Catalog

5.8 Loan Covenants

Several standard loan covenants are usually included in the ADB loan agreement. The covenants provide for specific action that is related to the loan and that the borrower or EA is required to do during the implementation of the project. The covenants are intended to ensure that the project’s objectives and prescribed benefits can be achieved. The project team must be familiar with the covenants and make every effort to help the borrower comply with them in an efficient and timely manner.

ADB recognizes that some (but not all) projects may be delayed or face other difficulties associated with implementing the covenants, for reasons outside the direct control of the project team. In such situations, ADB and the EA may to together determine alternative measures to achieve the intent of the original covenants, to ADB’s satisfaction.