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p. 1 of 21 BACK | NEXT I. Introduction II. An Overview of the Political Risk Insurance (PRI) Market III. Review of ADB's Partial Risk Guarantee (PRG) Program IV. Recommendation for Changes to ADB's PRG V. Potential Benefits of the Proposed PRJ Program VI. Conclusion

Review of the Partial Risk Guarantee of the Asian Development Bank

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I. Introduction

1. In 1995, the review of the guarantee operations¹ of the Asian Development Bank (ADB) introduced the partial risk guarantee (PRG) as a new instrument to expand guarantee operations. The Board approved a second review of guarantee operations in 1999.² In April 2000, the Board approved a review paper on fees for partial credit guarantees (PCGs)³. The current paper reviews ADB’s experience with the PRG and proposes possible improvements to the instrument.

2. The PRG provides coverage against certain well-defined political risks. To place ADB’s PRG into the overall context of the political risk insurance (PRI) market, this paper presents an overview of the PRI market and its evolution. Section III reviews ADB’s current policy on PRGs and analyzes the constraints that have limited its use. Section IV proposes changes to ADB’s current policy on PRGs, while section V analyzes the benefits of a new and improved PRG program. Section VI presents the conclusion.

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