OP 7.30
July 2001
These policies were prepared for use by World Bank staff and are not necessarily a complete treatment of the subject.

Dealings with De Facto Governments


Note:This OP 7.30 replaces OP 7.30, dated November 1994. Questions may be addressed to the Chief Counsel, Operations Policy.

1. A “de facto government” comes into, or remains in, power by means not provided for in the country’s constitution, such as a coup d’état, revolution, usurpation, abrogation or suspension of the constitution.

2. A decision to make a loan1 to, or to have a loan guaranteed by, a country with a de facto government, or to continue disbursing under existing loans to or guaranteed by such country, or to provide a guarantee in respect of a project in the territories of such country,2 does not in any sense constitute Bank “approval” of the government, nor does refusal indicate “disapproval”. The Bank under its Articles is required to refrain from interfering in the political affairs of any member; moreover, its decisions may not be influenced by the political character of the member country concerned.3

3. In many cases, a de facto government either suspends the constitution or abrogates it. In other instances, the constitution and other basic laws remain partially or wholly in force. In either situation, the Bank when continuing disbursements under an existing loan or making a new loan or issuing a guarantee ascertains that (a) a proper legal framework exists to secure approval of the Bank loan or the Bank guarantee and the related counter-guarantee of the country, to permit the project to be carried out, to allow the project objectives to be achieved and to allow the loan to be repaid or any required payments under the country’s counter-guarantee of the Bank guarantee to be made; and (b) all parties to the agreements with the Bank in respect of the project have taken or will be able to take all actions necessary to carry out their respective obligations under their respective agreements with the Bank. The Bank also ascertains that these obligations are or will be valid and binding.4

Existing Operations

4. The Bank may not unilaterally suspend disbursements under existing loans5 or suspend or terminate its obligations under guarantees provided by it unless there are grounds for such suspension or termination based on existing agreements. Thus, the Bank deals with a de facto government with respect to loans made by the Bank before the government assumed power, provided that:
New Operations

5. In considering whether to extend a new loan to a country with a de facto government, to make a new loan with the guarantee of such country, or to provide a guarantee in respect of a project in the territories of such country, the Bank first allows a certain time to pass to weigh: __________________________________________

1. “Loan” includes credits and grants; “Bank” includes IDA; and “project” includes an adjustment program supported under a Bank loan or guarantee.

2. For information regarding Bank guarantees, see OP 14.25, Guarantees.

3. See IBRD Articles of Agreement, Article IV, Section 10, and IDA Articles of Agreement, Article V, Section 6.

4. The issues addressed in this OP may arise in the context of a country emerging from conflict. For a general discussion of the Bank’s assistance to countries emerging from conflict, see OP 2.30, Development Assistance and Conflict.

5. See OP 13.40, Suspension of Disbursements.

6. Agreements between the Bank and its members are governed by international law. International law also prescribes certain principles with respect to de facto governments. Under a general but not unqualified principle of international law, obligations entered into by de facto governments, purporting to be binding on the state, must be honored by successor governments. The qualifications of the general principle may relate to the nature of both the de facto government and the obligation it entered into. For instance, a successor government may question the power of a de facto government that had characterized itself as an interim government to enter into long-term obligations not connected with the immediate needs of the country concerned.