Is intended to promote private investment, not to complete with it.

E. The use of loan proceeds is supervised, IBRD makes arrangements to ensure that funds loaned

are used only for authorized purposes and, where relevant, with due attention to considerations of

cost-effectiveness. This policy is enforced primarily by requiring borrowers (a) to submit documentation

establishing, to IBRD's satisfaction, that the expenditures financed with the proceeds of loans

are made in conformity with the applicable lending agreements and (b) to maximize competition in

the procurements of goods and services by using, wherever possible, international competitive bidding

or, when it is not appropriate, other procedures that ensure maximum economy and efficiency.

Vocabulary Notes to Text 10.7.1.2

1. interest — проценты (на капитал)

2. environmental soundness — здоровая окружающая среда

3. to act prudently — действовать расчетливо, экономно

4. to meet debt-service obligations — поступать согласно обязательствам по оплате долга

5. loan proceeds — вырученная сумма от займа

6. authorized purposes — установленные цели

7. lending agreement — договор займа

8. procurement of goods — снабжение товарами

9. international competitive bidding — международные конкурентные торги

10.7.1.3. Read the text and make an account of it in English.

Country Credit Risk

Country credit risk is the risk of loss due to a country not meeting its contractual obligations.

IBRD's Credit Risk Department continuously reviews the creditworthiness of its borrowing member

countries. These reviews are taken into account in determining IBRD's overall country programs and

lending operations, used to estimate the appropriate level of provisions for losses on loans and guarantees,

and used to asses the adequacy of IBRD's income-generating capacity and risk-bearing capital.

In keeping with standard practice, probable losses inherent in the portfolio due to country credit

risk are covered by the accumulated provision for losses on loans and guarantees, while unexpected

losses due to country credit risk are covered by income-generating capacity and risk-bearing capital.

Portfolio concentration risk, which arises when a small group of borrowers account for a large

share of loans outstanding, is a key concern for IBRD and is carefully managed, in part, through a

single borrower exposure limit.

For FY 2005, the single borrower exposure limit is $13,5 billion, unchanged from FY 2004, which is

the lower of the concentration risk limit ($13,5 billion) and the equitable access limit ($21,4 billion).

Since the current exposure data presented are at a point in time, evaluating these exposures

relative to the limit requires consideration of the repayment profiles of existing loans, as well as

disbursement profiles and projected new loans and guarantees.

Under certain circumstances, IBRD would be able to continue to lend to a borrower that was

reaching the single borrower exposure limit by entering into an arrangement that would prevent its

net exposure from exceeding the limit. Any such arrangement would need to be approved in advance

by IBRD's Executive Directors. During FY 2003, IBRD entered into the first such arrange-