13 World Bank lending contracts generally require the purchase of goods and services for a World Bank-financed project, in accordance with the Bank`s procurement guidelines, which generally require compliance with internationally competitive bidding procedures. WB`s opera. Man, supra note 12, at PO 7.01, `3 (July 1994). An Overview of World Bank Public Procurement Policies, Tendering for World Bank-funded Projects 10 (n.d.) See also Brooches, supra note 12, at 256 n.32. Other MDBs generally meet the same requirements. See Head, Contracting, supra note 12, at 47. How does current legislation provide for loan contracts by the World Bank and other multilateral development banks (MDBs) as part of the implementation of their public sector loans? This issue was finally addressed for the first time about 35 years ago. This article again addresses this issue in the light of the latest practical developments, in particular the recent MDB, the European Bank for Reconstruction and Development (EBRD). 14 See International Bank for Reconstruction and Development, General conditions Applicable on Loan and Guarantee Agreements – Dated January 1, 1985, 5.08 [IBRD 1985 general terms and conditions]. How these terms and conditions of sale are included in a particular loan agreement is discussed in the text under and infra 27-44 below. 12 IBRD and IDA can both provide loans to Member States, state-owned enterprises or private entities. When a loan is granted directly to a public company or private body, the IFP is necessary (and IDA is authorized) for the loan to be guaranteed by the government of the Member State in which the project is being implemented.
See article of the International Bank`s agreement for reconstruction and development, July 22, 1944, art. III, No. 4(i), 60 Stat. 1440, 2 UNTS 134, modified 16. 1965 16 UST 1942, 606 UNTS 294 [hereafter the IBRD Charter] (which came into force on 27 December 1945), reprinted in the amended version of 17 December 1965 in 1 basic documents of international economic law 427 (Stephen Zamora – Ronald A. , 1990) [hereafter basic documents]; Article of the agreement of the International Development Association, January 26, 1960, art. V, 2 (d), 11 UST 2284, 439 UNTS 249 [hereafter the IDA Charter] (came into force on 24 September 1960). As IDA`s objective is to reduce the external financing burden of poorer countries, IDA loans (technically called „loans”) have traditionally been granted only to Member States, not to state-owned enterprises or private bodies. Aron Broches, The World Bank, in International Financial Law-Lending, Capital Transfers and Institutions 251, 262 n.72 (Euromoney Publications, 1980); WB 1992 Report, p. 1, 4 a.m.; The World Bank, World Bank Operational Manual, at OP 7.00 `2, `3 n.4 (loose-leaf, July 1994) [hereafter the opera WB. Man.]. The ADB, IDB and AFDB also all or almost all loans to states and state-owned enterprises.
See John W. Head, International Contracting Opportunities Under Projects Financed by the World Bank and Related Institutions, Int`l Contract Advisor, Spring 1995, at 41, 44 [contracting]. The EBRD is required in its charter to benefit from 60% of its loans to the private sector (i.e. entities that are neither (1) owned or controlled by the State, and (2) to benefit from a guarantee from the State or a State entity), while it has had difficulty achieving this objective due to changes in political conditions in its countries of activity.