Loans

• Loans on highly concessional terms: Offered free of interest, but bear a service charge on the principal amount outstanding, subject to a floor of 0.75% per annum with adjustments made for single-currency loans
  - Maturity period of 40 years, including a grace period of 10 years starting from the date of approval by the IFAD executive board
  - If member state is a small state economy, then amortization is set at 1% of total principal withdrawn per annum for years 11 to 20, and 4% of total principal withdrawn per annum for years 21 to 40
  - If it is not a small state economy, then amortization is set at 4.5% of total principal withdrawn per annum from years 11 to 30, and 1% of total principal withdrawn per annum from years 31 to 40
  - Eligible member states are normally those that, at the end of the year before the start of the replenishment period: (i) have a gross national income (GNI) per capita lower than, or equal to, the operational cut-off as determined annually by the International Development Association (IDA); (ii) have a GNI per capital higher than the operational cut-off but not classified by IDA as “gap countries” or “blend countries”; or (iii) are classified by IDA as a “small state economy”"
• Loans on blend terms: Bear a service charge on the principal amount outstanding, subject to a floor of 0.75% per annum with adjustments made for single-currency loans
  - Maturity period of 25 years including a grace period of 5 years starting from the date of approval by the IFAD executive board
  - Interest is payable on the principal amount outstanding at a fixed rate of 1.25% with adjustments made for single-currency loans, subject to a floor of 0%
  - The principal of the loan is amortized at 5% of the total principal withdrawn per annum from years 6 to 25
  - Eligible member states are normally those that, at the end of the year before the start of the replenishment period, are classified by IDA as a ""blend"" or ""gap"" country"
• Loans on ordinary terms: The interest on ordinary loans consists of a market-based variable reference rate and a spread, and such loans have a variable maturity and grace period
  - The maximum maturity period a borrower can request is 35 years, subject to a maximum average repayment maturity of 20 years
  - The maximum grace period is set at 10 years, starting from the date IFAD has determined that all general conditions precedent to withdrawal have been met
  - Average repayment maturity is the sum of the weighted average repayments of principal over the repayment period, and therefore depends on the choice of maturity and grace period selected by the borrower
  - There are six average repayment maturity buckets (ranges of time of average repayment maturity) into which loans are classified: (i) up to 8 years; (ii) between 8 and 10 years; (iii) between 10 and 12 years; (iv) between 12 and 15 years; (v) between 15 and 18 years; and (vi) between 18 and 20 years
  - Borrowers can choose between a variable spread and a fixed spread—the level of the spread on the loan is dependent on the average repayment maturity bucket as well as the income category of the borrower, subject to other country classifications
  - Loans with an average repayment maturity longer than 8 years include a maturity premium—the maturity premium is also differentiated by income category
  - Borrowers can be currently classified as: (i) standard maturity premium (as of July 2018); (ii) exempt from the maturity premium increase introduced by World Bank in July 2018; (iii) discount from the standard maturity premium for borrowers with GNI per capita up to USD 6,795; or (iv) surcharge to the standard maturity premium for borrowers with GNI per capita greater than USD 12,055
  - As soon as the conditions of first withdrawal have been fulfilled by the borrower, IFAD will send an amortization schedule to the borrower
  - Repayments of principal are usually in equal amounts, however the option of varying repayment instalments is available
  - Eligible member states are normally those that are not eligible for loans on highly concessional or blend terms 
• IFAD provides loans on highly concessional, blend, and ordinary terms

Grants

IFAD can provide grants to:
- Developing member states
- Intergovernmental organizations in which member states participate
- Entities which the IFAD executive board determines to be eligible

Debt Sustainability Mechanism

• A Debt Sustainability Analysis (DSA) is conducted by the International Monetary Fund and/or the World Bank
  - One of the key outputs of a DSA is the risk of debt distress which can be: (i) low; (ii) moderate; (iii) high; or (iv) in debt distress
• The classification determines which financing terms are applicable to eligible countries:
  - Countries at low risk of debt distress receive their financing on 100% highly concessional terms
  - Countries at moderate risk of debt distress are eligible for 50% of the financing provided as a grant and 50% as a highly concessional loan
  - Countries at high risk of debt distress or in debt distress are eligible to receive 100% of their financing on grant terms

Single-Currency Lending

• IFAD offers a single-currency lending facility which allows member states to borrow in EUR or USD as an alternative to SDR
• All IFAD countries may request the currency of denomination of the financing which IFAD will grant at its discretion