Mitigating Currency Convertibility Risks in High-Risk Countries : A New IDA Lending Approach
A proposed Currency Convertibility Fund, backstopped by a contingent credit from the International Development Association (IDA)-the World Bank's concessionary window for the world's poorest countries-has been designed for the Songo Songo...
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| Format: | Viewpoint |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/1999/04/717457/mitigating-currency-convertibility-risks-high-risk-countries-new-ida-lending-approach http://hdl.handle.net/10986/11490 |
| Summary: | A proposed Currency Convertibility Fund,
backstopped by a contingent credit from the International
Development Association (IDA)-the World Bank's
concessionary window for the world's poorest
countries-has been designed for the Songo Songo Gas
Development and Power Generation Project in Tanzania. The
fund is a transitional mechanism aimed at supporting the
Tanzanian government's efforts to attract foreign
equity in circumstances where the private sector perceives a
high level of risk and is otherwise unwilling to invest. The
fund may be a replicable mechanism that, by mitigating
sovereign risks that investors are unwilling to bear and
unable to hedge against, could help catalyze foreign equity
investment in other IDA countries and in projects that
generate local currency. |
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