Banking on Development

Peter D. Cleary
Director & General Counsel

March 2007
Core Mission

To issue political risk guarantees in

cross border emerging market
transactions

MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 2

Four Coverages

1. Transfer and inconvertibility

2. Expropriation: government action which deprives the

guarantee holder of ownership or control of the
guaranteed investment or deprives the guarantee
holder of a substantial benefit of the investment

3. War and civil disturbance

4. Breach of contract: failure of the host government to

honor an arbitral award following a breach of contract

MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 3

Benefits of MIGA Guarantees

1. Mitigate political risk

2. Accessing funding and lowering borrowing costs

3. Improving ratings

4. Extending tenors

5. Ability to resolve / mediate disputes

MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 4

Eligibility

1. Must be cross border between member countries

2. Cannot participate in purely local deals

3. Must be “new” investment, but there is considerable

flexibility here

– Expansion or modernization of old plant

– Acquisition of existing project if there is a financial

restructuring etc.

MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 5

Eligibility

4. Coverage of:

– Equity, including shareholder loans and various profit sharing

agreements

– Loans, but only if there is an equity cover

– Loan guarantees

• could be used to cover sponsor support agreements

5. Minimum term of 3 years; maximum of 20

MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 6

Miscellaneous

1. Rely on rights of subrogation

2. Do not require counter-guarantees

3. We do obtain a host country approval

4. Ability to intervene to prevent claims

5. SME program for investments of $5m or less

MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 7

Overview of Business
Four Strategic Pillars - FY06 Guarantees Issued, $ M

Infrastructure projects $469m (14 projects)

Frontier markets $481m (23)

Conflict-affected countries $165m (10)

South-South investments $389m (15)

By Sector – FY06 By Region – FY06

Services MENA
Ag. & Manu 6% 5% Africa
7% 16%
OGM Infrastructure LAC
14% 41% 20% Asia
14%

ECA
Financial
47%
33%

 $16bn of guarantees issued since 1989

 Current portfolio of $5bn

MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 8

MIGA support to US companies

Guarantees Issued to US Companies, % Guarantees Issued to US Companies, %

By Region By Sector

Africa, 1% Agribusiness & Mfg, 20%

Asia, 17% Financial, 31%
ECA, 26% Oil, Gas and Mining, 18%
LAC, 51% Tourism & Services, 10%
MENA, 5% Infrastructure, 21%

MIGA has issued $2.2bn in guarantees to US investors since

inception; USA represents MIGA’s 3rd largest host country exposure

MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 9

 For more information

Peter D. Cleary
Director & General Counsel
pcleary@worldbank.org

www.miga.org

MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 10