Advantages of World Bank loans
One: the term is long. The longest term of World Bank hard loans is 20 years, with an average of 17 years and a grace period of 5 years. Starting from the sixth year, the principal and interest will be repaid every year, and only the interest will be repaid in the first five years, not the principal. The longest term of soft loans is 50 years. The grace period is 10 year. That is, 10 does not need to repay the principal in the first year, but will be repaid in two installments every year from 1 1 year. The specific term depends on the per capita GNP of the borrowing country. Due to the long loan period, the borrowing country has great flexibility in the allocation of funds, accordingly, the proportion of capital flow can be reduced, which is conducive to improving the value-added ability of funds.
Second, the loan interest rate is low. The loan funds of the World Bank come from the paid-in share capital of member countries, but most of them are medium-and long-term bonds issued in the capital market. Because of the high credit rating of these bonds, the financing cost is lower than that of other banks, and the loan interest rate is correspondingly lower.
Third, the loan payment method is unique. The World Bank loan payment method has a complete set of prescribed methods to ensure that the loan will not be misappropriated. Although there are many loan payment methods, they can generally be divided into two types: reimbursement withdrawal application payment and special commitment application payment, and all loan projects need to set up working capital accounts.