Improving Governance in Africa
What is your policy on write-offs?
The Bank has never written off sovereign guaranteed loans. Its experience has been that countries default in case of
unusual civil disturbances or events. When peace and stability is restored, the countries re-engage with the Bank and
pay their arrears or usually obtain assistance from donors for arrears clearance.
It is the Bank's policy that if the payment of principal, interest or other charges becomes 30 days overdue, no new loans
to that member country, or to any public sector borrower in that country, will be presented to the Board of Directors for
approval, nor will any previously approved loan be signed, until all arrears are cleared. Furthermore for such countries,
disbursements on all loans to or guaranteed by that member country are suspended until all overdue amounts have
been paid. These countries also become ineligible in the subsequent billing period for a waiver of 0.5% on the
commitment fees charged on qualifying undisbursed loans.
Although the Bank benefits from the advantages of its preferred creditor status and rigorously monitors the exposure
on non-performing sovereign borrowers, some countries have experienced difficulties in servicing their debts to the
Bank on a timely basis. As previously described, the Bank makes provisions for impairment on its sovereign loan
portfolio commensurate with the assessment of the incurred loss in the portfolio.
Write-offs could arise for non-sovereign loans and these are financed by the Bank's net operating income (NOI). To date
there has not been any significant loan write offs of non-sovereign loans.
In compliance with IFRS, the Bank does not make general provisions to cover the expected losses in the performing non-
sovereign portfolio. For the non-performing portfolio, the Bank makes specific provisions based on an assessment of the
credit impairment, or incurred loss, on each loan.
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