The Multilateral Investment Guarantee Agency (Miga) has issued US$2.1bn in guarantees to support foreign direct investment in developing countries and is set to continue this level of support as other funding sources tighten.
“Developing countries continue to rely on private sector investment and FDI to support economic growth. But with liquidity drying up, the risk appetites of international investors for projects in emerging economies may be tested,” comments James Bond, acting executive vice-president and chief operating officer of Miga, on the release of its 2008 annual report.
“Miga can play a critical role in helping these economies grow by supporting projects that generate jobs and build essential infrastructure, allowing governments to focus funds on urgent social needs,” he adds.
The US$2.1bn-worth of guarantees (calculated for the year ending June 30, 2008) marks the largest amount of new guarantee coverage issued in Miga’s history. The insurer also recorded an active portfolio of over US$6.4bn at the close of the year. These results bring the total guarantee coverage issued since Miga’s establishment in 1988 to US$19.5bn.
During the fiscal year, Miga was active is some of the world’s poorest and often conflict-affected countries. In 2008, 63% of projects supported by Miga were in IDA-eligible [International Development Association] countries. The IDA is a branch of the World Bank dedicated to the poorest nations, often providing credits with no interest charge, and repayment periods often spread across 35 to 40 years.
Miga also issued over US$100mn in guarantees for projects in countries affected by conflict. It is also aiming to increase its support for infrastructure projects, which represented 36% of guarantees issued in the last fiscal year.
“Miga projects are responding to the need to compensate for low investment levels in the world’s poorest countries, such as Djibouti and the Central African Republic,” concludes World Bank group president Robert Zoellick.
Last Updated October 13, 2008
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