Note: These OP and BP apply to loans, credits, and grants of more than US$1 million under the Global Environment Facility (GEF). They do not apply to 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); for such operations and for GEF grants of US$1 million or less, staff should consult the GEF Executive Coordinator, ENVGM, or refer to the GEF Operations website; and for operations financed by the Multilateral Fund for the Implementation of the Montreal Protocol (MP), see OP/BP 10.21, Investment Operations Financed by the Multilateral Fund for the Implementation of the Montreal Protocol. For policies on the signing and effectiveness of legal agreements for Project Preparation Facility advances, see OP/BP 8.10, Project Preparation Facility; for guarantees, see OP/BP 14.25, Guarantees, or consult the Director, Project Finance and Guarantees Department, PSI; for World Bank grants, including grants under the Development Grant Facility, see OP/BP 8.45, Grants, or consult the Manager, Development Grant Facility, TFO; and for grants under trust funds, see OP/BP 14.40, Trust Funds, or consult the Head, Trust Funds Oversight Team, TFO.
OP and BP 13.00 replace the versions dated July 1994 and para. 2(a) of the Operational Memorandum Responsibilities of the Managing Directors, Operations, and Regional Vice Presidents, March 11, 1996. OP and BP 13.00 are complemented by OPCS Guidelines and OPCS Templates, available online to staff. Questions may be addressed to firstname.lastname@example.org.
1. Once the Bank1approves a loan, authorized representatives of the borrower and the Bank sign the legal agreements for the loan, subject to the following two requirements:
(a) the Bank has received from all the other signing parties satisfactory evidence of authorizations for signature of the legal agreements; and
(b) no payments to the Bank¾on loans to the borrower, or on loans to or guaranteed by the country¾are overdue beyond the number of days specified in OP 13.40, Suspension of Disbursements.
2. After signing, the legal agreements become effective only after the borrower furnishes to the Bank satisfactory evidence that the borrower has met standard and special conditions of effectiveness.2
(a) Standard conditions of effectiveness apply to all loans; they require the borrower to show that the execution and delivery of the legal agreements on behalf of the borrower and the guarantor, if applicable, have been duly authorized or ratified by all necessary governmental and corporate actions.3
For a borrower that is not a member of the Bank, the Bank may require evidence that the condition of the borrower, as represented to the Bank at the date of signing, has undergone no material adverse change since that date.
(b) Special conditions of effectiveness are specific to a particular loan; they pertain only to actions that are essential for initiating the implementation of the project, or that need to be taken early on to ensure project success.4
(c) As part of the evidence of compliance with the conditions, the Bank requires legal opinions by counsel acceptable to the Bank (or a certificate from a competent official of the borrower or guarantor or, where applicable, project implementing or other entities with which the Bank has entered into a legal agreement) that the legal agreements have been duly authorized or ratified by, and are legally binding upon, the non-Bank parties involved. The legal opinions may also cover the legal aspects of compliance with special conditions of effectiveness.
3. If, before the effectiveness date, any event occurs that would have entitled the Bank to suspend the borrower's right to make withdrawals from the loan account had the Loan Agreement been effective, the Bank may withhold the notice of effectiveness until the event ceases to exist.5
Deadlines and Extension
4. No deadline for signing is specified; however, the Bank expects signing to take place as soon as possible after loan approval.6 If the legal agreements are not signed 18 months after approval, the Bank normally withdraws the loan.7
5. The legal agreements terminate if the conditions established for effectiveness are not met by the date specified in the legal agreements, normally 90 days after signing, but this date does not normally exceed 18 months after loan approval.8 However, if the borrower shows satisfactory reasons for the delay, the Bank may set a later date on the basis of the time required to fulfill the remaining conditions of effectiveness.9
"Bank" includes IBRD and IDA; "loan" includes IDA credit and IDA grant, and GEF grant to which OP 13.00 applies; and "borrower" includes recipient of GEF grants to which OP 13.00 applies. "Legal agreements" includes, as applicable, the Loan Agreement, Development Credit Agreement, Guarantee Agreement, Project Agreement, GEF Grant Agreement for GEF grants to which OP 13.00 applies, and, in the context of signing, any other agreement to which the Bank is a party, including the Letter on Financial and Economic Data and any other supplemental letters.
Staff should refer to Sections 12.01 and 12.02 of the relevant General Conditions: the General Conditions Applicable to Loan and Guarantee Agreements and General Conditions Applicable to Development Credit Agreements. For GEF grants to which OP 13.00 applies, staff should refer to the applicable provisions of the GEF Grant Agreement, which may incorporate the relevant sections of the General Conditions by reference.
See OP 7.00, Lending Operations: Choice of Borrower, and Contractual Agreements, for an explanation of when the Bank may want to enter into a legal agreement with project implementation entities or other entities that have a direct interest either in the project or in the achievement of its objectives. For loans that involve the Bank's entering into legal agreements with entities other than the borrower or the guarantor, additional standard conditions of effectiveness require such entities to show that the execution and delivery of the legal agreements on behalf of each such entity have been duly authorized or ratified by all necessary governmental and corporate actions. In general, such actions should be taken before the project is presented to the Bank's Executive Directors for approval. See also OP 7.00, Lending Operations: Choice of Borrower, and Contractual Agreements, for special conditions of effectiveness that may involve legislative action.
Staff should see the General Conditions, Section 12.03 (b). For GEF grants to which OP 13.00 applies, staff should see the applicable provisions of the GEF Grant Agreement, which may incorporate the relevant sections of the General Conditions by reference.
Commitment charges begin accruing 60 days after the date on which the Loan or Development Credit Agreement is signed (see OP/BP 3.10, Loan Charges, Currencies, and Payment Terms of IBRD Loans and IDA Credits). No commitment charges accrue on GEF grants. For exceptional extensions of the signing deadline beyond the 18-month period, see BP 13.00, para.19. Although commitment charges begin to accrue 60 days after signing, the Bank does not charge commitment charges for loans that fail to become effective (see OP/BP 3.10, Loan Charges, Currencies, and Payment Terms of IBRD Loans and IDA Credits).
Staff should see the General Conditions, Section 12.04. For GEF grants to which OP 13.00 applies, staff should see the applicable provisions of the GEF Grant Agreement, which may incorporate the relevant sections of the General Conditions by reference.