Syndicate content

Add new comment

Submitted by P. Gupta on

First many thanks for this comment. You are absolutely right that in providing these guarantees, an institution that provides such guarantees or political risk insurance, must ensure that the projects are economically and financially viable. What we see in emerging markets is that projects are typically economically viable, but financially projects may or may not generate returns. In such cases it is imperative that overall sector reforms are targeted and come alongside such guarantees. The Bank typically has a long-term engagement in infrastructure sectors with our client countries, and thus takes a medium to long-term assessment of sector reforms. Not one but there have been a few cases where the Bank has said no to providing guarantees on projects that did not meet the investment criteria of the Bank. This is also one of the reasons why our project-based guarantees portfolio has never had a default.