UNDP-supported Guarantees Procedures | United Nations Development Programme

1	Steps Guarantee Origination: CO identifies opportunity to use guarantee, conducts initial diagnostic, drafts concept note and initiates country risk assessment, consulting with the GPN and Guarantees Project Team as required, and submits proposal for review.	Responsible Party CO in consultation with GPN & Guarantees Project Team	Template/Guideline	Explanatory Notes Guarantees Project Team is a dedicated project team established to support the initial phases of roll out of the guarantees policy.
2	Steps Review guarantee proposal, including the diagnostic, evidence of positive impact and country risk assessment. Approve or request CO to revise and resubmit.	Responsible Party Finance Sector Hub &GPN	Template/Guideline	Explanatory Notes
3	Steps Conducts financial and programmatic structuring of the guarantee, including appropriate exit strategy, pricing based on credit risk assessment of the lending portfolio and cost recovery, consulting with the Guarantees Project Team and GPN as required. Guarantees Project Team reviews the guarantee structure, including proposed pricing and cost recovery, and requests CO to modify if necessary	Responsible Party	Template/Guideline	Explanatory Notes
4	Steps Initiate identification, screening (including initial due diligence and credit risk assessment), selection and engaging of lender(s) and guarantee issuer in consultation with Guarantees Project Team and BMS/OFM Treasury.	Responsible Party CO in consultation with Guarantees Project Team & BMS/OFM Treasury	Template/Guideline	Explanatory Notes
5	Steps Conduct solicitation process for guarantee issuer. Provide advice, review and clearance for lender(s) selection. Provide advice on due diligence and credit risk assessments, as required. Initiate formal agreement process with guarantee issuer.	Responsible Party BMS/OFM Treasury	Template/Guideline	Explanatory Notes
6	Steps Conduct initial due diligence and credit risk assessment of lender(s) and guarantee issuer, consulting with Treasury as required. Assess if OK to proceed with guarantee. If not OK, reject guarantee proposal and notify CO.	Responsible Party Guarantees Project Team	Template/Guideline	Explanatory Notes Due diligence on borrowers is conducted by lender(s).
7	Steps Modify financial and programmatic structuring, if necessary, in consultation with Guarantees Project Team and GPN, and submit guarantee documentation (agreements) for review.	Responsible Party	Template/Guideline	Explanatory Notes
8	Steps Review guarantee arrangement, advise on legal and other issues/risks of the guarantee, and approve or reject the guarantee arrangement. For exceptional cases, Treasury escalates the guarantee to the Credit Risk Committee and CFO for review.	Responsible Party	Template/Guideline	Explanatory Notes Refer to paragraph 49 for examples of cases that must be escalated to the Credit Risk Committee for review and approval.
9	Steps Credit Risk Committee and CFO review exceptional cases and approve/reject or escalate to Enterprise Risk Management (ERM) committee for final decision.	Responsible Party Credit Risk Committee & CFO, followed by ERM Committee	Template/Guideline	Explanatory Notes Credit Risk Committee will be advised and supported by the Guarantees Project Team
10	Steps If guarantee agreement is cleared, record the guarantee and assign guarantee funds to the escrow account	Responsible Party Treasury, BMS/GSSU and BMS/OFM Treasury	Template/Guideline	Explanatory Notes
11	Steps Conduct ongoing programmatic and financial monitoring, reporting and oversight of guarantees.	Responsible Party CO, GPN, Finance Sector Hub, Guarantees Project Team, BMS/OFM Treasury, Credit Risk Committee, ERM Committee	Template/Guideline	Explanatory Notes Includes providing donor reporting and refunds where required by financing agreements.