World Bank Offers Belarus Longer Repayment Periods

World Bank Offers Belarus Longer Repayment Periods
Move follows decision in 2007 to reduce IBRD interest rates

The World Bank Executive Board approved an extension in maximum maturity limits up to 30 years (average maturity of up to 18 years) for all new IBRD loans and guarantees as well as a further simplification of IBRD loans to a single product line.  The changes follow significant reductions in interest rates approved in late 2007.  These changes are part of the World Bank Group’s enhancement of its engagement with middle-income countries, one of the strategic priorities of World Bank President, Robert Zoellick.

These changes make IBRD financing more attractive to Belarus than ever before, notes Paul Bermingham, World Bank Country Director for Ukraine, Belarus and Moldova.  We are delighted that as we start implementation of our strategy for engagement in Belarus for the next four years, we can offer Belarus both lower interest rates and longer repayment periods, together with simplified, more transparent, and more flexible financing options. 

All IBRD borrowers benefit from the extended limit on average maturity up to 18 years and the extended limit on the final maturity up to 30 years for new loans and guarantees regardless of country per capita income.  In the case of Belarus, the average maturity period will be increased from 11.25 years to 18 years, an increase of 60 percent, while the maximum maturity will be increased from 25 years to 30 years. 
The new flexible loan platform combines the Variable Spread Loan (VSL) and the Fixed Spread Loan (FSL) into a unified product line which provides borrowers access to embedded loan conversion options to manage the currency and interest rate risks as well as the ability to customize repayment terms during loan preparation. Under the unified product, Belarus, and all IBRD borrowers, are offered the following options on new loans:
• Choice of fixed (for the life of the loan) or variable (recalculated every six months) spread over LIBOR for the lending rate
• Repayment schedule flexibility
• Commitment- and disbursement-linked repayment schedules

The new terms become applicable for all new loans and guarantees approved by the Board on or after February 12, 2008.