Discount rate, depending on the maturity of the debt
The discount rate is the CIRR rate plus the margin, when calculating the grant element of a loan so as to identify a non-concessional loan under the IDA Free Rider Policy.
- if the maturity is less than 15 years, six-month average CIRR plus 0.75%;
- if the maturity is 15 years or more, but less than 20 years, ten-year average CIRR plus 1%;
- if the maturity is 20 years or more, but less than 30 years, ten-year average CIRR plus 1.15%; or
- if the maturity is 30 years or more, ten-year average CIRR plus 1.25%;
- For those currencies whose CIRRs are unavailable but are pegged to a hard currency, the CIRR for the relevant hard currency is used. Otherwise, the SDR rate is applied.
where:
- “six-month average CIRR” means the average of the Commercial Interest Reference Rates for the currency of the debt to be incurred by the Recipient over the most recently published six month period ; and
- “ten-year average CIRR” means the average of the CIRRs for the currency of the debt to be incurred by the Recipient over the most recently published ten year period.
- “Commercial Interest Reference Rates” means the monthly CIRRS for debt denominated in the relevant currency with a maturity exceeding 8.5 years in, published by the Organization for Economic Cooperation and Development (OECD).
- Margines vayring by loan maturity are those employed in the context of IMF PRGF arrangements or PSIs.
See OECD web site for CIRRs by currency
- http://www.oecd.org/searchResult/0,2665,en_2649_34171_1_1_1_1_1,00.html
- http://www.oecd.org/dataoecd/15/47/36644390.pdf
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