The Bank and the Fund use a similar discount rate system for the purpose of calculating the grant element of loans.
This policy refers to the Guidelines on Performance Criteria with Respect to External Debt in Fund Arrangements (see Decision No. 6230-(79/140), as amended).
Countries for which concessional financing is normally available (in the sense that they obtain the bulk of their financing on concessional terms) are typically characterized by low levels of income. As shorthand, these countries are henceforth referred at as LICs.
The term “nonconcessional debt” is used to refer to all debt with a grant element that is lower than a specified threshold, typically 35 percent.