APG is a financial instrument issued by a bank or a financial institution on behalf of a contractor or supplier to guarantee the repayment of an advance payment made by the buyer to the seller or by the project owner to the contractor.

Advance Payment Guarantees are often required by buyers as a condition of the contract, especially in large-scale projects or transactions where significant advance payments are involved. It helps mitigate the risk of non-performance or default by the contractor.

The guarantee typically covers the full amount of the advance payment made by the buyer to the contractor or supplier. The bank issuing the guarantee commits to refunding this amount to the buyer if the contractor fails to fulfill its contractual obligations.

The most secured bank guarantee should be:

• Irrevocable
• First Demand
• Unconditional
• Extendable

If the works of the project or the supply of the goods will be performed gradually then the bank shall have the right to reduce the guaranteed Sum by the value of work performed, proportionally.