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OP 13.50 - Cancellations


These policies were prepared for use by World Bank staff and are not necessarily a complete treatment of the subject.
OP 13.50
August, 2002
 
This Operational Policy statement was revised in March 2012 to take into account the provisions of OP/BP 9.00, issued in February 2012.
 
Note:  This OP 13.50 replaces OP 13.50 dated August 1994.  Questions may be addressed to opmanual@worldbank.org.

Revised March 2012


1.  Loan1 amounts may be canceled by either the borrower or the Bank.2

Cancellation by the Borrower

2.  Section 6.01 of the General Conditions3 provide that the borrower has a right to cancel unilaterally any amount of the loan not yet withdrawn, except amounts for which the Bank has entered into special commitments.4

Cancellation by the Bank

3.  Section 6.03 of the General Conditions5provides that the Bank may cancel an amount of the loan for one of the following reasons:

(a)  disbursements of that amount have been suspended for at least 30 days (see OP/BP 9.00, Program-for-Results Financing,  OP/BP 3.05, Project Supervision, and also OP/BP 13.40, Suspension of Disbursements); 

(b)  the Bank has determined, after consultation with the borrower, that the loan account contains a surplus that is not required to finance project costs (see OP/BP  13.25, Use of Project Cost Savings);

(c)  the Bank has determined that the borrower or a beneficiary of the loan has engaged in corrupt or fraudulent practices during the procurement of a contract to be financed out of the proceeds of the loan, and that the borrower has failed to take action acceptable to the Bank to remedy the situation (see para. 17 of OP 11.00, Procurement);

(d)  the Bank has declared misprocurement (see paras. 22-23 of BP 11.00, Procurement);

(e)  an amount of the loan remains undisbursed after the closing date (see OP 13.30, Closing Dates); or

(f)  the guarantor has terminated its guarantee of an unwithdrawn amount of the loan.

4.  The Bank may also cancel parts of a loan as provided in the loan agreement.  For example, under a financial intermediary loan, the Bank may cancel an amount not committed for subloans at the expiration of the commitment period specified for subloans, as provided in the loan agreement. 

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  1. Except where the context otherwise requires, "loans" includes IDA credits and IDA grants; and "Bank" includes both IBRD and IDA. In the case of grants, if the Grant Agreement between the Bank and the recipient of grant funds incorporates some or all of the relevant cancellation provisions of the General Conditions, OP/BP 13.50 applies to the extent the relevant provisions have been so incorporated.  For example, Sections 6.01 and 6.03 of the General Conditions are normally incorporated in Grant Agreements providing for grants of more than US$1 million under the  Global Environment Facility (GEF) (other than GEF grants for projects executed by organizations identified by the GEF Council as eligible to work with the GEF through expanded opportunities for project preparation and implementation; such organizations include, inter alia, regional development banks and UN agencies such as FAO and UNIDO).  Thus, for these GEF grants, the provisions of OP/BP 13.50 applies.  For the cancellation of: (a) GEF grants not covered by OP/BP 13.50, see the GEF Operations website or consult the GEF Executive Coordinator, ENVGC; (b) trust fund grants not covered by OP/BP 13.50, consult the Head, Trust Funds Oversight Team, TFO; and (c) Development Grants Facility (DGF), including IDF grants not covered by OP/BP 13.50, consult the Manager, Development Grants Facility, TFO. For the cancellation of Project Preparation Facility advances, see OP/BP 8.10, Project Preparation Facility.  Loan cancellation is also dealt with in OP/BP 9.00, Program-for-Results FinancingOP/BP 11.00, Procurement; OP/BP 13.05, Project Supervision; OP/BP 13.30, Closing Dates; and OP/BP 13.40, Suspension of Disbursements.
  2. Cancellation of loan amounts does not terminate the borrower's obligation to carry out the project.  See Section 6.06 of the relevant General Conditions.
  3. See the relevant General Conditions Applicable to Loan and Guarantee Agreements or the relevant General Conditions Applicable to Development Credit Agreements.
  4. For a definition of "special commitment", see OP/BP 12.00, Disbursement.
  5. See the relevant General Conditions Applicable to Loan and Guarantee Agreements or the relevant General Conditions Applicable to Development Credit Agreements.



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