"World Bank Ventures Into $422 Million Debt Swap With Ivory Coast"

" World Bank Ventures Into $422 Million Debt Swap With Ivory Coast \r\n\r\nWith support from the World Bank Group, C\u00f4te d\u2019Ivoire will complete a debt-for-development swap, a transaction designed to improve the country\u2019s debt profile and generate significant fiscal savings.\r\n\r\nThe money saved by replacing expensive debt with cheaper financing will be used to improve education across the country. This will be the first debt-for-development swap of its kind supported by the World Bank Group.\r\n\r\nThe swap operation will target close to \u20ac400 million of C\u00f4te d\u2019Ivoire\u2019s most expensive commercial debt that matures in the next five years. Thanks to a partial credit enhancement from the new World Bank Group guarantee platform, C\u00f4te d\u2019Ivoire will buy back this high-interest debt portfolio using a commercial loan with a lower interest rate, a longer maturity, and a grace period.\r\n\r\nThe transaction will free up around \u20ac330 million in budget resources over the next five years, generating lifetime savings of at least \u20ac60 million in net present value terms\u2014and allowing for critical investments in education.\r\n\r\n\u201cOur government has implemented a robust fiscal consolidation reform agenda, resulting in sound debt management,\u201d said\u00a0Robert Beugr\u00e9 Mamb\u00e9, Prime Minister of C\u00f4te d\u2019Ivoire. \u201cWe are proud to be the first country to operationalize the World Bank Debt for Development Swap framework, based on the joint World Bank-IMF approach, to invest in human capital outcomes. Additionally, we have utilized the World Bank Group Guarantee Platform to engage with environmental, social and governance investors through an innovative sustainability-linked loan. This pioneering approach reflects our commitment to exploring creative solutions that enhance the well-being of our citizens while contributing to the sustainability of our planet.\u201d\r\n\r\nThe debt swap will be enabled by a policy-based guarantee. Approximately half of the \u20ac500 million guarantee will facilitate the debt swap, with the remainder enabling C\u00f4te d\u2019Ivoire to secure a Sustainability-Linked Loan (SLL) to broaden its investor base.\r\n\r\n\u201cToo many countries face mounting debt service payments that are consuming the resources they could spend on development priorities like education that set them up for long-term success,\u201d said\u00a0Anna Bjerde, World Bank Managing Director of Operations.\u00a0\u201cThrough a pioneering debt-for-development swap, facilitated by a World Bank guarantee, the Government of C\u00f4te d\u2019Ivoire is aiming to address these two challenges at once. This innovative approach has strong potential for replication in other countries.\u201d\r\n\r\nThe swap announced today differs from other recent debt-for-development swaps in several key, innovative ways. Unlike other swaps that use costly structures, including offshore special-purpose vehicles and trust funds that often incur significant transaction, administrative, and financial costs, this operation uses country systems already in place.\r\n\r\nIt also increases the ambition of an ongoing education program in C\u00f4te d\u2019Ivoire, supported by a World Bank Program for Results financing instrument that monitors the newly agreed results and outcomes in the education sector.\r\n\r\nThis debt swap is part of a larger package of financing for C\u00f4te d\u2019Ivoire under the Third Investment for Growth Development Policy Financing (DPF), which supports strengthening competition in key sectors, expanding equitable access to health and education services, and promoting the sustainable use of natural resources."

"World Bank Ventures Into $422 Million Debt Swap With Ivory Coast"

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