I have today laid a departmental minute setting out DFID’s intention to guarantee a portion of a forthcoming development policy loan from the International Bank for Reconstruction and Development (IBRD)-arm of the World Bank to Jordan.
This would create a contingent liability of the US dollar equivalent of £332 million (based on current interest and exchange rates), in respect of the World Bank Group. There remain strong incentives for Jordan to avoid entering into arrears as doing so would lead to the IBRD not agreeing any new lending, and not providing any lending agreed under existing loans.
In the event that a default did occur, and the guarantee is called, the UK would still provide compensation to the World Bank, in proportion to the UK’s guaranteed share of the overall IBRD loan. If this liability is called, provision for any DFID payment would be sought through the normal procedure.