NH-SFO Second-Loss - Inclusive and Resilient Job Creation Development Policy Financing

Project Description

The Project entails one or multiple 15-year commercial loans of up to US$400 million (or an equivalent amount in EUR), made by lenders yet-to-be-determined, to the Government of Rwanda (GoR) as part of an IDA Development Policy Financing (DPF). 

The commercial loan(s) will accompany an IDA credit and will be used for general budgetary purposes, as part of a DPF operation that would go for Board approval following the successful completion of a series of reforms/Prior Actions undertaken by the GoR that are defined under the DPF and which focus on inclusive and resilient job creation. 

The commercial loan(s) is expected to benefit from a combination of a (i) US$240 million IDA Policy-Based Guarantee, provided on a first-loss basis; and (ii) a MIGA Non-Honoring of Sovereign Financial Obligations (NH-SFO) guarantee of around US$384.5 million, provided on a second-loss basis. The guarantees will cover 95% of GoR’s scheduled payment obligations under the loan(s). 

The IDA Concept Program Information Document for this DPF can be accessed through the link below:  https://documents1.worldbank.org/curated/en/099122225165023707/P513028-a5b1d069-a82f-48b8-bb81-3a8ba0648f5b.docx 

Environmental Categorization 

The Project is classified as category C under MIGA’s Policy on Environmental and Social Sustainability (2013), as there is no specific use of proceeds or footprint. As above, it is expected that the loan(s) proceeds would be used by the Government of Rwanda for budgetary purposes.

Development Impact

The proposed Project, anchored in the IDA DPF, is expected to contribute to Rwanda's structural transformation while promoting resilient and inclusive job creation. Specifically, the Project is expected to promote fiscal sustainability by broadening the tax base and to help enhance private sector competitiveness by easing key constraints to private investment and job creation.

The joint IDA-MIGA guarantee operation is expected to also maximize debt service savings compared to a standalone IDA PBG, and is expected to help Rwanda meet its financing needs with better terms compared to what would be available without WBG guarantees. 

^[1] In accordance with paragraph 35 of the MIGA Access to Information Policy, this section reflects the date on which IDA Concept Program Information Document for this DPF was publicly disclosed.