Pledge Guarantee for Health

Our Work

How does PGH work?

With the support of PGH, a participating bank issues a letter of credit to a supplier on behalf of a grant recipient. The supplier receives payment from the bank when its receivable is due and the bank recoups its capital when the donor disburses its funding. PGH plays an instrumental role in both facilitating the transaction and providing a guarantee of the bank loan.

This new tool builds on existing relationships and mechanisms. Letters of credit have been used in trade finance for centuries and grant recipients already hold accounts at many of the banks that would participate in PGH transactions. However, simple forms of credit are too costly for many grant recipients. By providing a partial guarantee on loans, PGH allows grant recipients to avail of financial tools that are commonplace in the private sector. Over the long term, PGH also paves the way for banks to participate independently in the market for global health aid.