Before the World Bank provides a loan, either directly or indirectly through guarantee, certain conditions must be fulfilled. These Conditions, as stated in the Article III of the Articles of Agreements, require that:
(i) The World Bank lends only to governments or have guarantee of the government in whose territory the borrower is located as to the repayment of the principal and the payment of the interest and other charges.
(ii) The competent committee of the World Bank reports favorably on the project.
(iii) The World Bank is satisfied that the borrower is unable to obtain the loan otherwise on reasonable terms.
(iv) In the opinion of the World Bank, the rate of interest and other charges are reasonable and such rate, charges and the schedule for repayment of principal are appropriate to the project.
(v) In guaranteeing a loan made by other investors, the World Bank receives suitable compensation for its risk.