Note: OP and BP 8.10 replace the version dated February 2002. They were updated in November 2011 to reflect the provisions of Review of Operational Policy Waivers (R2011-0184), July 26, 2011. They apply to all PPA Agreements that were signed after July 10, 2008. For guidance on, and answers to, specific questions about the Project Preparation Facility, staff should contact email@example.com.
1. The Bank may make a Project/Program Preparation Advance (PPA) from the Project Preparation Facility (PPF) to a prospective borrower to finance:
(a) preparatory activities for investment operations, including preliminary and detailed designs and limited initial implementation activities; and
(b) preparation of programs to be supported by development policy lending operations.
2. The following can be recipients of a PPA:
(a) in the case of PPAs made by IDA, a member country or regional organization ; and
(b) in the case of PPAs made by IBRD, any IBRD-eligible borrower. If the IBRD borrower is not a member country, the member country’s guarantee of the repayment of the PPA is required.
The PPA complements other Bank methods of assisting project or program preparation, such as trust fund grants for project/program preparation and retroactive financing.
3. A PPA is made only when there is a strong probability that a Bank loan will be made to the PPA recipient for the operation under preparation. However, granting the PPA does not commit the Bank to finance any portion of the operation. The PPA is designed to be refinanced out of the proceeds of the loan for whose preparation the PPA is granted or, if the loan does not materialize, to be refinanced or repaid as provided in paragraph 8. The PPA is made in US dollars and carries interest on IBRD fixed spread terms or charges on IDA credit or IDA grant terms, depending on the country’s borrowing status. Payment of interest or service charges, where applicable, is deferred until the PPA is refinanced out of the proceeds of the loan or other repayment terms take effect.
4. The Bank determines the PPF's total commitment authority and the ceiling on individual advances. One or more PPAs may be made for the operation at any stage before the Bank approves the loan, up to an aggregate maximum amount of (a) US$5 million for operations made under OP 8.00, Rapid Response to Crises and Emergencies; or (b) US$3 million for all other operations or for each loan in a regional operation.
5. The PPA Agreement between the PPA recipient and the Bank spells out the purposes, terms, and conditions of the PPA and specifies a date by which the advance is to be refinanced or the repayment process initiated. The refinancing date is the expected date of effectiveness of the Loan Agreement to be made for the operation under preparation. After this date, no withdrawals of the advance are made, and any unwithdrawn amount of the advance is canceled. If the Loan Agreement has not become effective within two years following the date of PPA approval, a later refinancing date may be agreed between the PPA recipient and the Bank. Extension of the refinancing date beyond four years following PPA approval requires RVP approval. If the loan for which the PPA was made is unlikely to materialize by the refinancing date, the PPA may be refinanced out of the proceeds of any other loan to or guaranteed by the PPA recipient for which the Loan Agreement becomes effective by the refinancing date.
6. To refinance the PPA, an amount sufficient to cover the principal amount of the advance plus any applicable estimated accrued interest or service charges is allocated in a separate disbursement category in the Loan Agreement providing for the Bank loan. Any excess amount remaining in this category after refinancing the PPA may be reallocated to other disbursement categories in the disbursement schedule of the Loan Agreement.
7. Further disbursements for continuing PPA activities that have been included as eligible for financing under the loan are made against the appropriate disbursement categories in the Loan Agreement.
8. If no Loan Agreement providing for the refinancing of the PPA has become effective by the refinancing date (including any extensions), the following apply:
(a) If the PPA recipient was an IBRD borrower or an IDA country eligible to receive IDA credits on the PPA approval date, it is required to repay the PPA (together with any applicable accrued interest or service charges) upon notice by the Bank in 10 approximately equal semiannual installments over a five-year period after the refinancing date. However, if the disbursed amount of the PPA is US$50,000 or less, the PPA recipient is required to repay it within 60 days after the Bank's notice to repay.
(b) If the PPA recipient was an IDA country or a regional organization eligible only to receive IDA grants on the PPA approval date, the advance becomes a grant and is not repaid by the recipient.
Suspension of Disbursements and Cancellation
9. The Bank may suspend disbursements of the PPA upon the occurrence of any of the events of suspension specified or referred to in the PPA Agreement. The Bank may also request a refund of any amount of the advance that has not been used in accordance with the provisions of the PPA Agreement.
10. At any time after disbursements of the PPA have been suspended or an amount of the advance has been refunded, the Bank may cancel any remaining unwithdrawn amount of the PPA.