Since the World Bank requires a counter-guarantee from the government, doesn the government end up guaranteeing private investors?
No. The Bank’s partial risk guarantee is specifically designed to back only the obligations a government has given to an investor. In typical projects, these undertakings would include no assurance of commercial success but only aspects under the government’s control. By providing a guarantee against the failure of the government to fulfill these obligations, the Bank merely adds credibility to the project, allowing the investor to mobilize financing from international financial markets.
Related Questions
- I know the government requires private foundations to distribute five percent of their assets each year. Does the same requirement cover donor advised funds?
- Since the World Bank requires a counter-guarantee from the government, doesn the government end up guaranteeing private investors?
- How can the generous pensions of the public sector be sustained while the private sector pensions evaporate?
