Miga, the political risk insurance arm of the World Bank Group, and Georgia’s Investment Risk Management Agency (Irma), have signed a memorandum of understanding aimed at promoting foreign direct investment (FDI) into the country. According to the Georgian statistics department, FDI into Georgia fell to US$124.7mn in the first quarter of 2009, down from US$537.6mn in the same period last year.
Under the memorandum, Miga and Irma will work together to establish a joint outreach programme targeting foreign investors in Georgia. For its part, Irma will provide information regarding Miga’s products and services to eligible foreign investors in Georgia and provide risk assessment services for proposed investments. Miga may provide political risk insurance for eligible investors and projects and will train key Irma personnel and provide technical assistance for the development of risk-mitigation products and instruments.
Kakha Baindurashvili, Georgia’s minister of finance, explains the importance of mitigating political risks in promoting a favourable investment climate in Georgia: “Attracting foreign direct investment is a key component of the economic policy being implemented by the government of Georgia. The economic reforms cover many aspects to provide the private business sector with different incentives and basis for successful development. Easy access to mitigating political risks will stimulate foreign investment activities which are very essential to economic growth and development in Georgia.”
“Irma is in a very strong position to promote Miga’s products in Georgia and facilitate acquisition of political risk insurance by foreign investors,” says Zurab Simonia, Irma’s director. “The risk mitigation products created via close co-operation between the two agencies will definitely be an incentive to the foreign investors and contribute towards more efficient and effective investment decision-making.”
Izumi Kobayashi, Miga’s executive vice-president, notes that the objectives of the two agencies are complementary. “Joining Miga’s and Irma’s efforts to encourage and promote foreign direct investment in Georgia is particularly important in an environment where the global economic crisis has resulted in a number of significant shocks to the country’s growth and stability. We look forward to working together in order to bring good projects to Georgia that foster sustainable development and improve people’s lives.”
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