How to make cross border investment?

Dec 14, 2020

Multilateral Investment Guarantee Agency (hereinafter referred to as MIGA), another world bank affiliate was established in 1988 to encourage private sector investment in developing countries by providing cover to lenders and investors against political world Bank group vehicles for political risk guarantees. It is the largest sector of activity. 

The parameters of MIGA coverage is it relates to cross border investment or loans,  both equity and debt can be covered. Other forms of investment, such as technical assistance and management contracts, asset securitization, bond issues, leasing, services and franchising and licensing agreements, may also be eligible for cover. It covers up to 95%  of the scheduled payments of loan principal or 90% of the equity investment. It can not ally provide coverage for 15 years, and for 20 years were justified. It operates a co-operative underwriting with private-sector insurers, which is based on the principle of the world bank. The premium is in the range 0.50 - 1.75% on the amounts insured. 

MIGA guarantees cover currency convertibility and transfer on the receipt of the blocked local currency from an investor, MIGA pays compensation in the guaranteed currency. War, terrorism and civil disturbance, covers not only the cost of physical damage to the project but also extends to events that, for one year, resulting in an interruption of project operations essential to overall financial viability. For loan guarantees, MIGA pays the insured portion of the principal and interest payments in default as a result of business interruption caused by covered events. The temporary business interruption may also be included, and would cover three sources of interruption. The coverage encompasses not only violence in the country concerned directed against a host government, but also against foreign investment, including the investor's government or nationality.

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