Private sector financing for development projects can be difficult to attract, but World Bank guarantees can mitigate a range of risks to facilitate private investment and commercial borrowing by governments and public sector entities.

The World Bank offers three basic types of guarantees:

Partial risk guarantees

This instrument covers debt service defaults on a loan to a private sector project caused by a government's failure to meet its contractual obligations related to a private project. Such guarantees allow public sector projects to reduce political or regulatory risks that can hamper private investment. See how the PRG helped to generate significant savings for the sector and lower tariffs for the consumer in Romania.

Partial credit and policy based guarantees