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OP 3.10, Annex A - Past Loans of IBRD

These policies were prepared for use by World Bank staff and are not necessarily a complete treatment of the subject.
OP 3.10 - Annex A
June, 2003

1.  For new loans, IBRD only offers the fixed-spread loan (FSL) and variable spread loan (VSL) financial terms set out in OP 3.10.  This annex presents the terms and conditions of the loans IBRD has offered in the past, which still govern some outstanding loans.

Fixed-Rate Single Currency Loans (FSCLs)

2.  FSCLs were available to all IBRD borrowers for which the invitation to negotiate was issued after May 11, 1995 and before December 1, 1999.

Eligibility and Currencies

3.  Same as for VSLs (see
 OP 3.10, para. 24).


4.  Lending Rate.  The fixed rate of the FSCL is set on the semiannual rate-fixing date for loan amounts disbursed during the preceding six-month period (the "Disbursed Amount") and remains fixed for each Disbursed Amount until that amount is repaid.

5.  During the period from the date of each disbursement until the next rate-fixing date, interest accrues at the same rate as applicable to VSLs for that period. In effect, an FSCL is like a series of fixed-rate subloans, comprising as many fixed-rate subloans as there are semesters in which disbursements occur.

6.  All FSCL interest payment dates fall on the 15th of the month. Interest continues to accrue on any overdue principal, but IBRD does not charge interest on overdue interest on its loans.  Once the rate of the Disbursed Amount is fixed on the rate-fixing date, it remains fixed for the life of the loan.  The FSCL lending rate is expressed, and interest accrues, on a 30/360 day-count convention on daily principal volumes disbursed and outstanding.1

7.  Commitment Charge.  Same as for VSLs (see OP 3.10, para. 27).2

8.  Waivers.  Same as for VSLs (see OP 3.10, para. 28).

9.  Front-End Fee.  Same as for FSLs and VSLs (see OP 3.10, para. 8).


10.  Each Disbursed Amount has a three-year grace period and amortizes in level repayments of principal.  The final maturity of each Disbursed Amount is based on the expected total disbursement period for the loan, measured from the loan approval date to the loan closing date (see table below).

Maturities for Fixed-Rate Single Currency Loans

Expected total disbursement period
Final maturity for each Disbursed Amount
Final loan maturity from date of loan approval
0 up to and including three years (fast-disbursing loan)
12 years
12-15 years
More than three and up to and including six years (medium-disbursing loan)
9 years
12-15 years
More than 6 years (slow-disbursing loan)  
6 years
12-20 years*
*For Category III borrowing countries, overall loan maturities are limited to 17 years, and for those in Categories IV and V they are limited to 15 years.


11.  IBRD charges a prepayment premium based on the cost of redeploying the full amount of the loan to be prepaid from the date of prepayment to the original maturity date (see para. 4 of Annex B to OP 3.10).

Variable Lending Rate 1989 (VLR89) Currency Pool Loans (CPLs)


12.  VLR89 CPLs were available to all IBRD borrowers for which the invitation to negotiate was issued before March 1, 2001.


13.  VLR89 CPLs are multicurrency loan obligations expressed in U.S. dollar equivalent terms.  The currency composition of borrowers' currency pool loan obligations reflects that of the currency pool and is the same for all borrowers.  At least 90 percent of the U.S. dollar equivalent value of the currency pool is maintained in a target currency ratio of one U.S. dollar: 125 Japanese yen: one euro.  Before the introduction of the euro on January 1, 1999, the currency pool was maintained in a target currency ratio of one U.S. dollar: 125 Japanese yen: two Deutsche mark group currencies (Deutsche mark group consisted of Deutsche marks, Swiss francs, and Netherlands guilders).


14.  Lending Rate: Cost Basis and Lending Spread.  The interest rate on VLR89 loans passes through to borrowers IBRD's average cost of outstanding funding allocated for these loans, plus a lending spread.  The rate is based on the semester average cost of outstanding IBRD debt issued since 1982, excluding debt allocated to fund IBRD's liquidity portfolio or other loan products offered after 1989.  This cost basis for IBRD's borrowings in each of the currencies in the pool is recalculated every six months for the semesters ending June 30 and December 31.
3 The currency-specific average costs are then weighted by the U.S. dollar equivalent share of each currency in the currency pool.4

15.  IBRD's contractual lending rate for VLR89 loans for which the invitation to negotiate was issued on or after July 31, 1998, is determined by adding a spread of 0.75 percent to this weighted average semester cost.  For VLR89 loans for which the invitation was issued before July 31, 1998, IBRD's lending rate is determined by adding a spread of 0.50 percent.  The lending rate for VLR89 loans is reset every six months and applies to six-month interest periods beginning on or after January 1 and July 1.  Interest accrues on an actual/365-366 day basis on daily principal volumes disbursed and outstanding.  It continues to accrue on any overdue principal, but IBRD does not charge interest on overdue interest on its loans.

16.  Commitment Charge, Front-End Fee, Waivers.  Same as for VSLs (see OP 3.10, paras. 27-29).

Repayment Terms

17.  Subject to the same repayment terms as VSLs (see OP 3.10, paras. 30-33).


18.  VLR89 loans may be prepaid. IBRD charges a prepayment premium, calculated as described in paras. 4-5 and 7-8 of
 Annex B to OP 3.10.

Offer of Currency Choice for existing CPLs as of September 1996

19.  Between September 1, 1996, and June 1, 1998, IBRD offered borrowers the option to amend the terms of their existing CPL (VLR89, VLR82, or fixed-rate) Loan Agreements to change their currency obligation. Borrowers could request the following:

(a)  conversion of undisbursed loan amounts to single currency loan terms (VSL or FSCL); or

(b)  conversion of disbursed loan balances and undisbursed loan amounts (not converted to single currency loan terms) to one of four single currency pools (SCPs); or

(c)  a combination of (a) and (b).

Conversion of Undisbursed Loan Amounts to Single Currency Loan (SCL) Terms

20.  Borrowers could convert undisbursed balances into any currency or currencies of sufficient borrower demand that the IBRD could efficiently intermediate.  They could also choose between VSL or FSCL terms.

21.  LIBOR-based SCL Terms (presently known as VSL terms).  The lending rate for loan amounts converted to VSL terms is determined in the same manner as for new VSLs less any applicable waivers (see OP 3.10, paras. 25-26).

22.  Undisbursed loan amounts converted to VSL terms retained the same remaining maturity as the original currency pool loan had before its terms were amended.  The amortization schedule was adjusted using a pro rata share of the amortization schedule of the original loan, such share being the ratio of converted amounts to the sum of converted and unconverted balances.

23.  Fixed-Rate SCL (FSCL) Terms.  The lending rate for loan amounts converted to fixed-rate SCL (FSCL) terms is determined in the same manner as for existing FSCLs, as described in paras. 4-6, less any applicable waivers.

24.  Loans converted to FSCL terms have maturities, grace periods, and amortization schedules set in the same manner as for newly contracted FSCLs, and in no case do they exceed the final maturity of the original currency pool loan.

Conversion of Disbursed and Undisbursed Loan Amounts to Single Currency Pool (SCP) Terms

25.  Currencies.  Loans that were converted to single currency pool (SCP) terms were to be multicurrency obligations initially and would continue to be expressed in U.S. dollar equivalents. SCPs were offered in four designated currencies: Deutsche mark, Japanese yen, Swiss franc, and U.S. dollar.  Deutsche mark SCPs were re-denominated to euro on December 31, 2001.

26.  Since January 1, 1999, IBRD has established a currency composition for each SCP that is 100 percent in the borrower's designated currency.

Lending Rates

27.  Fixed-Rate SCP Loans.  The original lending rate applicable to each fixed-rate currency pool loan (see para. 38) converted to SCP terms continues to apply, less any applicable waivers.

28.  Variable-Rate SCP Loans. All variable-rate currency pool loans (i.e., VLR89 and VLR82) that were converted to SCP terms accrue interest at a variable interest rate determined separately for each SCP.  This rate, which is reset every six months, is a direct pass-through to borrowers of IBRD's cost of funding allocated to that SCP.  It is the weighted average cost of IBRD's outstanding borrowings allocated to fund that SCP, as recalculated each June 30 and December 31, plus IBRD's lending spread of 0.50 percent ( which was in effect when the Loan Agreements were signed), less any applicable waivers.


29.  For borrowers that converted entire loans to SCP terms, the maturities, grace periods, and amortization schedules remained unchanged from the original Loan Agreement.  If undisbursed amounts were converted to SCL terms and only disbursed loan balances were converted to SCP terms, the remaining maturities and amortization schedules of the disbursed balances were adjusted pro rata, with the share determined by the ratio of balances converted to SCP terms to the sum of those converted to SCP and SCL terms.


30.  Same as for VLR89 currency pool loans (see paras. 4-8 of
 Annex B to OP 3.10).

Variable Lending Rate 1982 (VLR82) Currency Pool Loans and Conversion to VLR89 Loans

31.  All IBRD loans that were approved after June 30, 1982, and for which invitations to negotiate were issued before May 18, 1989, were made as variable lending rate 1982 (VLR82) loans.


32.  Borrowers' currency obligations under VLR82 loans are the same as those under VLR89 loans (see para. 13).


33.  Lending Rate. The lending rate for VLR82 loans is based on the weighted semester average cost of all IBRD debt issued and outstanding since July 1982 (qualified borrowings), plus a contractual lending spread of 0.50 percent.  The pool of qualified borrowings reflects all of IBRD's outstanding debt.  The lending rate is recalculated on or about June 30 and December 31 and applies to interest periods beginning on or after July 1 and January 1.  Interest accrues on an actual/365-366 day basis.

34.  Lending Rate Waiver. Until January 1, 1996, the VLR82 lending rate was subject to the same interest waiver as the rate on VLR89 loans.  After January 1, 1996, the interest waiver on VLR82 loans was adjusted as described in para. 37(b).

35.  Commitment Charge and Waiver.  For VLR82 loans, the contractual commitment charge on undisbursed amounts5and the annual commitment charge waiver are the same as those for VSLs and VLR89 loans.


36.  Same as for VLR89 currency pool loans (see paras. 4-5 and 7-8 of
 Annex B to OP 3.10).

Conversion to VLR89 Terms6

37.  When VLR89 loans were introduced, IBRD's Board authorized the conversion of VLR82 loans to VLR89 terms for borrowers that amended their Loan Agreements.  In 1994, the Executive Directors approved two actions to promote conversions of loan terms from VLR82 to VLR89:7

(a)  Conversion waiver. IBRD would grant each borrower converting all its VLR82 loans a one-time 0.10 percent waiver of annual interest for two interest periods (regardless of whether the borrower was eligible for the annual interest waiver).  Borrowers that converted all of their VLR82 loans before January 1, 1995, received the reduction in annual interest charges on converted loan balances outstanding for the two consecutive six-month interest periods beginning on or after January 1, 1995.  Other borrowers receive this reduction for the first two full six-month interest periods beginning after the date on which they convert all their VLR82 loans.

(b)  Adjustment of annual interest waiver on VLR82 loans.  At the time of the annual allocation of net income (effective FY95), IBRD would reduce the annual interest waiver for VLR82 loans to borrowers eligible for the waiver whenever the VLR82 lending rate is below the VLR89 lending rate, in order to equalize the two rates.

Fixed-Rate Currency Pool Loans

38.  All IBRD loans approved before June 30, 1982, were made as fixed-rate loans.  Interest rates, determined at the time of loan approval, were fixed for the life of the loan.

39.  All fixed-rate loans committed until June 30, 1980, were non-pooled.  The currency composition of each loan depended on the currencies disbursed on that loan.  These currencies formed the borrower's repayment obligation to the IBRD.  Fixed-rate loans committed after June 30, 1980, were pooled: the currency composition of all borrowers' loan obligations was the same, as determined by the composition of the currency pool.


40.  Borrowers repay non-pooled fixed-rate loans in the various currencies in which the loans were disbursed.
8 Borrowers' currency obligations on pooled loans are shares of the currency pool.


41.  Lending Rate: Cost Basis and Lending Spread.  The lending rate for the earliest fixed-rate loans was based on IBRD's marginal cost of borrowing in the currency or currencies expected to be disbursed on these loans, plus a lending spread. Beginning in 1976, the lending spread was fixed at 0.50 percent.

42.  Commitment Charge.  Contractual commitment charges on undisbursed amounts of fixed-rate loans were specified in the Loan Agreements, within a range from 0.375 percent to 0.75 percent per annum.9

43.  Waivers. Same as for VLR89 currency pool loans.

Repayment Terms

44.  Repayment terms, specified in each Loan Agreement, were based principally on the per capita income of member countries, although initially they were based on project characteristics as well.


45.  Fixed-rate currency pool loans may be prepaid in the same way as VLR89 currency pool loans (see para. 6 of
 Annex B to OP 3.10).


  1. Current FSCL lending rates are given at
  2. The BCFBD website shows the waiver, if any, for eligible IBRD borrowers.
  3. VLR89 Loan Agreements provide for the possibility of quarterly calculation of the lending rate upon reasonable notice to the borrower.
  4. For the current VLR89 lending rate, see the BCFBD website at
  5. Some VLR82 loans were subject to a front-end fee, due by the loan effectiveness date, that borrowers could finance from their loan proceeds.  When this fee was approved by the Executive Directors in January 1982 it was set at 1.5 percent of the loan amount.  It was reduced to 0.75 percent in December 1982 and to 0.25 percent in March 1983, and then was phased out.
  6. VLR82 loans differ from VLR89 loans in that the lending rate is based on a pool of qualified IBRD borrowings reflecting all of IBRD's outstanding debt, not just the currency pool referred to in connection with the 1989 currency pool loans (VLR89 CPLs).
  7. A Proposal to Promote Conversion of Loan Terms from VLR82 to VLR89 (R94-215), November 1, 1994.
  8. In January 1989, the Executive Directors approved a policy that increased the predictability of the order in which currencies are recalled for payment.  The currencies that make up less than 2.5 percent of a non-pooled loan's outstanding balance are recalled first. Major currencies are then recalled on a pro rata basis.
  9. Fixed-rate loans approved after January 1982 were assessed a front-end fee of 1.5 percent of loan amount until they were phased out on June 30, 1982.
OP 3.10 - Financial Terms and Conditions of IBRD Loans, IBRD Hedging Products, and IDA Credits

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