These loans are disbursed in several tranches, when the policy conditions linked to each tranche are completed and verified. Multi-tranche PBLs require that all the policy/institutional reforms necessary to achieve a program’s objective be defined before the project is approved. Ideally, there is very little uncertainty regarding the policy/institutional reforms and their sequencing to achieve the programs objectives.

These loans support a framework of reforms/institutional changes to be executed in phases. Funds are disbursed in a series of single tranches over the medium term (three to five years). There are specified triggers for moving from one operation to the next.

The deferred draw-down option can be used with both multi-tranche and programmatic PBLs. It permits PBL resources to be drawn down over a period of three years after the borrower complies with the agreed-upon policy conditions. This gives borrowers flexibility by providing the resources in the amounts, and at the time, that meets their needs most effectively. The draw-down period can be extended for an additional three years. During the draw-down period, the borrower must maintain policy conditions and sustainable macroeconomic policies.