Output-Based Aid in Project Finance : Using World Bank Guarantees to Enhance Credit
To obtain market financing for an infrastructure project, a private operator needs to be able to provide potential investors assurance that revenue flows to the project will be reliable. Where those revenue flows consist in part of government outpu...
| Main Authors: | , |
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| Format: | Brief |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2005/07/7068519/output-based-aid-project-finance-using-world-bank-guarantees-enhance-credit http://hdl.handle.net/10986/11042 |
| Summary: | To obtain market financing for an
infrastructure project, a private operator needs to be able
to provide potential investors assurance that revenue flows
to the project will be reliable. Where those revenue flows
consist in part of government output-based aid (OBA) subsidy
payments, providing that assurance can be problematic. Many
governments are considered unreliable payers and therefore
assigned a low credit rating by financial markets and
investors. In these cases the credit quality of OBA payments
needs to be enhanced if they are to help attract investment
financing to the project. The World Bank offers guarantee
instruments that can enhance the creditworthiness of such
payments. There are two main options: partial risk
guarantees to mitigate the risk of a government failing to
make OBA payments for individual projects, and partial
credit guarantees to help governments raise financing for a
subsidy pool providing OBA payments to multiple project. |
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