Multilateral Investment Guarantee Agency - MIGA


 
 
Concept Explanation
 

Multilateral Investment Guarantee Agency - MIGA

MIGA- Multikateral Investment Guarantee Agency:

The Multilateral Investment Guarantee Agency (MIGA) is an international financial institution, which offers political risk insurance and credit enhancement guarantees. These guarantees help investors protect foreign direct investments against political and non-commercial risks in developing countries.

  • MIGA is a member of the World Bank Group and is headquartered in Washington, D.C., United States. MIGA was established in 1988 as an investment insurance facility to encourage confident investment in developing countries. MIGA is owned and governed by its member states, but has its own executive leadership and staff, which carry out its daily operations. Its shareholders are member governments that provide paid-in capital and have the right to vote on its matters. It insures long-term debt and equity investments as well as other assets and contracts with long-term periods. The agency is assessed by the World Bank's Independent Evaluation Group each year.
  • MIGA was established as an effort to complement existing sources of non-commercial risk insurance for investments in developing countries, By serving as a multilateral guarantor, the agency reduces the likelihood of confrontations among the investor's country and the host country.
  • Investment Guarantees:

  • MIGA offers insurance to cover five types of non-commercial risks: currency inconvertibility and transfer restriction; government expropriation; war, terrorism, and civil disturbance; breaches of contract; and the non-honouring of financial obligations. MIGA covers investments such as equity, loans, shareholder loans, and shareholder loan guarantees.
  • The agency may also insure investments such as management contracts, asset securitisation, bonds, leasing activities, franchise agreements, and license agreements.The agency generally offers insurance coverage lasting up to 15 years with a possible five-year extension depending on a given project's nature and circumstances.
  • When an event occurs that is protected by the insurance, MIGA can exercise the investor's rights against the host country through subrogation to recover expenses associated with covering the claim.
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