loans Mitigate Climate Change ?," Working Papers hal-04072352, HAL.
    18. Mr. Julien Acalin & Mr. Leonardo Martinez & Mr. Francisco Roch, 2025. "Fiscal Rules, Robust Correction Mechanisms, and Sovereign Spreads," IMF Working Papers 2025/195, International Monetary Fund.
    19. Misun Woo & Sarala Emmanuel & Tharanga Silva & Zainab Shumail, 2024. "Is the IMF a Primary, Direct Perpetrator of Human Rights Violations? Evidence from Sri Lanka, Pakistan and South Korea," Development, Palgrave Macmillan;Society for International Deveopment, vol. 67(3), pages 326-340, December.
    20. Kersting, Erasmus & Kilby, Christopher, 2024. "How do stock markets in emerging economies respond to World Bank loan approvals?," Emerging Markets Review, Elsevier, vol. 63(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpm:notfdl:2506. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Martin Kessler (email available below). General contact details of provider: https://edirc.repec.org/data/ceprefr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.