The Multilateral Investment Guarantee Agency (MIGA), the World Bank’s political risk insurance arm, foresees continued growth and has expanded its remit. In the last financial year, it provided a record $2.1 billion in new guarantees. MIGA guarantees against risk in developing countries (see Update 72), in order to encourage foreign direct investment. As detailed in its 2012-14 strategy, Achieving value-driven volume, it plans to increase guarantees to as much as $3 billion over the next two years, expanding its client base and portfolio. MIGA claims this is opportune, as “in the aftermath of the financial crisis, the private [political risk insurance] industry has become more conservative.” The strategy document also says MIGA will revise its performance indicators.
In November 2010, MIGA relaxed the terms of the Convention that governs its activities, the first amendment since its inception in 1988. Previously, MIGA could underwrite loans for projects only if simultaneously guaranteeing some equity investment. Now, however, it can underwrite loans even where it has no equity involvement. In particular, this allows MIGA to guarantee loans to public sector recipients, whose equity is not traded. A further amendment allows it to underwrite acquisitions and, where investors demonstrate some durable commitment to the project, existing investments. Previously, MIGA could underwrite only new investments or expansions.