Poverty Reduction and Growth Trust - 2017 Borrowing Agreements with the Bank of Spain, the Government of Japan and the People's Bank of China

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The Fund, as Trustee of the Poverty Reduction and Growth Trust (PRGT or Trust), entered into:
- a new borrowing agreement with the Bank of Spain (Spain);
- amendments to the 2010 NPA with the Government of Japan (Japan); and
- a new note purchase agreement (NPA) with the People’s Bank of China (China).
Purpose presented to the Executive Board for information: the new borrowing agreement with Spain, the amendments to augment the existing agreement with Japan, and the new NPA with China.

Spain: SDR 450 million (new borrowing agreement).
Japan: SDR 1.8 billion (amendments to the 2010 NPA augmenting resources).
China: SDR 800 million (new NPA).
Total new PRGT lending resources provided to the General Loan Account of the PRGT: SDR 3.05 billion.

The new borrowing agreement with Spain, the augmentation under the amended NPA with Japan, and the new NPA with China are among the first ten loan contributions concluded in the context of the current Board endorsed effort to raise SDR 11 billion in new PRGT loan resources.

Recent changes to the Fund’s framework for concessional lending to low income countries incorporated into the new Spain agreement and the China NPA, and adopted as applicable in prior amendments to Japan’s agreement:
- extensions of the commitments and drawdown period for PRGT loans to end-2020 and end-2024, respectively;
- incorporation of the Chinese Renminbi (RMB) interest rate instrument of six month maturity for borrowing agreements in currencies;
- provision that, if the derived six-month SDR interest rate formula results in a negative rate, the applicable interest rate shall be zero percent.

In addition to increasing the principal amount of notes that can be issued under the NPA, Japan’s agreement was modified to:
- provide more flexibility in the media of payment for purchases under the NPA;
- set up a maximum amount for monthly purchases under the NPA;
- establish a preferred media for payments of interest and principal amount of the notes issued under the NPA.
Except for these changes, all other elements of the NPA with Japan remain unchanged.

Poverty Reduction and Growth Trust - 2017 Borrowing Agreements with the Bank of Spain, the Government of Japan and the People's Bank of China